CORPORATE MATTERS: Bill would put limits on secrecy - Business

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May. 02, 2008
Copyright © Las Vegas Review-Journal

CORPORATE MATTERS: Bill would put limits on secrecy

Senators offer plan targeting tax evasion, money laundering

By JOHN G. EDWARDS
REVIEW-JOURNAL

Barack Obama
Democratic presidential candidate sponsors anti-secrecy legislation

Democratic presidential candidate Barack Obama and two other senators introduced a bill Thursday that would require states to obtain ownership records for corporations and make those available to law enforcement.

The Incorporation Transparency and Law Enforcement Assistance Act would allow states to withhold ownership records from the public. But law enforcement agencies would be able to obtain the records through subpoena or summons.

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The measure is designed to help the government investigate money laundering and income tax evasion. But it would limit the secrecy that companies incorporating or establishing limited liability have enjoyed in Nevada.

"It's unacceptable for American companies to be used by criminals and terrorists as shields for tax evasion, terror financing and financial crimes," Obama said in a statement.

Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations, and Sen. Norm Coleman, R-Minn., the subcommittee's ranking minority member, also sponsored the bill.

The subcommittee questioned Nevada and Delaware officials during a hearing in late 2006 about the secrecy granted to corporate owners by those two states.

The National Association of Secretaries of State approved a model measure that would require states to gather ownership information although those records could be limited to the name of another corporation or a nominee for the owners.

Since then, the Nevada Legislature has enacted a law that allows law enforcement agencies to request the names of a business's corporate owners. If the corporation fails to provide the information within 72 hours, the corporation is voided.

Nevada Secretary of State Ross Miller said he is proud of the Nevada law, which has become a model for other states to follow.

Miller acknowledged that a fraudulent corporation might fail to respond to a request for ownership records, but he said criminals couldn't be expected to provide accurate ownership information when they file for incorporation, either.

Requiring his office to verify ownership for 315,000 business entities would be too burdensome, he said.

The federal bill sponsors complained that lack of corporate ownership records in Nevada blocked an investigation recently. Immigration and Customs Enforcement said during the 2006 hearings that it found a Nevada-based corporation with 3,700 suspicious wire transfers for $81 million over two years. The case wasn't prosecuted, because federal agents were unable to identify the corporation's owners.

Eric Witkoski, chief of the attorney general's Bureau of Consumer Protection, said corporate ownership information could be useful in investigating scams. His bureau has had difficulty locating owners of businesses that cheated consumers with fraudulent offers.

Dennis Meservy, a certified public accountant and certified fraud investigator, agreed but said the proposed bill raises concerns about privacy, government intrusion and what will happen to revenues the state collects from corporations established here. Incorporation fees generate $90 million in annual revenue for Nevada.

"I'm not certain that it's the right thing for America, certainly (not) Nevada," Meservy said.

Martin Lobel, a Washington, D.C., tax law expert, criticized the measure for failing to make corporate ownership information available to the public.

"Transparency is required to make the free market work," Lobel said. "It will make the market work as opposed to regulation, the dead, heavy hand of government regulation."

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Roger wrote on May 02, 2008 01:15 PM: Should read, "Bob Beers CAN MAKE the laws that benefits his business....duh!" I don't know if he has or hasn't made or passed such laws, only that he, and not us, is in a position to make law. Nathan wrote on May 02, 2008 12:55 PM: Dear Helen Weils; You wrote on the LV Sun blog last week; "Hey, I'm a Ron Paul supporter and a Senator Bob Beers supporter and contribute to both campaigns." Really? The Federal Election Commission has no record of you providing a contribution to anyone! So, are you as truthful in everything you blog as you are about giving money to Ron Paul? Roger wrote on May 02, 2008 12:37 PM: Bob Beers makes the laws that benefits his business....duh! Lucy wrote on May 02, 2008 12:35 PM: Helen, this testimony is from the republican Department of Justice. DUH? Lack of transparency "make[s] it easier for criminals to launder money for terrorism and illegal drug trafficking and help corporations evade federal income taxes." We have illegal wiretapping and library checks of every American all in the name of "national security" and YOU want to protect the criminal elements that want to destroy our country? YOU must be a traitor! YOU must love spending more and more taxpayer money on big buisiness and war proffiters while not collecting enough revenue to pay the way..YOU support the government welfare state of "living beyond one's means." If Obama is gay, please produce his lover(s); if he wants war with Africa, tell me where he said it (those in the know know the number of wars republican presidents have run in Africa and central America). McCain's church sponsor says the Catholic Church is the devil! Bush, McCain agree with allowing "illegals to invade our country and let them vote" wake up and sip your beeraid! Ah, if only you owned property or a business...what did you do with your life? Helen Weils wrote on May 02, 2008 10:05 AM: Lucy, you must be a Democrat nanny stater. Senator Bob Beers is adhering to state law which doesn't divulge the owners of corporations. There is also no income tax here which is why companies come to incorporate. In fact, Nevada relys in a big way from fees (ie. taxes) businesses pay to incorporate in Nevada. DUH! This is typical Democratic drivel. More laws, more taxes, more bureaucrats, more government overpaid employees, bla, bla, bla. How about shining some light on Obama and his gay past? Or his mentor the racist Wright? Or his liberal tax and spend record? Or his desire to go to war in Africa? Or his desire to allow illegals to invade our country and let them vote? Wake up and smell the coffee, Obama is a racist Markist! Michael Raymond Hawkes wrote on May 02, 2008 08:55 AM: How can the Feds require anything of the state of NV. Don't states have "States Rights " in how they conduct business within their state? Lucy wrote on May 02, 2008 08:55 AM: "Marketing and Nevada Economic Development" "We created the Nevada Economic Development Advisory Board (NEDAB), a council of prominent businesspeople and legislators" "According to the Nevada Secretary of State, there are approximately 310,000 corporations domiciled in Nevada. During 2006, 41,083 corporations were formed in Nevada and 39,052 and 35,186 corporations were formed in Nevada during 2005 and 2004, respectively. We perceive Nevada as offering the following benefits: Favorable securities, corporate and tax laws and regulations for small businesses" "Robert Uithoven, President of J3 Strategies and Manager for Jim Gibbons’ successful 2006 gubernatorial campaign in Nevada." Lucy wrote on May 02, 2008 08:29 AM: Gee, isn't this exactly the business model that Senator Bob Beers is involved with-"come incorporate in Nevada and I will help you to do so?" Then again, when he voted on legislation concerning this issue in the Senate last year he said he hadn't heard any of the testimony supporting disclosure of ownership information before he voted against transparency. Could it be argued that Senator Bob Beers wants to "make it easier for criminals to launder money for terrorism and illegal drug trafficking and help corporations evade federal income taxes" so that he can make a buck? Check out his company's SEC files: Public Company Management Corporation. This is great wrote on May 02, 2008 07:57 AM: It is about time these Nevada/Delaware Corporations be held accountable. The regular citizens have been getting screwed to long. Look at it this way. This would make it harder for Desai to hide his money.