Wyoming legislators have advanced a bill that attempts to eradicate foreign adversaries from Wyoming by dissolving their businesses.
The state Legislature’s Corporations, Elections and Political Subdivisions Committee unanimously advanced the bill Tuesday that allows the Secretary of State’s Office to dissolve a business determined to be owned by a foreign country or person determined to be an adversary to America.
Not allowing foreign adversaries and foreigners to own land in Wyoming has been a frequent topic at the Legislature, but this is the first bill to take aim at dissolving their Wyoming-registered businesses.
In May, Secretary of State Chuck Gray stripped three businesses with suspected ties to North Korea of their licenses to operate in Wyoming. Gray clarified on Tuesday that he was only able to take that action because the businesses were suspected of committing fraud by his office.
“If they didn’t, we would not have the statutory authority to dissolve these Kim Jong Un entities,” Gray said in reference to the supreme leader of North Korea.
Gray said the FBI determined those entities were set up as part of an effort to fund the North Korea weapons program.
How It Would Work
Determining which companies and people determined foreign adversaries would be identified by the U.S. Secretary of Commerce.
Under the bill, Gray also said that any dissolutions by his office would have to be done in the public’s interest.
In the original version of the bill, an exemption existed for entities performing transactions already approved by the federal government. The Legislative Service Office recommended replacing this with language exempting businesses if their ownership or control had already been approved by the Committee on Foreign Investment in the United States.
Gray argued against that suggestion, saying the federal government would not want to get involved in a state-level business registration.
“This is a state charter not subject to any federal preemption at all,” he said.
The committee still passed the LSO’s language.
Cheyenne attorney Scott Meier questioned how the state could regulate this proposed law, but Gray said it would do so with assistance from groups like the FBI.
State Sen. Bill Landen, R-Casper, also questioned how much it even matters to dissolve an entity, but Gray expressed confidence it would prevent them from doing business.
“I’m pleased the the committee approved our bill proposals to take on fraud and fight back against foreign adversaries, like North Korea,” Gray told Cowboy State Daily.
Fraudulent Addresses
The committee also passed three bills Tuesday attempting to tighten regulations on Wyoming’s limited liability corporations and trusts.
The combination of Wyoming’s low filing fees and overall tax environment make it an extremely attractive environment for out-of-state companies and people to file LLCs. Wyoming also has some of the most lenient and private corporate business filing laws in the country, and some of the lowest associated fees for registering LLCs.
Although none of the bills make significant changes that will drastically alter the LLC landscape in Wyoming, Sen. Cale Case, R-Lander, believes they represent an important first step to countering fraud.
“I think it’s incremental, very small, but it allows us to go after the obvious bad actors,” he told Cowboy State Daily.
There has been an influx of out-of-state businesses filing with the state as LLCs to addresses in Fremont and Sheridan counties. Many of these businesses did so without the permission of the actual property owners, drawing deep concern and an official investigation from the Fremont County assessor.
“It’s very clear that it was organized mayhem,” Case said.
The committee passed by a 10-3 vote a bill Tuesday that would allow the secretary of state to release certain confidential information maintained by registered agents in Wyoming to any county assessor or treasurer.
If it can be proven that someone is entering fraudulent information when filing with the Secretary of State’s Office, they can already be administratively dissolved. But Case still sees the bill as an official mechanism for reporting fraud and to see whether companies have a personal property tax obligation to Wyoming, since many have questionably listed their principal offices as located in Wyoming.
“They’re (assessors) just trying to get the taxes collected,” Case said.
Sens. Case, Brian Boner, R-Douglas, Eric Barlow, R-Gillette, Bill Landen, R-Casper, Charles Scott, R-Casper, and Reps. Jared Olsen, R-Cheyenne, Forrest Chadwick, R-Evansville, Sandy Newsome, R-Cody, Mike Yin, D-Jackson, Cody Wylie, R-Rock Springs, voted to support the bill. Reps. Pepper Ottman, R-Riverton, Chris Knapp, R-Gillette, and Jeremy Haroldson, R-Wheatland, voted against it.
