There’s a new spinoff on exploiting Wyoming’s trust laws that give business entities some of the nation’s strongest privacy rules, and this time it comes with a mix of limited liability corporation (LLC) filing laws.
Over the last few years, Fremont County Assessor Tara Berg said she’s been investigating an influx of out-of-state businesses filing with the state as LLCs to addresses in her county. Wyoming has some of the most lenient and private corporate business filing laws in the country and some of the lowest associated fees for LLCs at $65.
Practices like these have sparked the term “cowboy cocktail” to describe the way people and corporations can spend and move their money with nearly complete secrecy.
An out-of-state company may not transact business in Wyoming until it gets a certificate of authority from the Wyoming Secretary of State. Non-resident owners must appoint a registered agent with a physical address in Wyoming to comply with legal and state requirements.
But what happens when that business isn’t really conducting business in Wyoming and is potentially using that filing to hide information about itself from other state governments?
That’s the dilemma Berg has been concerned about.
“I just feel like right, wrong and indifferent, something has to change with how we’re doing this and how we’re asking,” Berg told the Legislature’s Corporations, Elections and Political Subdivisions Committee on Monday.
For one quarter, Berg’s office sent out more than 200 business verification letters to addresses to confirm business associations, and from those got 20 responses from homeowners saying their addresses were used without permission.
A Tangled Web
One was a 95-year-old man in Dubois who expressed concern someone was trying to steal his identity.
Another was Lander resident Christy Kimber, who had her Precision Dirt Works business address hijacked by a mysterious Ubazone Ecom LLC. Kimber told Cowboy State Daily she’d like the state to do more cross-checking to ensure a business actually uses the address it claims it’s connected to.
“I don’t understand how someone could just parade around like they own it and file it with the secretary of state,” Kimber said. “It’s just really frustrating.”
Berg revealed a vacant lot behind Lander state Sen. Cale Case’s personal business has also been targeted, which doesn’t have a real address associated with it.
Other fake addresses were used by property owned by the town of Shoshoni and Wyoming Catholic College.
Rep. Jeremy Haroldson, R-Wheatland, said he sees this activity as “fraudulent at a high level” and plans to investigate it on a local level.
When Berg further investigated Ubazone, she navigated a maze of third-party LLC registration firms based in Casper and Cheyenne that all circled back to each other. She told Cowboy State Daily the firm Republic Registered Agent LLC of Casper was most commonly behind the fraudulent use of addresses.
Berg said what also drew her attention to the activity was the filing of a significant number of COVID-19 business claims by people who didn’t have any businesses registered with them to the state.
Some Know About It
In late 2022 and early 2023, Berg’s office began noticing a significant increase in the number of businesses registered to one specific address in Lander, which was listed as a principal address.
Their initial investigation revealed there was an actual homeowner and registered agent at the property who told Berg’s staff he could not provide any information about any of the businesses associated with his address, of which none were actually his or located there. He also referred to this business arrangement to Berg’s staff as a “side hustle.”
Further investigation revealed an escalating trend of outside corporations listed to this address, she said, with 26 in 2019, 77 in 2020, 79 in 2021, 119 in 2022 and 216 in 2023. Through the first quarter of 2024, 34 businesses filed to it. In total, 551 different businesses are now registered to the address.
Berg said there’s an even more egregious example in Sheridan for an address with around 800 businesses associated with it. In that city alone, there were 16,000 corporations registered so far this year, a highly questionable sum considering that only 19,235 people live in the town.
Berg said the Lander man wouldn’t talk to her about the businesses registered to his address, a rejection she didn’t have a problem with. What she did find concerning is that situations like these call into question what being a registered business agent really means in Wyoming.
In conversations with the secretary of state’s office, Berg was told if people formally file an affidavit with the state that their address has been improperly used, the state will dissolve the business.
Investigations like the one Berg performed are not being done throughout Wyoming, however, as many assessors don’t have the staff or resources to do what she did. Because of this, she questions how many people know their address is being used and if so, know to file an affidavit about it.
