Stealing Control of Your Company

We recently received an alert from our title underwriters about a new form of corporate identity theft. The warning was directed to us as title agents because of some fraudulent activity that resulted in an agent’s corporate identity being hijacked on the Secretary of State database (“SUNBIZ.ORG“).

The lesson we are learning is valuable for everyone, however.  If you purchase real estate in a corporation or LLC for example, lenders and title agents rely on the identification of the officers and managers of the entity as listed on that SUNBIZ.ORG database. If that “identity” is stolen, then the thief can control the disposition of the real estate and other assets of the company.

The “theft” occurs when the thief files a simple amendment (electronically, of course) to the address and contact information, and the officers and managers, that are on file with the Florida Secretary of State. Currently, there is no notification or verification alert that is sent to the prior owner or contact that a change was made.

What can an entity do to stop this? Well, technically there are no preventative steps to be taken. That means that you must be vigilant and check your entity’s online records regularly. This is relatively easy and quick by going to SUNBIZ.ORG and searching on your company’s name. Then verify that the information is still correct and accurate.  Do this before you go to contract AND before closing.

Also confirm your correct contact information (including email address) and wiring information with the closing agent upon signing and before closing (fraudulent redirection of wiring instructions is another threat we are addressing every day, but that is another topic for another blog entry!).

Of course, you should close your deals with an experienced real estate law firm which will  review all pertinent entity governing documents on both the buyer and seller side of the transaction. Some other entity verification and red flag issues include:

  • Any refusal of a party to provide corporate document or to sign appropriate affidavits, resolutions, etc. to complete the transaction.
  • If title is going to be held in an entity or different name than the party that is insured under the title insurance policy (sometimes title can transfer by merger, sale, death, etc. and many times title insurance in no obtained in that transaction).

If you find that someone has hijacked your corporate identity, or are uncertain as to the true status of an entity, give us a call so that we can immediately research the issue and determine the appropriate corrective filings to the SUNBIZ database and other records.  And as always, should you have any questions and/or suspicions about whether or not the person with whom you are dealing is legitimate, we encourage you to contact your real estate lawyer.

Sincerely,

Berlin Patten Ebling, PLLC

Article Authored by Chris Caswell, Esq.  ccaswell@berlinpatten.com

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

 www.berlinpatten.com 

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