Business Identify Theft Risk with LLCs
Most everyone knows about personal identity theft. A renegade thief steals your personal identity – social security number, date of birth, address, full legal name. Then they go after money in your bank account, apply for loans or credit cards, etc. The results can be devastating to your finances and credit report taking hundreds of hours of time and angst to resolve.
It’s also called cyber theft and one of the biggest risks today to those with valuable assets.
Whenever you form a corporation or an LLC you must provide identifying data of the principals. Those with real estate are prime targets. Thieves can easily match up public information at the Secretary of State and County Recorder. It’s easy using the internet. Think of yourself as “low hanging ripe fruit.”
The reason this is more dangerous is because the dollars are larger. It is easier to steal from a business because all their formation details are published by the Secretary of State.
Meanwhile, the Secretary of State acknowledges on their website that business identity theft is a real problem. What happens is that a hacker steals your password. Then they change the LLC Manager or the Corporation officers. Yet the Secretary of State disclaims ANY responsibility if you are victimized. Go look on their websites.
Here’s one real life story – an investor owned vacant acreage in North Las Vegas using an LLC. Thieves found his LLC details at the Nevada Secretary of State’s website. It all matched up with grant deed records at the Clark County Recorder.
Thieves hacked the owner’s password for his Secretary of State account. Once inside his account they changed out the manager’s name. Slick huh?
The new LLC manager (bad guys) applies for a hard money loan against real estate. The lender sees the Manager on title. Lenders title policy okay. $2,000,000 loan closing. Not a single payment made to the lender. It’s Saturday night, off to the tables! Title company, police detectives, lender, escrow company, secretary of state all pointing fingers at each other.
The real LLC manager had no idea this happened until much later until the loan went into default. Can you imagine this legal nightmare? What about your D&B business credit standing?
Had the real owners used a Business Trust for title, the thieves probably would have missed this property and had a tough time pulling this off. So if you’re now thinking defensively there’s only one way to keep your valuable assets off the public radar screen. Remember, the Secretary of State will not defend you.
Business Identity Theft is the next trend in high tech cyber thievery and fraud. Online realty or business records are ideal targets for the bad guys. Keep your assets safe by using a business trust company.
If you’d like our help reach out or review the Business Trust e-Seminar.
