As Ezra Temko goes back to school to pursue a Sociology PhD at the University of New Hampshire, Delaware ADA has two new organizers on the ground to work with our chapter and ensure together we move social and economic justice forward in the First State. Here’s some information about them:
Delawareans Tackle Issue of DE Anonymous Companies
International Policy Expert, Panel, and Community Share Concerns & Solutions
WILMINGTON – Over 50 Delawareans came together Wednesday evening for a community forum on Delaware’s anonymous companies put together by the Delaware chapters of Americans for Democratic Action and the National Association of Social Workers.
State Representative John Kowalko began the panel discussion, and shared that he along with 30 other state legislators recently signed a letter to Delaware’s federal delegation asking them to support the Incorporation Transparency and Law Enforcement Assistance Act. He took umbrage with attempts from the Secretary of State’s office to encourage legislators to remove themselves from the letter.
Special guest Stefanie Ostfeld, Senior Policy Advisor for anti-corruption organization Global Witness, spoke next. Global Witness has investigated numerous cases of international corruption, and Ostfeld explained that a common thread throughout these cases is that they were enabled by anonymous companies.
Darlene Battle, Executive Director of the Delaware Alliance for Community Advancement, shared her perspective on how anonymous companies hurt communities, especially poor people. Anonymous Delaware companies have been used to buy up tax liens to force foreclosures on vulnerable homeowners.
State Representative Gerald Brady, Executive Director of the Delaware AFL-CIO, explained why this issue is important to labor. Anonymous companies are used to help evade taxes and contribute anonymously to Super PACs. Labor unions are fighting for a working economy that creates prosperity for all and believe people have the right to know who is behind a company.
Rick Geisenberger, Deputy Secretary of State and Director of Corporations for the State of Delaware, concluded the panel’s introductory remarks, stating that he believed the Secretary of State’s office agreed with the other panelists on the problem, but not on the solution. Geisenberger took issue with the Incorporation Transparency and Law Enforcement Assistance Act and outlined his opposition to company beneficial ownership information becoming public.
What followed was a lively and active discussion. Participants asked detailed policy questions about the federal legislation and issue at hand. The issue of anonymous companies has been a particularly sensitive one in Delaware, as over one-third of Delaware’s state revenue comes from incorporation. However, panelists were enthusiastic about endorsing federal legislation that would apply to all states. Many openly challenged Geisenberger, vocalizing their opinions that the public has a right to know who owns companies and that corporations should be accountable. Currently in Delaware a person has to provide less information to form a company than to get a driver’s license.
Delaware ADA Board President Mike Matthews concluded the evening, calling on Delawareans to take action. “As a Delawarean, I want our state to be a responsible leader in incorporation,” Matthews said. “If you agree with what you’ve heard tonight, there are many ways to take action! Before you leave, sign our petition to help ensure law enforcement has the necessary information to ensure criminals cannot use anonymous shell corporations for terrorism, money laundering, tax evasion, and other nefarious activities.”
Photos from the event can be viewed at https://www.facebook.com/media/set/?set=a.748739668498868.1073741845.522724021100435
Check out the letter below from 31 Delaware legislators to our Congressional delegation in support of giving law enforcement the tools they need to more efficiently and effectively investigate and hold bad actors who use anonymous companies to launder money accountable.
To: U.S. Senator Tom Carper, U.S. Senator Chris Coons, U.S. Representative John Carney
CC: Governor Jack Markell, Lieutenant Governor Matt Denn, Attorney General Beau Biden, Secretary of State Jeffrey Bullock
Dear Senator Carper, Senator Coons, and Congressman Carney,
Delaware benefits greatly from our status as a corporate capital. Our state earns respect and revenue because U.S. and international corporations frequently choose to make and keep Delaware as their legal domicile.
While the overwhelming majority of American and Delaware businesses are law-abiding, some individuals take advantage of our laws by creating and using anonymous shell companies to facilitate money laundering, terrorist financing, drug smuggling, arms trafficking, anonymous campaign contributions, tax evasion, and other criminal activity.
