Folded Letter

The Folded Letter is a flavor item from smashed Pumpkin Loot during the Halloween Event. It is from one of the orphans.

Source
The Folded Letter is commonly contained in the Crudely Wrapped Gift reward item from Smash the Pumpkin.

The Folded Letter is occasionally looted directly from the Large Jack-o'-Lantern when you accept the Smash the Pumpkin quest.