Video Summary:

In this transcript from a video by Gale & Vallance, Andy Gale explains how California business owners are being targeted by official-looking scam solicitation letters disguised as government documents. These scams take advantage of publicly available corporate filings to mislead business owners into paying unnecessary and inflated fees. The discussion also highlights a 2012 California law designed to protect corporations and LLCs from these fraudulent practices and the importance of proper corporate governance compliance in Orange County.

To learn more about protecting your company and staying compliant, check out our detailed article on corporate governance compliance in Orange County.

Please note, this video is for educational purposes only, does not constitute legal advice, and we strongly recommend contacting a licensed attorney about your specific situation.

00:00:01 – Scam Letters Sent to Corporate Clients

there is not a week that goes by where I do not receive a telephone call from a corporate client asking me about a disclosure statement or other government appearing form requesting the immediate payment of money. The letters appear to be sent all over Orange County and is similar to the one here.

00:00:19 – How Scammers Exploit Public Records

the typical scenario is that the client has incorporated in the state of California. Because of the government filings that are required in California, the address of the corporation and the names of the officers and directors of the corporation become a matter of public record. So it is a simple matter for the crook to figure out the corporate officer or corporate director who should be the recipient of the scam letter.

00:00:44 – Official-Looking Forms and Hidden Fees

the forms come from a variety of official looking offices and appear to require the immediate attention of the corporate officer or the corporate director of the mailing. Frequently, the crooks behind the scams charge several hundred dollar to file forms that would only have a small fee if they were filed directly with the correct government agency. Many times the form suggest that if a form is completed the corporate recordkeeping for the corporation or limited liability company has been completed for the year. Nothing could be further from the truth.

00:01:17 – New California Law Passed in 2012

what is interesting news is that on January 1st, 2012, the state of California passed new laws to prevent people from sending misleading solicitations to Californians who had formed corporations or limited liability companies. To protect business owners who had formed corporations, the California Secretary of State Deborah Bowen supported a law that now requires new disclaimers to be added to third-party mailings.

00:01:44 – Disclaimer Requirements for Third-Party Mailings

the significant parts of the law requires the following disclaimer to be put on the front and back of every page in a font that is at least 12 point bold-faced capital letters and at least 2 point font sizes larger than the next largest font on the page.

00:02:05 – Restrictions on Misleading Names and Penalties

the law also requires or forbids the soliciting company from using a name that may make the recipient of the mailing believe it is from a government agency or entity like the Secretary of State’s business divisions division. It also increases the penalty to $2,500 per violation in order to really give this new law some teeth.

00:02:28 – Reporting Scam Solicitations

California corporations and corporate officers that receive this type of scam solicitation letter are encouraged to file a written complaint with the California Attorney General’s office. The Attorney General is requesting that the complaint be accompanied by the entire solicitation including the envelope and any other related documents. A Complaint Form can be completed online at the California attorney general’s website.

Conclusion: Corporate Governance Compliance Orange County

Scam solicitation letters can put California business owners at risk of paying unnecessary fees and creating confusion about their legal obligations. By staying informed about changes in the law and recognizing fraudulent documents, corporations and LLCs in Orange County can strengthen their corporate governance compliance. If you have concerns about suspicious solicitations or your company’s compliance requirements, it’s best to seek legal advice tailored to your unique circumstances.