Shell Companies and Fraud: An Investigative Primer at IRE by Kelly Carr

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Shell companies are corporations formed without significant assets or operations, mainly existing on paper. They are used for money laundering, tax evasion, fraud, and financing terrorism. A 2011 World Bank study found the US ranked number 1 for shell companies used by corrupt officials due to lax incorporation laws in states like Delaware and Nevada that allow anonymous ownership. Investigative journalists use tools like business registries and online databases to research shell companies and uncover hidden wrongdoing.

Empleo Empresariales Tecnología

Shell Companies and Fraud!
an investigative primer !
Kelly Carr | Senior O

What exactly is a shell company?
ompany incorporated
ing no significant assets
perations.
Exist mainly on paper.
Most have no “true” physical
presence.
Little to no economic value.

Why form a shell company?
lls can play a vital role in the underground
nomy. Here’s how:
Money laundering
Tax evasion
Market manipulation: Pump and dump stock schemes
Fraudulent services scams
Fraudulent invoicing
Financing terrorism

Why should we care?
or Bout “The
chant of Death” used
ast 12 shell companies
elaware, Texas and
ida as part of a global
me that involved
ng weapons to a
orist organization.

Why should we care?
e son of the
sident of
uatorial
nea used a
ies of
ifornia
ll
mpanies to
ve more
n a $110
lion in
pected
ds.

Which country ranked No. 1 in the
world for shell companies used by
corrupt ofﬁcials, according to a 2011
World Bank study?

“Shell Games”
x part series on the
mpact of U.S. corporate
crecy.
x U.S. incorporation
ws enable corporations
operate secretly.
me states offer similar
r more enhanced)
crecy selling points as
ell- known offshore tax
vens.

Onshore havens: Secrecy U.S.A.
ules for corporate formation vary by state.
me states allow additional perks that can
veil of secrecy.
ost states do not require beneficial
wnership information (aka the name of the
ue owners of a company).
here is no licensing for corporate service
oviders who incorporate mass numbers o

at states have been consistently dubbed a
secrecy havens by regulators?
Onshore havens: Secrecy U.S.A.

the U.S.,
iness
orporation
ompletely
egulated.
malia has
htly higher
ndards than
oming and
ada.” – Jason
an, a professor at
University in
lia.

ddress
eficial
ership
losure and
lenges
mming from
allowance of
ain perks like
minee officers
Carl Levin
posed:
“The Incorporation Transpare
and Law Enforcement Assistan
Act”

Corporate service providers
wyers
countants
ntrepreneurs
nyone!
o are they?

Corporate service providers
ompany formation
ocument upkeep
egistered agent services
her various services
at services do they offer?

Corporate service providers
ominee officers/ directors
elp setting bank accounts
rtual office services
elf sales
e offer perks like….

elf
rporation:
mpany with
ignificant
ts or
ration that’s
rporated and
n placed on
shelf to age.

Text!
Shell?!
Shell!
She
Shell?!
Shell?!

Finding stories involving shells
onsumer scams
ump and dumps: (Often penny stocks)
everse mergers: (Existing public “shell” takes ove
ivate company.)
overnment contractors
olitical donations/expenditures
eal estate transactions
idden within a corporate structure
corporators/Mail drops

Tools for digging: Business registries
cretary of state entity search:
ww.BusinessJournalism.org/registration/llc
uropean Business Registry: www.ebr.org

Questions?
mail: Kelly.Carr@BusinessJournalism.org
witter: @KellyCarrBiz
sinessJournalism.org
ere to ﬁnd me:

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