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Dummy corporation - Wikipedia

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searchaux" style="display:none">Entity created as a front or cover</div> <p>A <b>dummy corporation,</b> <b>dummy company,</b> or <b>false company</b> is an entity created to serve as a <a href="/wiki/Front_organization" title="Front organization">front</a> or cover for one or more companies. It can have the appearance of being real (<a href="/wiki/Logo" title="Logo">logo</a>, <a href="/wiki/Website" title="Website">website</a>, and sometimes employing actual staff), but lacks the capacity to function independently. The dummy corporation's sole purpose is to protect "an individual or another corporation from <a href="/wiki/Liability_(financial_accounting)" title="Liability (financial accounting)">liability</a> in either contract or import".<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">&#91;</span>1<span class="cite-bracket">&#93;</span></a></sup> </p><p>Typically, dummy companies are established in an international location—usually by the creator's "attorney or <a href="/wiki/Bagman" title="Bagman">bagman</a>"—to conceal the true owner of the often-illegitimate and empty company.<sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">&#91;</span>2<span class="cite-bracket">&#93;</span></a></sup> </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="Corporate_use">Corporate use</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=1" title="Edit section: Corporate use"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <div class="mw-heading mw-heading3"><h3 id="Blackwater_Worldwide">Blackwater Worldwide</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=2" title="Edit section: Blackwater Worldwide"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The multinational security corporation <a href="/wiki/Blackwater_Worldwide_businesses" class="mw-redirect" title="Blackwater Worldwide businesses">Blackwater Worldwide</a> was reported to have obtained over thirty dummy corporations to secure million dollar contracts from the United States government. After the backlash from Blackwater's "reckless misconduct" in <a href="/wiki/Iraq_War" title="Iraq War">Iraq</a>, the security corporation successfully obtained lucrative American contracts under several subsidiaries.<sup id="cite_ref-3" class="reference"><a href="#cite_note-3"><span class="cite-bracket">&#91;</span>3<span class="cite-bracket">&#93;</span></a></sup><sup id="cite_ref-4" class="reference"><a href="#cite_note-4"><span class="cite-bracket">&#91;</span>4<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Compass_East_Corporation">Compass East Corporation</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=3" title="Edit section: Compass East Corporation"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-default-size" typeof="mw:File/Thumb"><a href="/wiki/File:Walt_Disney_World_Resort_wordmark_bw.svg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/1/1c/Walt_Disney_World_Resort_wordmark_bw.svg/220px-Walt_Disney_World_Resort_wordmark_bw.svg.png" decoding="async" width="220" height="46" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/1/1c/Walt_Disney_World_Resort_wordmark_bw.svg/330px-Walt_Disney_World_Resort_wordmark_bw.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/1/1c/Walt_Disney_World_Resort_wordmark_bw.svg/440px-Walt_Disney_World_Resort_wordmark_bw.svg.png 2x" data-file-width="290" data-file-height="61" /></a><figcaption>Walt Disney World was made possible by the acquisition of land through several entities.</figcaption></figure> <p><a href="/wiki/Walt_Disney_World_Company" class="mw-redirect" title="Walt Disney World Company">Walt Disney World Company</a>'s use of <b>Compass East Corporation</b>, created in <a href="/wiki/Delaware" title="Delaware">Delaware</a> in 1964, is an example of a dummy corporation established to purchase land. On September 30, 1966, <b>Latin-American Development and Management Corporation; Ayefour Corporation</b> (a pun on <a href="/wiki/Interstate_4" title="Interstate 4">Interstate 4</a>); <b>Tomahawk Properties, Incorporated; Reedy Creek Ranch, Incorporated</b>; and <b>Bay Lake Properties, Incorporated</b>; all Florida corporations, were merged into Compass East Corporation. These corporations collectively purchased large masses of land in <a href="/wiki/Central_Florida" title="Central Florida">Central Florida</a> that eventually became the <a href="/wiki/Walt_Disney_World_Resort" class="mw-redirect" title="Walt Disney World Resort">Walt Disney World Resort</a>. The dummy corporations were established to prevent "unknowing landowners" from increasing prices of the land by disguising the true plans and owner of the purchased acres.