Harvard Money Unclaimed

Harvard does not know where all of its money is.

But that may not be the University's fault, according to the Massachusetts state treasurer's office.

A list released this week by state treasurer Joseph D. Malone '78, and published in many newspapers, names more than one dozen University accounts that have been "abandoned" and are currently being maintained by Malone's office.

That list names two accounts that belong to Harvard University in addition to others from the Business School, the School of Dental Medicine and the Harvard College Library. In all, 10 different Harvard-affiliated organizations with 17 different accounts were named in the list.

While the word "abandonment" may suggest that Harvard has neglected to keep tabs on some of its money, the reality in many cases is just the opposite, according to Joe Mara, director of claims processing and operations in the state treasury's unclaimed property division.

In most cases, the state treasury receives accounts that are abandoned by people who either leave the area or are elderly, Mara says. After a given account has been inactive for three years, that money is turned over to the state. This year, the amount collected by the state treasury in such accounts is $160 million.

But Harvard does not generally lose track of its bank accounts.

Instead, Mara says Harvard's accounts are really money owed to the University by other companies who cannot pay Harvard what they owe it. Companies that owe Harvard money and have turned checks over to the treasurer's office include IBM, AT&T, Sunoco and McGraw Hill.

Mara says the University has been very aggressive in retrieving its money. "We've paid Harvard quite a bit back," he says. "in a lot of cases, Harvard had no idea the money even existed."

Judith B. Warren, director of finance and accounting for Harvard, says the University has made a concerted effort to collect the money it is owed in Massachusetts and elsewhere. She says the manager of accounts payable wrote every state treasurer in the country last year asking them if they had funds due Harvard, and received several positive responses.

Warren says the companies Harvard deals with have, as a rule, acted vard had no idea the money even existed."

Judith B. Warren, director of finance and accounting for Harvard, says the University has made a concerted effort to collect the money it is owed in Massachusetts and elsewhere. She says the manager of accounts payable wrote every state treasurer in the country last year asking them if they had funds due Harvard, and received several positive responses.

Warren says the companies Harvard deals with have, as a rule, acted in good faith in trying to pay the University what it is owed.

"We don't have the sense that things are showing up in this abandoned property list because people are trying to commit fraud in any way," Warren says.

Mara says many companies don't pay this money to Harvard on time because of honest, clerical mistakes. But others, he says, do not make a strong enough effort to inform the University that they have some of Harvard's money. Some companies hand over money to the state while claiming that they cannot locate the University, which has been sitting at the same spot in Cambridge for more than 350 years.

Mara did not name specific companies that have left the University empty-handed, but he noted that insurance companies, in particular, often claim that they are not able to contact other insurance companies in the same city.

One insurance company, Mara says, recently turned over to the state a check for $130 that it owes the Harvard Business Review. In three years, the company was not able to get the money to the review, Mara says somewhat incredulously.

"Companies are supposed to attempt to notify the individual or company," Mara says. "There are an awful lot of companies who won't notify a place like Harvard."

Banks have a decidedly mixed record of informing their customers of inactive accounts. In the early 1980s, Mara says, the Bank of Boston once claimed, for example, that it could not find Carl Yastrzemski to tell him his account was inactive. Yastrzemski, a Hall of Fame baseball player, was widely known to spend many an afternoon in the same place: Fenway Park, where he played left field for the Boston Red Sox.

Holding onto the money for three years can save a company money, because their debt will be worth less (because of inflation and the interest the money earns while sitting in the company's bank account) by the time it becomes the property of the state.

The treasury tries to protect the value of the accounts it supervises by making interest payments on the accounts. Interest bearing accounts turned over to the state treasury receive five percent annual interest for as long as the government holds the money. Checking accounts or money due Harvard from other sources receive one percent annual interest, Mara says.

The Business School led all University affiliated entities with four "abandoned" accounts. Mary Keefe, director of the financial office at the Business School, said she was working to get the money back. She declined to answer other questions about the nature of the accounts.

"We are actively pursuing that," Keefe says.