Registered Agents
One other bill considered but not advanced by the committee would have required registered agents to provide records about a business to county assessors and treasurers for any reason.
Although Gray said he doesn’t oppose these county officials from receiving this information, he wants to make sure it's always for official business and that his office always gets to stay involved as part of a “team effort.”
Gray said his office has dissolved more than 40 companies since 2023, sometimes as a result of county auditors and treasurers presenting fraudulent evidence like what was found in Fremont.
“We take fraud very seriously, we have been dissolving entities that have these address issues,” Gray said. “That’s why I think it would be important for there to be a clearing house.”
The Secretary of State’s Office is already allowed to conduct audits of registered agents to make sure they are keeping complete and accurate records. Gray said an increase in these audits being performed by his office at random has led to a number of active investigations.
He also said before he took office in 2022, the only audits conducted were triggered by another event.
“I think this approach ensures cooperation between our office and counties and also provides that regulatory certainty for the business community by having one clearing house,” he said
Under the legislation, county officials would have to keep this information, which includes business tax records, confidential aside from assisting with a criminal investigation, which would prohibit them from releasing any details about a registered agent to the public or press.
Is It Necessary?
Meier, who is a registered agent for many LLCs, testified most passionately against the bill, stressing the need for business confidentiality and expressing concern about potential for misuse of the investigations. He also didn’t express much enthusiasm about county officials getting to play a role in the process of investigating registered agents.
“This is serious business when it comes to Wyoming and how we’re doing our economic development and how we’re doing our economic diversity,” Meier said. “We’re trying to bring businesses here to make sure that somebody has this, and all of a sudden we can share it with somebody else and here it all is- causes me some heartache because there are reasons why we do what we do.”
He also mentioned how the Facebook (Meta) data center under construction in Cheyenne was kept a secret until officially announced this May.
“It is not illegal to run a business in Wyoming when you have no assets and no location in Wyoming. Why? It is because we have laws that are favorable,” Meier said.
Sen. Charles Scott, R-Casper, also questioned the need for these bills and speculated that some of the instances of fraud are being caused by business owner’s confusion about what constitutes a principal office.
Colin Crossman, head of the business division in the Secretary of State’s Office, disagreed and said most incorrect address cases he sees are “not accidental.”
Crossman said he’s also seen instances of people trying to dissolve legitimate companies as a punitive measure, which is why his office investigates the matter before taking any action.
Third-Party Fraud
The committee also passed a bill on a 8-5 vote requiring third-party business filers who have registered more than 10 businesses on behalf of someone or entity to register with the state for $50, which Gray also supports.
Crossman estimated this would amount to about 2,000 people having to register, leading to an administrative cost of around $100,000.
Gray said he doesn’t believe this cost is significant for his office when considering how much revenue it brings in.
“This one would probably pay for itself in three-fourths of a day,” he said. “It costs some money to fight fraud.”
The purpose of this program would be to weed out people using fake names when registering a business with the state, another prevalent problem in Wyoming. It would only pertain to the employees of commercial registered agents, and would not include certified public accountants and registered attorneys in Wyoming. The Secretary of State’s office already has the ability to revoke licenses for commercial registered agents.
Case, Olson, Ottman, Haroldson, Knapp, Landen, Boner and Scott voted in favor of the bill. Wylie, Yin, Newsome, Barlow and Chadwick voted against it.
Some like Barlow and Haroldson questioned whether the bill simply adds another level of bureaucracy and does anything to actually fight fraud.
Gray and his staff believe it will have a deterrent effect on fraudulent filings and offer another tool in their toolkit.
“When someone sees that they have to be filed with our office … if we start requiring these to be real people, if they’re registered with our office, they’ll be a lot less apt to file false or fraudulent documents with our office,” Secretary of State’s Office Chief Legal Counsel Joe Rubino said.
The committee also unanimously passed a bill that would allow Gray’s office to dissolve a business that has given false or fraudulent information to a registered agent.
Leo Wolfson can be reached at leo@cowboystatedaily.com.
