“The sale of securities by an unlicensed broker or dealer is a clear violation of our securities statues,” said Miller. “Every corporation has stock or shares representing ownership, so in order to sell the corporation, you have to sell the stock or shares. It’s not illegal to do that, but it is illegal to do so without a license. We’re going to continue to investigate other possible criminal violations related to this type of activity.”
Carolyn Ellsworth, chief administrator of the securities division, says the division also will be investigating possible fraudulent and misleading claims regarding the value of the shell companies in this case as well as future investigations.
“Many times when these corporations or LLC’s are sold, the buyer is told that simply because the entity was formed and registered a few years ago, it has more value because it’s an ‘aged’ corporation,” Ellsworth said. “Buyers are sometimes told that the aged nature of the entity makes it more valuable for things like getting a line of credit, or just general credibility. It does not, and so that’s a serious misrepresentation.”
The issuance of the cease and desist order is part of an ongoing effort to address abuses of the Nevada commercial filing statutes and regulations.
In 2009 Miller, a former criminal prosecutor, traveled to Washington, D.C., to meet with leaders in the Treasury Department and the Department of Justice in order to work with federal agencies on these issues.
As early as 2007, Miller’s office crafted specific legislation intended to give law enforcement additional tools to fight financial fraud. The Corporate Ownership Fraud Task Force, recently formed by Miller, will be a valuable weapon in addressing criminal activity related to corp