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Are Wyoming Businesses Owned by Criminals?

July 13, 2011

No. Of course Wyoming businesses are not owned by criminals, generally speaking. Naturally, in any large group you will find a few bad apples, but by and large, most people who own a Wyoming corporation or LLC are honest, decent, hard-working American citizens. They pay their taxes and try to produce goods or services that they can sell to make a living.

People come to Wyoming to do business for many reasons. First, the State of Wyoming has made a concerted effort to make the State attractive to business owners. There are no corporate taxes; filing fees are low; the filing process is about as simple and un-intrusive as you can get. So, all other things being equal, Wyoming is a great place to do business. Because of this business-friendly environment, many people prefer to set up shop in Wyoming.

But what should a business incorporator do to avoid doing business with criminals? Remember, the incorporator does nothing except prepare a simple document for filing with the Secretary of State. Once the business is created, the incorporator sells it to a client. Should the incorporator require a background check? Should they require an extensive explanation about the client’s proposed business? Certainly, it is understandable that if an incorporator gets a bad vibe from a prospective client, he might refuse to work with him. But what if the prospective client is a smooth-talker? What if some mafia don gets his girlfriend to buy the business, so that he isn’t even an owner? How would an incorporator find this out? How do you distinguish these facts from a situation where a secretive inventor wants to protect a trade secret? Or from someone who honestly tells the incorporator that his business is none of theirs? The incorporator is just selling a single product: a business. What the buyer does with it is not something the incorporator can easily find out, or control.

What of the registered agent? Every business must have one in order to exist in Wyoming. It is the primary job of a registered agent to accept service of process of lawsuits, subpoenas and other official notices. These documents nearly always accuse the recipient business of wrong-doing, or demand otherwise private information. Some allege breaches of contract, but others may allege criminal wrongdoing. Must the registered agent resign, just because someone accuses a client company of illegal behavior? Wouldn’t that mean the registered agent is arrogating itself to judge unproven allegations? If this were the rule, you could put any company out of business simply by filing a lawsuit (no matter how baseless) and serving it on the registered agent – who must then resign, resulting in administrative dissolution by the Secretary of State, who sees that the business no longer has a registered agent. Who wants to live in a country governed by that kind of fear?

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