Compliance Scam Takes Small Businesses for More Than $1M
The scam works like this, according to New York Attorney General Eric T. Schneiderman: Company owners receive a letter that's designed to look like an official state letter, timed to the deadline by which the businesses would normally submit their required bi-annual New York registration forms.
The letter looks real, titled "Notice of Annual Minutes Compliance," and includes the recipient business' incorporation date and New York Department of State identification number. The text of the letter tells owners that they must, under state law, pay for a "Certificate of Minutes", costing $120.The problem is, the letter's phony, according to the attorney general's office. The certificate is worthless, and the money spent only lines the pockets of the sender.
"Small businesses are the backbone of our economy, and we cannot afford any scams that defraud them of their hard-earned money," Schneiderman said in a statement. "This office has zero tolerance for scam artists - especially those imitating government offices to prey on working men and women. Our message is clear: Those who cheat New York's small businesses will be brought to justice."
The state is suing a company that calls itself Corporate Records Compliance Office over the alleged scam. Owned by Barney Roland Freasier, Jr., a San Diego lawyer, Schneiderman's office said the targeted business operates out of a one-person office in Albany.
On April 4, three days after the attorney general's office announced the lawsuit on April 1, an employee at Corporate Records Compliance Office told Consumer Ally that a request for comment would be forwarded to "headquarters." A company spokesperson was not immediately available for comment.
In the lawsuit, Schneiderman's office seeks restitution for the more than 11,000 businesses it says Corporate Records Compliance Office defrauded. The attorney general has filed an injunction against the company to prevent it from continuing to do business in the state of New York unless it files a $500,000 performance bond.