Illegal Pete’s cries foul over LLC denial by State of Delaware

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A small Colorado restaurant chain is suing the State of Delaware over its apparent denial of Delaware Limited Liability company status.

The Associated Press reported the suit was filed by Illegal Pete’s, a company with restaurants in Colorado and Arizona. The company said the business brand is based on a nickname of the founder. It claims the action violates its right to free speech and due process.

The company’s restaurants feature Mexican-style fare and beer.

Delaware Department of State spokesman Douglas Dennis said “The department cannot comment on pending litigation” and declined to say whether the dispute arose over the use of the name Illegal Pete’s applied to the LLC itself. LLCs often use a name other than the operating or “doing business as” name.

Delaware has long come under fire for the lack of disclosure regarding LLCs that have been tied to money laundering and other sketchy activities by drug lords and others.

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A Delaware LLC  was used by former Trump lawyer Michael Cohen   as a payment conduit to adult film star Stormy Daniels. The president has denied an affair with Daniels.

Delaware has tightened up some LLC provisions and has sought federal legislation regarding disclosure, claiming that without a national bill, the state’s lucrative LLC business would go to states such as South Dakota and Nevada.

A few state legislators have proposed a further tightening of LLC disclosures,  even at the risk of losing LLC fees.

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