Investing Outside of Wall Street – Fraud alert for company owners

If you’re impatient like me, you need to know the conclusion about the topic first.  So, here it is.  If you own and operate a corporate entity and if you receive something in the mail that looks a lot like the Annual Statement renewal form, soliciting your company to pay a fee by 12/23/2016, do NOT comply because it’s a scam.  You’re welcome.

Now, the juicy story of how I came to write about it.  Earlier this month, I received an official looking envelope, indicating, among other statements, “IMPORTANT: Annual Records Solicitation Form.”  Inside were a form to fill out – asking you to specify details about your company’s shareholders, corporate officers, etc. – as well as instructions on how to fill it out and where to send a check.  Audacity of these scammers!

There were clues that this could be a fraud:

  1. On the envelope was a statement, “This is not a government document” – although both the envelope and enclosures were designed to look a lot like one.
  2. The return address came with an actual street number but was clearly a P.O. Box.  (This, in and of itself, is not alarming because most small businesses do use it.  What was alarming was the fact that, if it were indeed an official request regarding your company, you would expect the sender to be operating out of a brick-and-mortar building.)
  3. The note indicated, “Please respond by 12/23/2016.”  No government entity ever expects you to make a payment during the same month in which the letter has been sent.

So what did I do about it?  Frankly, I could have ignored it.  After all, I am very conscious of the fact that I have only about 14 hours, maximum, to get my work done each day to run our business. But it irked me enough to want to take action.  So I did.

First, I called Michigan’s Department of Licensing and Regulatory Affairs, commonly known as LARA, to verify the legitimacy of this solicitation.  The answer was that (1) “No, LARA does not collect such information,” and (2) I should contact Michigan Attorney General – Consumer Protection Division to alert them about it.  So I did.

Second, the Michigan Attorney General’s Office quickly determined that it was indeed a case of Mail Fraud.  I was told to contact the United States Postal Service – Mail Fraud Division.  So I did.

Third, trying to file a verbal complaint with the USPS – Mail Fraud Division, officially known as the US Postal Inspection Service, was extremely frustrating.  I wasted about an hour, just trying to get in contact with a live person.  It was as if it were designed to discourage people from filing complaints through the phone system.  Their real intent, I think, is to encourage people to go directly to its website and file a complaint, which is what I ended up doing.  In retrospect, it makes sense.  Once at the website, it was relatively easy to figure out where to go to file a complaint.  Now I know, and so do you!  You’re welcome.  (Postscript: The next day, I received an email response from the Postal Inspection Service, asking me to hang on to the mail-fraud materials in case they are needed for further investigation.  So, yes, I do have them.  I’ll be showing them to our friends at various investor meetings as well.)

As a precursor to filing a complaint, my curiosity led me to finding out a little more about this scam.  Here are some key findings:

  • According to National Corporate Research, Ltd., this issue is not limited to Michigan; it is, in fact, a nationwide problem.  (At the NCR’s website, scroll down to find the pertinent information in your state.)  The exact name of the entity, from whom our company received a fraudulent solicitation, did not appear at this website under Michigan.  The scheme is the same, nonetheless.
  • Interestingly enough, Michigan’s LARA had issued warnings about scams targeting corporations more than once.  In fact, the one that was published in 2015 is quite similar to the fraudulent letter I received: “Scam Targets Corporations; LARA alerts Michigan businesses of scheme collecting $150 fee to prepare annual minutes.”  As to why my first contact person at LARA could not tell me about this warning is beyond me.  That individual could have saved at least three hours of my productive time.  That time could have been spent generating revenues for our company and, in turn, helping us generate tax revenues for the state of Michigan.  Allow me to digress but this is another example of how there is a disconnect between those of us who run businesses and government employees who are unable to think beyond their immediate responsibility, which is merely to answer the phone and pass the buck, if you will, instead of finding the answer to the inquiry within LARA.

Lastly, I must add information about another, perhaps far more serious, fraud.  According to the U.S. Treasury Department, “Phone calls from fake IRS agents have netted crooks about $47 million in three years.”  The report continued to say, “The scam will continue next year but with a twist. The newest likely target will be people with college loans, who are threatened with arrest and other penalties unless a non-existent ‘federal student tax’ is immediately paid.”  For your information, IRS NEVER calls tax payers to pay up.  You’re welcome.


Happy investing!  And happy holidays!




This entry was posted in Investing. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *