The Delaware Department of Justice’s Consumer Protection Unit has filed a complaint in the Court of Chancery to prohibit a Michigan-based company from pitching “mandatory” corporate forms.
Click on link below to read complaint:
As-Filed Complaint – DE Council For Corporations
The department claims the principals of the company, The Mandatory Poster Agency, Inc. doing business as Delaware Council for Corporations, are the same three men who, under the name of a different company, entered into a cease and desist agreement with the state earlier this year for selling corporate forms to businesses under misleading materials.
Beginning in 2013, Corporate Records Service, also known as Mandatory Poster Agency, by defendants Thomas Fata, Steven Fata, and Joseph Fata, sent misleading solicitations to Delaware businesses. The mailing involved sending material that looks like an official Delaware government document and misrepresenting Delaware corporate law requirements so Delaware-registered businesses would pay the company $125 for unnecessary corporate forms.
Corporate Records Service agreed in January 2016 to a $200,000 penalty, of which $175,000 was suspended, provided the defendants didn’t violate the order for a period of five years. The agreement also called for full restitution to the Delaware businesses that fell victim to the scam. The department reported that 169 Delaware-incorporated businesses paid $21,125 to Corporate Records Service and were paid back in May of this year.
In June 2016, DOJ learned of a similar mailing from a company calling itself the “Delaware Council For Corporations” soliciting Delaware corporations with mailings that offer corporate record preparation services for $125, misrepresent Delaware corporate law records requirements.
Based on an investigation, DOJ believes the Delaware Council For Corporations is also run by the Fata brothers.
“This is a company our attorneys and investigators believe got caught selling forms to Delaware businesses under false pretenses, agreed to stop, and then did it again, so we’re asking the court to prohibit them from doing business here again and impose an appropriate financial penalty,” Attorney General Matt Denn said.
The complaint alleges violations of the 2016 cease and desist order, as well as the Consumer Fraud Act and Uniform Deceptive Trade Practices Act. Material violations of the 2016 order enable DOJ to recover the $175,000 in civil penalties suspended under the 2016 Order. DOJ told the court in its recent filing those same violations should also qualify as “willful violations” with enhanced civil penalties of $25,000 per violation.