<sup id="cite_ref-:0_5-0" class="reference"><a href="#cite_note-:0-5"><span class="cite-bracket">&#91;</span>5<span class="cite-bracket">&#93;</span></a></sup> While Disney's use of dummy corporations are within the confines of the law, the debate of whether the land was fairly obtained is still argued.<sup class="noprint Inline-Template Template-Fact" style="white-space:nowrap;">&#91;<i><a href="/wiki/Wikipedia:Citation_needed" title="Wikipedia:Citation needed"><span title="This claim needs references to reliable sources. (January 2022)">citation needed</span></a></i>&#93;</sup> Disney was also criticised for persuading the Florida government to waive municipal jurisdiction over the acquired land, allowing Disney to create anything on the land with little legal restriction.<sup id="cite_ref-:0_5-1" class="reference"><a href="#cite_note-:0-5"><span class="cite-bracket">&#91;</span>5<span class="cite-bracket">&#93;</span></a></sup><sup id="cite_ref-6" class="reference"><a href="#cite_note-6"><span class="cite-bracket">&#91;</span>6<span class="cite-bracket">&#93;</span></a></sup> Today, that entity is known as the <a href="/wiki/Reedy_Creek_Improvement_District" class="mw-redirect" title="Reedy Creek Improvement District">Reedy Creek Improvement District</a> (RCID). </p> <div class="mw-heading mw-heading3"><h3 id="Glencairn,_Ltd"><span id="Glencairn.2C_Ltd"></span>Glencairn, Ltd</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=4" title="Edit section: Glencairn, Ltd"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1236090951">.mw-parser-output .hatnote{font-style:italic}.mw-parser-output div.hatnote{padding-left:1.6em;margin-bottom:0.5em}.mw-parser-output .hatnote i{font-style:normal}.mw-parser-output .hatnote+link+.hatnote{margin-top:-0.5em}@media print{body.ns-0 .mw-parser-output .hatnote{display:none!important}}</style><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Cunningham_Broadcasting" title="Cunningham Broadcasting">Cunningham Broadcasting</a></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">See also: <a href="/wiki/Deerfield_Media" title="Deerfield Media">Deerfield Media</a> and <a href="/wiki/Howard_Stirk_Holdings" class="mw-redirect" title="Howard Stirk Holdings">Howard Stirk Holdings</a></div> <p>Glencairn, Ltd was an American company used by the <a href="/wiki/Sinclair_Broadcast_Group" title="Sinclair Broadcast Group">Sinclair Broadcast Group</a> to operate virtual <a href="/wiki/Duopoly_(broadcasting)" title="Duopoly (broadcasting)">duopolies</a> during the 1990s when legal duopolies were not allowed by the <a href="/wiki/Federal_Communications_Commission" title="Federal Communications Commission">Federal Communications Commission</a>. The initial capital was supplied by Carolyn Smith, wife of Sinclair founder <a href="/wiki/Julian_Sinclair_Smith" title="Julian Sinclair Smith">Julian Smith</a> and mother of current Sinclair CEO <a href="/wiki/David_D._Smith" title="David D. Smith">David Smith</a>. Carolyn Smith also controlled 70% of Glencairn's stock, eventually reaching 97%. </p><p>In 1999, the <a href="/wiki/Federal_Communications_Commission" title="Federal Communications Commission">FCC</a> relaxed its ownership rules and allowed one company to own two stations in the same market starting in 2001. This development brought the Sinclair-Glencairn arrangement to light for the first time. At the time, Glencairn was getting ready to buy Sullivan-owned <a href="/wiki/KOKH-TV" title="KOKH-TV">KOKH-TV</a> (channel 25) in <a href="/wiki/Oklahoma_City" title="Oklahoma City">Oklahoma City</a>, <a href="/wiki/Oklahoma" title="Oklahoma">Oklahoma</a>, where Sinclair already owned <a href="/wiki/KOCB" title="KOCB">KOCB</a> (channel 34). When the FCC relaxed its rules, Sinclair simply replaced Glencairn as the buyer for KOKH. Glencairn then announced plans to sell five of its stations to Sinclair outright.