According to Mara, some of the money owed to the Business School is held by companies in which the University has investments. Philip Morris, for example, owes the school a $150 dividend check. In addition, IBM appears to owe the Harvard Coop some investment-related money, Mara says.

Diane McAdams, a marketing official at Philip Morris, said the dividend check snafu was likely the result of a clerical error on the company's part.

"When our shareholder records do not have the correct address on file, it goes to the state," McAdams said. "We try to find the shareholder as best they can."

Mary Cassesso, director of administration at the Harvard School of Dental Medicine, says the dental school does not have any outside bank accounts that could be abandoned. However, a source at the dental school says the abandoned account was a $123 check from MIT that the Institute had never mailed to the school.

"It doesn't take a genius for someone at MIT to find out what the address for Harvard is," Mara says.

In fact, MIT had three accounts it has yet to settle with the University. The vocational school down Mass. Ave. also owes money to both the Harvard Club of Boston and the Harvard College Library. Officials at the club and the library did not return repeated telephone calls yesterday. Chuck Shaw, an auditor at MIT, says he was unaware of any money not paid to Harvard. He says the Institute's policy is to send out letters letting companies and other colleges know that MIT has money that was due them. "We do send letters out, and if we don't get responses, we have to turn it over to the state," Shaw says.

Mara also says McGraw Hill, the New York-based publishing giant, owed Harvard some of the money now controlled by the state treasury. Bill Farley, associate general counsel for McGraw Hill, says he had no information on the case and could not respond to the issue. He suggests that Mara may have erred in naming his company.

"I can't imagine any situation that would arise where we would send the money to the state treasury," Farley says. "I don't think we have a policy other than to write a check and send it to them in the mail."

One student group, the Harvard-Radcliffe Pre-Medical Society, is included on the state's list. It is unclear whether the society, which had been based in Currier House, is still active.

Alison A. Charello, vice president of Cambridge Savings Bank, confirmed yesterday that the society had an account at the bank. She says the bank, as it does with all inactive accounts, had notified the group by first class mail of their account's status, but the students never responded. So the account was turned over to the state.

"I think that perhaps there are student organizations like this formed, and then the kids graduate and forget about the money," Charello says. "That's too bad, and I hope they see this, and realize the money is still theirs."

Harvard itself may not always make a strong effort to return all the money it owes to individuals. Vice President for Finance Robert H. Scott says that the University has large numbers of small paychecks that do not get sent to people the University cannot easily find.

"We have a large number of small paychecks," Scott says. "So it's not worth Harvard's time to find someone for a paycheck that is, say, $25."

Because of Harvard's own experience, Scott says he is extremely reluctant to impugn the motives of companies who do not always pay the University in a timely fashion.

"Sometimes there is a mistake in the system," Scott says. "Let's say, we wrote the check and you cashed the check. We never got the check because of a bank error. To us, it seems the check was never cashed. These kinds of mistakes don't happen often, but they do happen."

There are an awful lot of companies who won't notify a place like Harvard. Joe Mara, director of claims processing/operations, state treasurer's offic

Judith B. Warren, director of finance and accounting for Harvard, says the University has made a concerted effort to collect the money it is owed in Massachusetts and elsewhere. She says the manager of accounts payable wrote every state treasurer in the country last year asking them if they had funds due Harvard, and received several positive responses.

Warren says the companies Harvard deals with have, as a rule, acted in good faith in trying to pay the University what it is owed.

"We don't have the sense that things are showing up in this abandoned property list because people are trying to commit fraud in any way," Warren says.

Mara says many companies don't pay this money to Harvard on time because of honest, clerical mistakes. But others, he says, do not make a strong enough effort to inform the University that they have some of Harvard's money. Some companies hand over money to the state while claiming that they cannot locate the University, which has been sitting at the same spot in Cambridge for more than 350 years.

Mara did not name specific companies that have left the University empty-handed, but he noted that insurance companies, in particular, often claim that they are not able to contact other insurance companies in the same city.

One insurance company, Mara says, recently turned over to the state a check for $130 that it owes the Harvard Business Review. In three years, the company was not able to get the money to the review, Mara says somewhat incredulously.

"Companies are supposed to attempt to notify the individual or company," Mara says. "There are an awful lot of companies who won't notify a place like Harvard."

