Archive for April 2009

At this point, none of us should be surprised to discover that yet another state has fallen victim to corporate scams. The most recent alert that I stumbled upon was issued by the North Carolina Secretary of State (NC SOS). According to the PDF released by the NC SOS, a company called the National Companies Register Corporation is mailing “Important Final Notices” to businesses. These notices claim that North Carolina-based businesses are required to nationally register under the Patriot Act of 2001. The required fee? A whopping $487.

The official-looking documents that are being mailed out contain elements of the North Carolina Seal, which is very deceptive. NC SOS warned that no such governmental national registry exists.

The NC SOS is asking businesses to report any fraudulent notices that ask you to “register your business in a national database to avoid dissolution of your corporation.” Here’s how to report it:
1. Keep the notice, mailing envelope and return envelope.
2. Contact the United States Postal Inspections Service to report mail fraud at:
877-876-2455 or http://postalinspectors.uspis.gov (investigations drop down menu – mail fraud – file a complaint)
and
Contact the North Carolina Department of the Secretary of State, Attention: Horace Farrar at 919-807-2040 or email at hfarrar@sosnc.com.

As always, we are interested in identifying and notifying our clients of additional scams so please let us know if you receive anything suspicious.

Here's a little information on an upcoming seminar that I am giving on Legal Ethics and Corporate Officer Fraud. The seminar, which will be presented by the Los Angeles Paralegal Association (LAPA) will be held on Wednesday, May 13th 2009 at the Del Amo Room in Torrance.

Joining the list of states to fall victim to corporate scams is Texas (see my earlier post on Nevada Corporate Scams). Last month, the Texas Secretary of State (SOS) released an alert regarding an entity calling itself “Compliance Services.” The company is targeting Texas-based business entities, mailing them solicitations titled “Annual Minutes Requirement Statement.” The official-looking documents imply that entities are required to complete the paperwork and return it along with a $125 fee.

Please know that you are not required to fill out this solicitation. These forms are not a requirement of the Texas SOS and Compliance Services is in no way associated with the Texas SOS. The solicitation does contain a disclaimer stating that is not affiliated with the Texas SOS, but because the materials look legitimate, it is still confusing to business owners. According to the alert issued on the Texas SOS site, “It appears that confusion has resulted from Compliance Services’ solicitation and the suggestion that the statement is necessary to avoid non-compliance with Texas law.”

Whether you choose to do business with Compliance Services will in no way affect your status with the SOS. Official statements or requests from the Texas SOS will always bear the state seal and the name of Hope Andrade, the Texas Secretary of State.

If you’re a Texas business and have a solicitation from Compliance Services, have sent money in response to the solicitation or have received a similar solicitation, you may file a complaint with the Texas Attorney General.

We continue to be interested in identifying and notifying our clients of additional scams so please let us know if you encounter anything suspicious.

Since September 11, 2001, new requirements for due-diligence searches have emerged to ensure that banks and other individuals know with whom they are doing business. No one wants to be party to assisting terrorists, money launderers or people trying to avoid paying taxes or adhering to economic sanctions laws.

These searches are now a necessary part of all financial transactions and some may be expanding in the near future to encompass any entity formation transactions. Some of the searches which are currently required in financial transactions include:

1. Searches of the Specially Designated Nationals (SDN) list – This is a list maintained by the U.S. Treasury Office, specifically the Office of Foreign Asset Control (OFAC). Names of all parties involved in the transaction must be checked against the SDN list to ensure that no business is being done with anyone whose name appears on the list. The list includes names of “individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.”

Any apparent matches must be researched and reported to OFAC and they will notify you whether the match is in fact legitimate. If it is, you will not be able to proceed with the transaction with that individual involved. The requirement to check the SDN list was implemented as part of the Patriot Act in the aftermath of 9/11.

2. Searches of ANY list distributed by the federal government naming terrorists, money launderers or individuals avoiding payment of taxes or economic sanctions - The SDN list is by no means the only list of sanctioned companies and individuals maintained by the federal government. All available lists must be checked to ensure that business is not being transacted with any sanctioned individual or company. Trying to identify and check each of these lists can be a nightmare.

Fortunately, there are companies which specialize in these required due-diligence searches and Parasec has a good relationship with a nationally recognized firm in this area. Let us know you are in need of a due-diligence search of this type and we can make the necessary connections for you.