We need to ensure law enforcement is sufficiently equipped to investigate and prosecute cases like these and the many more that remain unsolved due to a lack of information. That is why law enforcement organizations support the Incorporation Transparency and Law Enforcement Assistance Act (S. 1465 and H.R. 3331), such as the Federal Law Enforcement Officers Association, Fraternal Order of Police, National Association of Assistant United States Attorneys, and Society of Former Special Agents of the Federal Bureau of Investigation.
This legislation would require corporations and LLCs to disclose their beneficial owner(s) at the time they are formed and for this information to be made available to law enforcement upon a summons or subpoena. A beneficial owner is a real person who has a substantial economic interest in the business or ultimately controls the company’s activities or assets.
This matter is best handled at the federal level because the law would require all states to collect beneficial ownership information, thereby ensuring that Delaware does not lose any competitive advantage in business incorporation to other states. Taking action will help uphold a positive image of Delaware as a responsible leader in incorporation and ensure that individuals cannot use our state’s incorporation laws for illicit purposes.
Please support S. 1465 and H.R. 3331 to give law enforcement the tools they need to more efficiently and effectively investigate and hold bad actors accountable.
Senator Catherine Cloutier
Senator Bruce Ennis
Senator Bethany Hall-Long
Senator Margaret Rose Henry
Senator Bob Marshall
Senator Karen Peterson
Senator Dave Sokola
Senator Bob Venables
Representative Mike Barbieri
Representative Paul Baumbach
Representative Andria Bennett
Representative Donald Blakey
Representative Stephanie Bolden
Representative Tim Dukes
Representative Ron Gray
Representative Deborah Hudson
Representative Earl Jaques
Representative J.J. Johnson
Representative John Kowalko
Representative Joe Miro
Representative Larry Mitchell
Representative Mike Mulrooney
Representative Ed Osienski
Representative Trey Paradee
Representative Charles Potter
Representative Mike Ramone
Representative Daniel Short
Representative Darryl Scott
Representative Steve Smyk
Representative Kim Williams
Representative Dave Wilson
Delaware ADA is co-sponsoring a film series that starts tonight! Can you attend the Pacem in Terris 2014 Film & Lecture Series focused on RestoringDemocracy and the Common Good? All programs are at 7pm on Tuesdays at Westminster Presbyterian Church, 1502 W 13th St, Wilmington, in the Meeting Room (brown door).
Tuesday, July 8: State of Conflict-North Carolina
Tuesday, July 15: The Best Govt. Money Can Buy?
Tuesday, July 22: Take Action! against money corruption of elections
Tuesday, July 29: Gerrymandering and voter suppression (*ADA has a special role this night! Come support our chapter, our activism, and our organizer Apryl Walker!)
Tuesday, August 5: Shadows of Liberty
Tuesday, August 12: Conundrum of U.S. Media: A Review of the Contradictory Forces in the American Media
- Senator Margaret Rose Henry, running in the 2nd Senate District
- Councilwoman Sherry Dorsey Walker, running in the 3rd Senate District
- Claire Snyder-Hall, running in the 6th Senate District
- Senator Bryan Townsend, running in the 11th Senate District
- Representative Charles Potter, running in the 1st Representative District
- Representative Gerald Brady, running in the 4th Representative District
- Representative Paul Baumbach, running in the 23rd Representative District
- Representative Ed Osienski, running in the 24th Representative District
- Representative John Kowalko, running in the 25th Representative District
- Jonathan Gallo, running in the 30th Representative District
- Paulette Rappa, running in the 37th Representative District
Joint Statement on House Bills 327 and 328
Americans for Democratic Action, Delaware Chapter
Delaware Alliance for Community Advancement
Delaware Coalition for Open Government
Delaware Community Reinvestment Action Council
Delaware State Education Association
Delaware State NAACP Conference of Branches
Kent County Progressives
League of Women Voters of Delaware
National Organization for Women, Delaware Chapter
Political Action Committee, National Association of Social Workers, Delaware Chapter
Progressive Democrats for Delaware
Public Employees Council 81 AFSCME AFL-CIO
Service Employees International Union 32BJ
- One Serbian drug lord laundered cocaine money. Another smuggled cigarettes.