Banks have a decidedly mixed record of informing their customers of inactive accounts. In the early 1980s, Mara says, the Bank of Boston once claimed, for example, that it could not find Carl Yastrzemski to tell him his account was inactive. Yastrzemski, a Hall of Fame baseball player, was widely known to spend many an afternoon in the same place: Fenway Park, where he played left field for the Boston Red Sox.

Holding onto the money for three years can save a company money, because their debt will be worth less (because of inflation and the interest the money earns while sitting in the company's bank account) by the time it becomes the property of the state.

The treasury tries to protect the value of the accounts it supervises by making interest payments on the accounts. Interest bearing accounts turned over to the state treasury receive five percent annual interest for as long as the government holds the money. Checking accounts or money due Harvard from other sources receive one percent annual interest, Mara says.

The Business School led all University affiliated entities with four "abandoned" accounts. Mary Keefe, director of the financial office at the Business School, said she was working to get the money back. She declined to answer other questions about the nature of the accounts.

"We are actively pursuing that," Keefe says.

According to Mara, some of the money owed to the Business School is held by companies in which the University has investments. Philip Morris, for example, owes the school a $150 dividend check. In addition, IBM appears to owe the Harvard Coop some investment-related money, Mara says.

Diane McAdams, a marketing official at Philip Morris, said the dividend check snafu was likely the result of a clerical error on the company's part.

"When our shareholder records do not have the correct address on file, it goes to the state," McAdams said. "We try to find the shareholder as best they can."

Mary Cassesso, director of administration at the Harvard School of Dental Medicine, says the dental school does not have any outside bank accounts that could be abandoned. However, a source at the dental school says the abandoned account was a $123 check from MIT that the Institute had never mailed to the school.

"It doesn't take a genius for someone at MIT to find out what the address for Harvard is," Mara says.

In fact, MIT had three accounts it has yet to settle with the University. The vocational school down Mass. Ave. also owes money to both the Harvard Club of Boston and the Harvard College Library. Officials at the club and the library did not return repeated telephone calls yesterday. Chuck Shaw, an auditor at MIT, says he was unaware of any money not paid to Harvard. He says the Institute's policy is to send out letters letting companies and other colleges know that MIT has money that was due them. "We do send letters out, and if we don't get responses, we have to turn it over to the state," Shaw says.

Mara also says McGraw Hill, the New York-based publishing giant, owed Harvard some of the money now controlled by the state treasury. Bill Farley, associate general counsel for McGraw Hill, says he had no information on the case and could not respond to the issue. He suggests that Mara may have erred in naming his company.

"I can't imagine any situation that would arise where we would send the money to the state treasury," Farley says. "I don't think we have a policy other than to write a check and send it to them in the mail."

One student group, the Harvard-Radcliffe Pre-Medical Society, is included on the state's list. It is unclear whether the society, which had been based in Currier House, is still active.

Alison A. Charello, vice president of Cambridge Savings Bank, confirmed yesterday that the society had an account at the bank. She says the bank, as it does with all inactive accounts, had notified the group by first class mail of their account's status, but the students never responded. So the account was turned over to the state.

"I think that perhaps there are student organizations like this formed, and then the kids graduate and forget about the money," Charello says. "That's too bad, and I hope they see this, and realize the money is still theirs."

Harvard itself may not always make a strong effort to return all the money it owes to individuals. Vice President for Finance Robert H. Scott says that the University has large numbers of small paychecks that do not get sent to people the University cannot easily find.

"We have a large number of small paychecks," Scott says. "So it's not worth Harvard's time to find someone for a paycheck that is, say, $25."

Because of Harvard's own experience, Scott says he is extremely reluctant to impugn the motives of companies who do not always pay the University in a timely fashion.

"Sometimes there is a mistake in the system," Scott says. "Let's say, we wrote the check and you cashed the check. We never got the check because of a bank error. To us, it seems the check was never cashed. These kinds of mistakes don't happen often, but they do happen."

There are an awful lot of companies who won't notify a place like Harvard. Joe Mara, director of claims processing/operations, state treasurer's offic