There is no address lookup option on the secretary of state’s office website for property owners to determine if their address is being used if they don’t already know it is. Also, determining who would prosecute this issue and what jurisdiction it falls under is hazy at best, she said.
What’s The Motivation?
There’s a few likely motivations for companies to file their businesses in Wyoming even though they don’t do any actual real business in the state.
The most basic is to conceal their identity, as Wyoming’s LLC laws allow third parties to file on behalf of a company.
The other is to evade paying taxes.
Wyoming Director of Revenue Brenda Henson told Cowboy State Daily she finds it highly suspicious that many companies are filing sales tax licenses in Wyoming, but the large majority never remit any sales taxes.
“It gives them credibility as a Wyoming company and there’s really nothing we can do,” she said.
This has resulted in her department sending thousands of notices to these companies that go unanswered.
Also, Georgia law firm Smith Barid explains on its website that even a single-member LLC is entitled to charging order only protection in Wyoming. What that means is that if a judgment is entered against a member of a Wyoming LLC, the judgment creditor cannot force any distribution of the assets of the LLC and will be liable to pay income taxes on any income of the LLC even if it's not distributed.
Tax Burden
Berg said she doesn’t necessarily want the state to change its $65 rate to file, but questions based on what she’s seen if the lenient laws are coming at the expense of Wyoming taxpayers.
“I’m not saying that maybe we can’t keep some of our corporate stuff, I’m saying I’m seeing a really big overload of filings that we can’t get a handle on,” Berg said. “While the income looks good, I’m not really sure what that does to the state of Wyoming.”
But the income may not even be as virtuous as it seems.
Any business that registers in Wyoming must report its business assets for taxation purposes. The corporation fees for Wyoming-based businesses are based on the assessed value of their property and assets. For out-of-state businesses, their fees remain at $65, as it’s not possible for the state to assess their properties.
“Is that fair?” she questioned the committee.
When contacting Wyoming Discount Registered Agent Inc., a third-party LLC agent associated to the Lander address, owner Adolph Stankus of Nevada, refused to provide Berg with any information about the actual people running businesses that are associated to the address, but told her he would forward the tax information requested to them, to which she declined.
Berg said of the corporations that have transferred into Wyoming, around 800 in Fremont and Sheridan counties were from Nevada.
There’s a similar service based in Sheridan called Wyoming Registered Agent Services LLC, with 16,941 businesses filed at its address.
Berg doesn’t believe agents like Stankus aren’t doing anything illegal, but said that actual Wyoming businesses are being put at a disadvantage when it comes to their tax burden.
Rep. Mike Yin, D-Jackson, disagreed and pointed to Wyoming state law, which says the principal-listed office of an LLC must be the actual main office for the business. Wyoming law states that a registered office is also required to be a street address located in Wyoming that must be a physical location where the business entities’ registered agent or a natural person who has an agency relationship can accept services for the business.
Because of this, Yin believes all the filings Berg referenced are fraudulent and liable to be dissolved by the state.
Accountability
Case said that Wyoming could pass legislation requiring out-of-state businesses to prove they are associated with the addresses they list and on Monday arranged an informal working group to keep exploring the issue. Berg said the state could do this with documents like a deed or rental agreement or permission they’ve been given to use an address.
Cheyenne attorney Scott Meier cautioned the committee against infringing on personal civil liberties if it makes any legislative changes based on the issue. When he serves as the registered agent for his clients, Meier said he informs them they are not allowed to use his address as a principal office. He said the business filing forms in Wyoming could be better clarified on this point.
But when pressed by Case, Meier agreed that the purposeful use of incorrect addresses is fraudulent.
“That’s clearly more than just a mistake,” Meier said. “It could be but … I would be very suspect of that as well.”
Secretary of State Chuck Gray has been taking a more aggressive approach to this issue than the previous administration, performing at least 12 random business audits per quarter, which he said has resulted in some findings of significance. He encourages the state’s assessors and any member of the public to immediately contact his office if they see fraud.
“This is a huge priority of our administration,” he said.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
