The wheels of Arizona justice turn slowly, but Arizona Attorney General
Terry Goddard Tom Horne finally got a judgment against the perpetrators of a 2008 corporate minutes scam. I wrote about the scam in 2008 in an article entitled “LLC Minutes Scam Alert.” Attorney General Goddard’s September 2009 complaint alleged:
11. From November 2008 until May 2009, Defendants disseminated at least 137,500 solicitations, using direct mail, to Arizona corporations and limited liability companies. The solicitations, under the fictitious name Arizona Corporate Headquarters, were official-looking forms which implied that a business had to complete the form and return it with an “Annual Fee” of $125 by a “REPLY BY” date to preserve its corporate status. The form is entitled “Annual Minutes Disclosure Statement.” Below this title is a date designated as the “NOTICE DATE: XIX./XX” followed by the “CORPORATE NAME:[Name of Corporation or LLC]” and the “CORPORATION NUMBER: [#######J,” which was the corporation number of the business addressee as assigned by the Arizona Corporation Commission. The form has the format of an official-looking document and includes a citation to the Arizona Corporations Code requiring a corporation to hold annual meetings of shareholders.
12. The forms contain a warning, in boldface capital letters: “TO ENSURE APPROPRIATE PROCESSING AND FULFILLMENT, PLEASE RETURN THIS FORM WITH YOUR PAYMENT TO: ARIZONA CORPORATE HEADQUARTERS-BUSINESS DIVISION – 5025 N. CENTRAL AVENUE, SUITE 573, PHOENIX, AZ 85012.” The address is a private mail box used by Defendants and located in a UPS Store.
13. The form also contains a warning that “[fjailure to comply with certain requirements could cause your corporation to lose its limited liability status. If so, personal liability exposure to tax agencies, or other creditors could possibly be put on the directors and shareholders for failing to document formalities.” Thereafter each form states that it should be submitted “with the ANNUAL FEE OF $125.00 WITHIN 15 BUSINESS DAYS.”
14. The back of the forms utilized by Defendants states that payment should be submitted “along with the Annual Minutes Disclosure Statement for proper processing and fulfillment of the Annual Minutes for your corporation.” It directs payments be sent to the “Business Division” of Arizona Corporate Headquarters.
15. Defendants represent that in exchange for payment they will prepare corporate minutes. In fact, in the limited cases in which Defendants did provide corporate minutes, those minutes reflected meetings that never took place and actions that never occurred.
17. Defendants have received over $350,000 from the thousands of Arizona corporations and limited liability companies that completed the form and paid the $125.00.
In February of 2012 Attorney General Horne obtained a judgment for $338,225 damages plus $48,900 attorney fees against defendants Y.M.S., Inc., a Nevada corporation, Gaston Muhammad, aka Gaston Greene and Ronna Muhammad, aka Ronna Greene.