Delaware Public Media

State Justice Dept, U.S. Treasury seek to combat corrupt LLCs

Sep 7, 2020

The Delaware Department of Justice (DOJ) takes a step toward combating corrupt LLCs incorporated in the First State.

The state DOJ recently announced a Memorandum of Understanding (MOU) with the U.S. Treasury.

The agreement fosters a partnership between the state and the Office of Foreign Assets Control, or OFAC. The two will coordinate investigations to combat organizations and individuals taking advantage of Delaware’s lower tax rate to incorporate fronts for illegal activity. 

Delaware Attorney General Kathy Jennings says that could be anything from drug traffickers to government corruption.

“When OFAC discovers that an organization like that exists and is incorporated in Delaware through an LLC that we would act expeditiously to take away the certification of corporate status,” said Jennings.

That would be an action filed in the Court of Chancery.

Jennings says the state DOJ has worked with OFAC in the past to dissolve the corrupt LLCs of foreign criminal organizations.

“That’s the hope and the belief that we’re going to continue that work, grow it, to make sure a Delaware corporate franchise is never misused in such a way,” she said.

There are more than a million businesses incorporated in the First State.

Delaware has decertified several corporations in recent years, including companies owned by former Donald Trump campaign chairman Paul Manafort and Richard Gates and former Trump lawyer Michael Cohen - as well as the child sex trafficking website Backpage.com.