- One anonymous company purchased property tax liens across the U.S. to force homeowners into foreclosure proceedings.
- Viktor Bout, also known as “the Merchant of Death,” engaged in weapons trafficking in conflict zones around the world
- Timothy Durham, known as ‘the Midwest Madoff’, bilked 5,000 mostly middle-class and elderly investors out of $207 million.
- Romanian Laszlo Kiss embezzled and laundered $10 million and helped others with tax evasion.
- A $1 million donation was made anonymously to the Restore Our Future Super PAC.
- Jack Abramoff, former DC lobbyist jailed on corruption charges, hid millions in payments and circumvented federal laws.
These criminals all have a common thread. They all set up Delaware companies to use as the getaway car for their crimes.
We need to put a stop to the ease with which criminals can take advantage of Delaware law to set up anonymous shell companies to facilitate money laundering, terrorist financing, drug smuggling, arms trafficking, anonymous campaign contributions, tax evasion, and other criminal activity.
We see annual legislation to update our state code relating to corporations, but the legislation remains crafted behind closed doors by corporate attorneys. We appreciate their dedication and diligence, but this is asking the fox to guard the hen house, unless the General Assembly acts as a watchdog and not a rubber stamp on these pieces of legislation, even given the late hour for consideration.
House Bills 327 and 328 fail to give law enforcement the tools they need to more efficiently and effectively investigate and hold bad actors accountable.
The bill proposes changes that require companies to keep records of members, managers, and partners that law enforcement is supposed to ultimately be able to access. The problem is that a “member” or “partner” could be another shell company. A “manager” could be a “nominee” who is a front for the actual person in charge of the company. The legislation does not require any information to be collected about the real people, often called beneficial owners, who ultimately own or control Delaware companies.
House Bills 327 and 328 also do not set up an effective means for law enforcement to access this information. A subpoena to a registered agent requires the registered agent to contact the company’s communications contact, which could tip the company off that they are under investigation and give criminals time to move their dirty money and disappear from the U.S. Under these bills, law enforcement would have to go through three levels of red tape to get basic information just to identify who might own one company.
Delaware benefits greatly from our status as a corporate capital. Our state earns respect and revenue because U.S. and international corporations frequently choose to make and keep Delaware as their legal domicile. We have more business entities incorporated in our state than we have residents. And just like most Delaware people are responsible and law-abiding, so are most Delaware businesses. In fact, the Fortune 500 companies and other publicly traded companies that incorporate in Delaware all already disclose their beneficial owners. However, there are bad actors who take advantage of the ease with which individuals can set up an anonymous shell company in our state.
As a leader in corporate formation, our state has a responsibility to also be a leader in ensuring law enforcement is sufficiently equipped to investigate and prosecute cases like the ones mentioned earlier and the many more that remain unsolved due to a lack of information.
Federal legislation that applies to all states like the Incorporation Transparency and Law Enforcement Act would certainly be helpful in ensuring criminals do not abuse our state and for ensuring our state does not find itself in a race to the bottom with other states like Nevada.
However, until this issue has been sufficiently addressed at the national level, we urge the Delaware legislature to study this issue and take action. We recognize that Delaware relies on incorporation for revenue and therefore this issue must be addressed sensitively and carefully to ensure responsible businesses still choose Delaware as their legal domicile. We hope you recognize that window-dressing legislation and inaction are insufficient. We urge our state legislature to help uphold a positive image of Delaware as a responsible leader in incorporation and ensure that individuals cannot use our state’s incorporation laws for illicit purposes. Let’s work together to stop enabling criminals to use our state to play shell games and cause real harm across the world.