Tracking down mystery owners of $12.5 billion

When he's not selling tickets at the annual church fair or helping parishioners make Polish dumplings, Roger Greger counts the money at St. Malachy Parish near Detroit.

Which isn't a bad job. But it has its annoyances. "You know these people that crunch up those dollar bills? You gotta unfold them - and then it's only a dollar," says Mr. Greger, slightly peeved. "Why do they do that?"

But when it comes to counting his own money, Greger has no complaints - thanks in part to a financial adviser who told him about a quarter of a million dollars he didn't even realize he had - in United States savings bonds.

In fact, Americans are sitting on an estimated $12.5 billion in savings bonds that no longer earn interest - but they either don't know or don't care to cash them in, according to the Bureau of Public Debt. Later this year, the last of the 40-year Series E bonds will quit paying interest. And the federal government wants to clean out the backlog.

Nestled in an office building in Parkersburg, W.Va., Evelyn Stephens is one of five government employees tapping away at telephone keypads, trying to track down the owners of that $12.5 billion. A soft-spoken woman with a slight Southern twang, Ms. Stephens has been placing calls since 1997. Her sleuthing starts with a stack of photocopies of matured Series E bonds, filled out with the name of the bond owner and his or her address at the date of issue - either 30 or 40 years ago, depending on the bond.

"If we come across a name that's real unusual, we have a lot of success," says Stephens. But when she or her co-workers come across a name like Smith, or a Miss "so and so," who's likely to have married, taken on a husband's name, and moved away, "we just kind of skip over that photo[copy]."

The outgrowth of a surprisingly successful two-week project to track down US savings-bond owners in 1997, the Bureau's Matured Unredeemed Debt program - known as MUD - has since located more than 25,000 holders of matured bonds, says Pete Hollenbach, spokesman for the Bureau of Public Debt.

Of those, says Mr. Hollenbach, 7 of 10 know their bonds have matured but don't want to cash them, presumably because they don't want to pay taxes on their gains. That's a mistake.

Savings bonds are purchased at a fraction of their face value, and earn interest over a predetermined number of years. For example, a $100 Series E bond bought for $75 in early 1965 would now be worth more than $850. The last of these 40-year E bonds, issued from May 1941 to November 1965, will stop earning interest later this year. But some 30-year E bonds, issued from December 1965 to June 1980, continue to grow.

Once such bonds no longer earn interest, federal taxes are due on the gains, according to the Internal Revenue Service, whether or not bondholders cash them. The tax bill can run into thousands of dollars because the income on a matured bond generally represents more than 80 percent of its face value.

Savings bonds are the only financial investment for which monthly or yearly statements are not issued. But anyone can check the value and maturation date of his or her bonds by visiting the government's online calculator (www.publicdebt.treas.gov/sav/ savcalc.htm).

Even with such tools, however, navigating the complexities of tax law and keeping track of bond values and maturity dates can be daunting for retirees like Greger, who tracks every penny of his investments in a thick binder.

That's why Brian Kurtz, Greger's financial adviser and the author of "Getting the Most Out of Your Savings Bonds," began giving free seminars on bonds in 2001. It was at one of these seminars that Greger received a free personalized report of his savings bonds and began working with Mr. Kurtz.

Greger was no stranger to savings bonds. He started buying them in grade school, running an "undercover business" selling gum at school. For years, he'd fill his pockets with chewing gum, earning a nickel profit for every three packs he pandered to his classmates. "I betcha I was making about a buck a day," he recalls proudly.

For every five nickels he collected, Greger would buy a US savings-bond stamp and paste it in a little book. When he had collected $18.75 worth of stamps, he could redeem them for a $25 savings bond.

"So that's how I got started in bonds," explains Greger, who retired after 32 years working in the shipping and receiving department at Ford Motor Co. But Greger returned to work shortly after retiring because he doesn't have any hobbies to keep him busy - other than making money, he says.

"I'll tell you, the easiest thing in the US is to make money. The hardest thing," Greger says, pausing for dramatic effect, "is to keep it - to find the right places to invest it, and the right people to help you."