by Adam Wolf, Director of US Operations – Global Wealth Protection LLC
Using a Wyoming LLC for Asset Protection
We are certainly living in interesting times. Never before has it been more important to establish an asset protection strategy, and never before has it been easier to do so from the comfort of your living room.
While Americans certainly have some justification for wanting to protect their privacy from seemingly limitless invasions by their government, the litigious culture in the U.S. at large can potentially pose a far greater risk to their assets and wealth, especially for the small business owner. Search “legal extortion” on StartPage and you’ll get over a million results. (You’re not still using g**gle are you? Tisk, tisk.)
One of my favorite examples of legal extortion is a 2008 case out of Manchester, New Hampshire in which an attorney sent a demand letter to 19 hair salons in the area threatening litigation against the salons for discriminating against customers by charging different amounts for men’s and women’s haircuts. In one of the demand letters, the parasitic attorney said prices should be based on the time a cut takes or on the length of hair, instead of on gender. According to court documents, he wrote, “I demand payment in the amount of $1,000 in order to avoid litigation.” Needless to say, several of the salons paid the extortion money, but one of them eventually had the courage to file suit against the scum-sucking attorney after paying him the money.
This is one of my favorite examples of legal extortion for several reasons:
- It shows you to what length parasites in the United States will go to suck value out of society, instead of working hard to create value;
- It illustrates that even with the seemingly innocuous nature of some businesses, every business-owner should consider themselves targets;
- It highlights some weak spots in the salon-owners’ asset protection plan, and the consequence of having no plan at all;
- Last but not least, and the best part of the whole story, is the fact that the lawyer was found guilty of theft by extortion!!! Yippie!!!! A crucial element in the decision, however, was that the lawyer did not in fact have a client in hand with a potential complaint as an actual customer of the salon, so it’s more of a technical victory for the salon-owner than anything.
The take-away from this story is that legal extortion happens all the time and to seemingly mundane businesses. Many times the threat is more powerful than an actual suit, and by using fear and intimidation, it’s often possible for unscrupulous attorneys to reap significant rewards from their hapless targets. A properly-structured asset protection plan, however, can mitigate the risks from this kind of baseless fishing expedition.
Had the New Hampshire salon-owner structured the business as a Private Wyoming LLC, any demand letter received at the salon could simply be thrown in the trash. For the salon to be sued, the parasitic lawyer would have to contract with a Wyoming attorney to serve the salon’s registered agent in that state. That simple asset protection barrier is often enough for extortion artists to move on to easier, less protected targets.
Private Wyoming LLC – Asset Protection
Perhaps the New Hampshire parasitic attorney decides that it’s worth the time, effort, and money find another parasitic attorney in Wyoming with whom to work in order to sue the New Hampshire salon’s registered agent. The registered agent would forward the legal service to the anonymous managing member of the Wyoming LLC, who could answer the suit with an attorney-drafted letter that the Wyoming LLC-owned salon has no assets because all the assets are actually owned by a separate LLC in a separate jurisdiction. Also, the salon’s attorney could continue, any further attempt to extort money from the Wyoming LLC, its managers, or members will result in the Wyoming LLC simply being dissolved.
Nine times out of ten, this counter-move is enough to stop attempts at legal extortion in its tracks. In many cases a Private Wyoming LLC is one of the primary components in your Asset Protection Toolbox.
You can fill in the blanks with the different types of small businesses that are easy targets for legal extortion cases. I see potential asset protection planning clients all the time both in my real estate and private investigation practice. The weekly public filings are full of small, mom-and-pop, assumed-name businesses that would be easy targets for a legal extortion case. Movers, auto transporters, computer repair shops, hot shot delivery drivers, beauty salons, contractors, auto mechanics…the list goes on and on. All of these business seem perfectly innocent enough, but all of them have some inherent risks simply based on the nature of their business that make them easy targets for legal extortion artists.
You may not consider your small business as an asset because you don’t have an overflowing bank account, expensive inventory, tons of products, and a huge customer base, but your business, in and of itself, is an asset and you should do everything in your power to protect it. It is orders of magnitude more affordable to set up a proper asset protection strategy than it is to slog it out in the courts when a blood-sucking attorney comes knocking on your door attempting to extort money from you and your business.
If you do happen to have expensive inventory, valuable assets, vehicles, tools, and other tools of the trade, it is imperative that you have an asset protection strategy in place. Even if you already operate your business as an LLC formed in your current jurisdiction, it may be prudent to add an additional layer or two to your asset protection strategy to truly insulate your business from the leeches. A few dollars and a few days worth of paper pushing is a small price to pay for the added security.
Our fearless leader here at Global Wealth Protection, is fond of quoting John D. Rockefeller who said, “Own nothing, and control everything.” That concise rule perfectly encapsulates the Global Wealth Protection strategies behind our asset protection planning. Very few, if any, assets should be held in your personal name, especially your business. However, when businesses and their asset protection plans are properly structured, you still maintain full control over everything, while maximizing the protections afforded to you by limited liability companies.
We can help you determine the best strategy. Don’t fall victim to extortion. Call today to schedule your free 30 minute asset protection consultation.