JOAN BARRON Star-Tribune capital bureau | Posted: Friday, February 29, 2008 12:00 am
CHEYENNE - Members of the Wyoming House will have the next crack at a controversial bill that was drafted to combat business fraud by companies registered in Wyoming.
After about two hours of testimony and discussion Thursday, the House Committee on Corporations, Elections and Political Subdivisions voted 7-1 to report it to the floor.
Rep. Pete Illoway, R-Cheyenne, the committee chairman, said the bill isn't perfect, but if the committee didn't pass it, it would be a "disservice to the state of Wyoming and to the people of Wyoming. This is an all-encompassing piece of legislation."
The bill expands current law that requires record keeping by registered agents for corporations.
The bill, Senate File 26, expands the law to cover registered agents for limited liability companies and other business entities.
The bill, said Secretary of State Max Maxfield, is his agency's response to "an epidemic of faceless companies coming to Wyoming from around the world."
The corporations division of the secretary of state's office registers corporations.
Maxfield said he is disappointed at the efforts by out-of-state interests to kill the bill. Local and national groups of registered agents opposed the original bill on grounds the record keeping requirements would be burdensome.
"We think it's totally reasonable to have a registered agent know who their clients are," Maxfield said.
The main issue at this point is where the information or records of the companies should be kept. The secretary of state's office wants the registered agents to have that information in the event law enforcement needs the records for a fraud investigation.
The registered agents want the secretary of state's office to be responsible for the information.
Joe Moore, former special FBI agent for Wyoming for 10 years, now director of the Office of Homeland Security, said law enforcement in his experience has been handicapped in trying to investigate white-collar fraud cases in real estate or oil and gas ventures, for example.
These companies were able to get licenses in Wyoming, complete with the state's official seal, without appearing in person or having any physical presence in the state, he said.
"We found out when we visited the registered agent they had little or no information about the corporation," Moore said.
Opponents questioned whether requiring the registered agents to have the company information would discourage criminal behavior.
Local attorneys who are registered agents and a national group of registered agents support an amendment tacked onto the bill by Sen. Drew Perkins, R-Casper, that would allow the information to be filed with the secretary of state's office if the registered agent and the business agree.
So does Tom Jones, director of the Wyoming chapter of the National Federation of Independent Businesses.
Jones said his members support the Perkins amendment, which he called "the heart of the bill" because it gives them a choice of where to keep the records.
Deputy Secretary of State Pat Arp said the amendment lets the registered agents "off the hook." It is not logical for the agency to be "the face of" tens of thousands of corporations in the state, Arp added.
Maxfield said he couldn't support the bill if the Perkins amendment is still included.
"We can't take baby steps," Maxfield said. "We get hit with thousands and thousands of corporations every month, and it's only a matter of time until something blows up."
The agency, he said, maintains a lists of complaints against the companies.
An effort by Rep. Dan Zwonitzer, R-Cheyenne, to remove the Perkins amendment failed with only three of the eight committee members voting for it.
The bill will come up for debate next week in the House.
Contact Joan Barron at joan.barron@trib.com or by phone at 307-632-1244.