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I-Team: Company facing allegations of misleading businesses, nonprofits

Updated: Wednesday, November 27, 2013 |
I-Team: Company facing allegations of misleading businesses, nonprofits story image
LANSING, Mich. (NEWSCHANNEL 3) - An I-Team investigation finds a company based in Michigan is attracting national attention, but not the attention that most companies would want.

Victims say Corporate Records Service is misleading small businesses and nonprofits asking for money for a service that state regulators say may not be necessary.

34 states have put out warnings about the company.

We found Corporate Records Service does not make it easy to find its offices or talk to company management.

The I-Team's adventure to track down the company and the man listed with the Better Business Bureau as its Co-Owner Steve Fata took us across Lansing and to a lot of different addresses.

Kalamazoo non-profit Director Demarra Gardner  received one of their letters.

"It's just sickening to think people are out there finding any way that they can scam on individuals and organizations," says Garnder.

Gardner feels fortunate that as she was about to pay she had second thoughts and never sent money.

But other businesses and non-profits across the country getting the letters have not been so lucky.
 
The letters look official according to recipients who say they thought they were from a government agency. 

They ask for $125 "prepare and provide corporate records to meet the following requirements of Michigan law." They ask for the names of shareholders and corporate directors.

"Every one of these states has hundreds of thousands if not millions of businesses in them and if every one of them pay $125 dollars each to file these corporate minutes or corporate annual report kinds of things, that's a lot of money," says BBB Western Michigan President Phil Catlett.

The BBB  in West Michigan has been fielding the complaints from across the country.

The company shares a business address in Lansing with another business called "Labor Law Poster Service" which according to BBB records Fata also co-owns. A man there who identified himself as a manager told us no one could talk to us, but defended corporate records,

"It's not a scam, we provide a service, the same as an attorney or an accountant would provide," says the manager.

When we went to the address of another of Fata's businesses listed with the BBB, Vintage City Guitars, we instead found another Labor Law Poster Service office with a large call center but Fata wasn't there.

According to court records Fata's home address is this house in Lansing and we found he also has two boats and four cars registered to him with the state.

Fata later called Newschannel 3, and while he did not want to let us record an interview,  he did send written answers to our questions; he says,

"There is nothing misleading about our solicitation documents.  We make it perfectly clear that we are a private entity offering a service, for a fee, to meet the requirements of Michigan corporate law… the only way that anyone could be confused by our solicitation documents is if a person did not read them."

But in all 34 states have put out a warning about Corporate Records, many of those accuse the company of offering a service that may not be necessary… or that organizations can do themselves for free.

The warning from Michigan's Department of Licensing and Regulation says,"in Michigan corporations are not required by law to file corporate records…"

The I-team has also found out the Michigan Attorney General is now investigating the company and says Corporate Records agreed to stop sending its letters in Michigan during the investigation.

Fata says, “the Attorney General's office is investigating our company because of what we believe to be complaints made by, or instigated by, our competitors… as we have done nothing wrong, we are completely willing to cooperate." 

Read more of Fata’s answers to our questions below:

=====================

WWMT: The Michigan Attorney General’s office says it is investigating Corporate Records Service, can you tell us why they are investigating the company?  The AG’s office also says you’ve agreed not to send out letters in Michigan while the investigation is going on, can you say why you agreed to that?
 
RESPONSE: Like most States, Michigan has a law that requires corporations to prepare and maintain certain records on an annual basis.  Specifically, corporations are required to select a board of directors and to document the action taken.  Corporate Records Service offers corporations a cost effective and convenient  to meet this requirement.  This service has traditionally been provided by lawyers, accountants, or other business advisors.  Corporate Records Service offers a way to fulfill this requirement at a cost much lower than what has been traditionally charged by other providers.
 
In addition to the corporate records, corporations are also required to file with the State of Michigan an annual report document.  Corporate Records Service does not offer services to meet the annual report requirement.
 
The Attorney General’s Office is investigating our company because of what we believe to be complaints made by, or instigated by, our competitors.  The Michigan Attorney General’s Office had concern that we were offering to file the annual reports with the State of Michigan and not following through.  On the contrary, we do not provide a service to fulfill the annual report requirement and, instead, our service is limited to the annual corporate records.
 
As we have done nothing wrong, we are completely willing to cooperate with the Attorney General’s Office to resolve any concerns.  We agreed to suspend solicitations on a temporary basis while we work with the Attorney General’s Office.

 
WWMT: Do you consider the letters you send to businesses misleading, what would you say the purpose of those letters is?
 
RESPONSE: There is nothing misleading about our solicitation documents.  We make it perfectly clear that we are a private entity offering a service, for a fee, to meet the requirements of Michigan corporate law.  We indicate in our materials that customers are not required to use our service and, instead, the corporate records can be prepared by the customers themselves, by lawyers, accountants or other business services.  The only way that anyone could be confused by our solicitation documents is if a person did not read them.
 
WWMT: The States that have put out warnings about the company all say you are offering a service that isn’t needed in those States and Michigan says it doesn’t require minutes to be sent in, so why are you asking for money to do that?
 
RESPONSE: We believe that the State’s warning creates confusion rather than providing clarification.  It is true that the corporate records do not need to be sent into the State of Michigan, but we never say that they do.  On the other hand, there is no question that Michigan law requires that corporations prepare and maintain annual corporate records.  We provide a service to meet that requirement that is both cost effective and convenient. Our customers are very satisfied with what they receive and appreciate the value in what we offer.
 
WWMT: What do you do with information that companies do send to you, do you send it to the State?
 
RESPONSE: In order to prepare the documents that fulfill the corporate record requirements, we obtain from our customers information regarding the shareholders of the corporation, its board of directors, and its officers.  With this information, we prepare documents that meet the requirements of State corporate law.
 
WWMT: Why do you think so many States have put out warnings about you or taken the company to court?  Are all of them wrong about your services?
 
RESPONSE: We believe that most, if not all, of the complaints are instigated by our competitors, who usually charge two or three times more than us, or even more.  We offer our customers an unconditional 100% money back guarantee.  Thus, the people who have lodged complaints are not our customers and, instead, are people who have been told by our competitors that we do not offer a valuable service.
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