Delaware civics groups are calling for an independent investigation of a state law governing limited liability companies.
Nick Wasileski with the Delaware Coalition for Open Government said some of Delaware’s LLCs are being used as fronts for drug smuggling, sex trafficking and money laundering. DelCOG’s calling for Attorney General Matt Denn to appoint a special counsel to look at the Delaware Limited Liability Company Act.
Wasileski said some people argue criminal activity makes up a small amount of what is mostly legitimate businesses. But he argues any amount is unacceptable.
“We cannot tolerate criminals using our laws to commit crimes," he said. "Tax revenue is not a justification for criminal activity, that’s the bottom line of this.”
Wasileski said an independent counsel could recommend legislative changes to the General Assembly to curb abuses.
He said people also claim revising the law will cause Delaware to lose tax revenue because LLCs will move to other states. But he doesn't buy it.
“I’m going to rephrase it in another way," he said. "It’s OK if money launders and narcotics traffickers and child sex traffickers form Delaware Limited Liability Companies as fronts to commit crime as long as we get $300 a year in tax revenue. And that’s appalling.”
A spokesman for the AG’s office said they’re reviewing the request.
A Delaware Department of State spokesman didn’t respond to whether it supported the idea, but he said a section of the Delaware Bar reviews the law and periodically suggests changes.
