Scheme to make NC businesses pay bogus fees shut down
Release date: 8/29/2013
Corporate Records Service barred from sending misleading mailings, collecting money
Raleigh: A Michigan company is under court order to stop sending deceptive mailings telling North Carolina businesses to pay $125 to comply with state law on filing corporate records, Attorney General Roy Cooper and Secretary of State Elaine F. Marshall announced today.
“Small business owners across North Carolina are working hard to make it in a still-recovering economy, and the last thing they need is somebody trying to make a fast buck at their expense,” Cooper said.
“Today's action shows we are not going to allow scams to rip-off North Carolina businesses with misleading mailers that try to trick them out of their hard-earned money and into providing corporate information that could open the door to business identity fraud,” Marshall said Thursday.
On Thursday, Wake County Superior Court Judge Howard Manning granted an order temporarily barring The Mandatory Poster Agency doing business as Corporate Records Service and its co-owners Steven Fata, Thomas Fata, and Joe Fata, all of Lansing, Michigan, from misleading North Carolina businesses. The defendants are barred from sending mailings to and collecting money from any North Carolina business while the case goes forward in court. Cooper is also seeking a permanent court order against the defendants’ deceptive practices in North Carolina plus refunds and civil penalties from the company.
In a complaint filed Wednesday, the Attorney General contends that Corporate Records Service sent deceptive mailings to North Carolina businesses earlier this month. The mailings directed businesses to complete the form provided and send it and $125 in order to comply with state law on taking and filing corporate minutes. The letters instructed businesses to send their replies by September 4 to an address in Raleigh, which turned out to be a rented mailbox that received stacks of replies daily.
As outlined in Cooper’s complaint, Corporate Records Service’s mailings included references to Chapter 55 of the North Carolina General Statutes which is enforced by the North Carolina Secretary of State. According to an affidavit filed in support of the lawsuit, more than two hundred people contacted the Secretary of State’s office after receiving the misleading letters. While state law does require corporations to keep records such as minutes of shareholders meetings and annual reports, completing the form mailed out by Corporate Records Service does not meet those requirements. The Secretary of State’s Office does not issue letters like the ones sent by Corporate Records Service, nor does the agency collect fees from corporations for filing records.
Corporate Records Service appears to have targeted businesses in several other states over the past year, including Texas, Massachusetts, Pennsylvania, Tennessee, Arizona, Delaware, Indiana, Illinois, Virginia, Michigan and Wisconsin.
The scheme is similar to one that Cooper and Marshall fought previously where a California company called Corporate Services, Inc. sent deceptive letters to North Carolina businesses. In that case, the company was barred from operating in the state and returned $90,000 in checks it had collected to small businesses across North Carolina.
Cooper has also fought The Mandatory Poster Agency before, winning civil penalties and refunds from the company in 2007 for using deceptive mailings and scare tactics to trick businesses into paying for workplace notices such as those reminding employees to wash their hands.
“Scammers are betting that you’ll simply pay these kinds of bogus bills without checking them out first,” Cooper warned. “Small businesses can avoid scams by making sure they screen invoices and other requests for payment carefully.”
Anyone wishing to check on the status of their corporation, limited liability company, or other business entity registered at the North Carolina Secretary of State's Office can go to www.sosnc.com or call the Corporations Division at 919-807-2225 or toll-free at 1-888-246-7636.
Businesses or consumers that get questionable letters demanding fees that claim to come from government agencies are encouraged to contact the Attorney General’s Consumer Protection Division at 1-877-5-NO-SCAM toll-free within North Carolina or at file a consumer complaint at www.ncdoj.gov.
Media contact: Noelle Talley (919) 716-6413