<sup id="cite_ref-7" class="reference"><a href="#cite_note-7"><span class="cite-bracket">&#91;</span>7<span class="cite-bracket">&#93;</span></a></sup> It later emerged that Glencairn was to be paid for the proposed purchases with Sinclair stock, and that the Smiths controlled almost all of Glencairn's stock. Eventually, the FCC placed a $40,000 fine against Sinclair for illegally controlling Glencairn. </p><p>Glencairn was eventually renamed under its current name <a href="/wiki/Cunningham_Broadcasting" title="Cunningham Broadcasting">Cunningham Broadcasting</a> in 2001, with Sinclair later launching similar sidecars with <a href="/wiki/Deerfield_Media" title="Deerfield Media">Deerfield Media</a> and <a href="/wiki/Armstrong_Williams#Howard_Stirk_Holdings" title="Armstrong Williams">Howard Stirk Holdings</a> once Sinclair began rapid expansion in 2011; the latter two companies are used where both Sinclair and Cunningham already own stations such as <a href="/wiki/Baltimore" title="Baltimore">Baltimore</a>. </p> <div class="mw-heading mw-heading3"><h3 id="Japan_Asia_Airways_(JAA)"><span id="Japan_Asia_Airways_.28JAA.29"></span>Japan Asia Airways (JAA)</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=5" title="Edit section: Japan Asia Airways (JAA)"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The now-defunct <a href="/wiki/Japan_Asia_Airways" title="Japan Asia Airways">Japan Asia Airways</a> (JAA) was created in 1975 as a fully owned subsidiary company owned by <a href="/wiki/Japan_Airlines" title="Japan Airlines">Japan Airlines</a> (JAL) designed to specifically fly the Japan-Taiwan route. As the Chinese government threatened to eliminate Japan Airlines Co., Ltd.'s (JAL) airport traffic rights coming to and from China, JAA was a solution to help decompress the politically sensitive issue.<sup id="cite_ref-8" class="reference"><a href="#cite_note-8"><span class="cite-bracket">&#91;</span>8<span class="cite-bracket">&#93;</span></a></sup> Several other airlines used similarly named subsidiaries to fly into Taiwan without the parent company losing their rights to fly to China; such as <a href="/wiki/British_Airways" title="British Airways">British Airways</a> (<a href="/wiki/British_Asia_Airways" title="British Asia Airways">British Asia Airways</a>), <a href="/wiki/Air_France" title="Air France">Air France</a> and <a href="/wiki/Air_France_Cargo" class="mw-redirect" title="Air France Cargo">Air France Cargo</a> (<a href="/wiki/Air_France_Asie" title="Air France Asie">Air France Asie</a> and <a href="/wiki/Air_France_Cargo_Asie" class="mw-redirect" title="Air France Cargo Asie">Air France Cargo Asie</a> respectively) and <a href="/wiki/Qantas" title="Qantas">Qantas</a> (<a href="/wiki/Australia_Asia_Airlines" title="Australia Asia Airlines">Australia Asia Airlines</a>). </p> <div class="mw-heading mw-heading3"><h3 id="Packet_Monster,_Inc."><span id="Packet_Monster.2C_Inc."></span>Packet Monster, Inc.</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=6" title="Edit section: Packet Monster, Inc."><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Packet Monster, Inc. was a <a href="/wiki/Singapore" title="Singapore">Singaporean</a> company in charge of running the popular Japanese forum, <a href="/wiki/2channel" title="2channel">2channel</a>, but was discovered to be a dummy corporation "existing only in name".<sup id="cite_ref-9" class="reference"><a href="#cite_note-9"><span class="cite-bracket">&#91;</span>9<span class="cite-bracket">&#93;</span></a></sup> The forum is infamous for sexually explicit content, slander, extreme <a href="/wiki/Nationalism" title="Nationalism">nationalism</a>, and allegedly "facilitating drug deals". While the company was registered in an office building in central Singapore, the Singaporean Metropolitan Police Department discovered that Rikvin Pte Ltd. was the true firm working in the rented space. An employee of the firm admitted to conducting corporate secretarial work for Packet Monster, Inc., in combination of 2,000 other "companies" across the globe. </p> <div class="mw-heading mw-heading3"><h3 id="Union_Pacific_Railroad">Union Pacific Railroad</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=7" title="Edit section: Union Pacific Railroad"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Main article: <a href="/wiki/Cr%C3%A9dit_Mobilier_of_America_scandal" class="mw-redirect" title="Crédit Mobilier of America scandal">Crédit Mobilier of America scandal</a></div> <p>In 1867, the <a href="/wiki/Union_Pacific_Railroad" title="Union Pacific Railroad">Union Pacific Railroad</a> set up a dummy company known as Crédit Mobilier. Union Pacific told the federal government that Crédit Mobilier will be the company constructing the eastern portion of the <a href="/wiki/First_transcontinental_railroad" title="First transcontinental railroad">First transcontinental railroad</a>. The federal government gave Crédit Mobilier around $150 million to build the railway. Upon receiving the subsidies, Union Pacific took most of the money and <a href="/wiki/Share_repurchase" title="Share repurchase">bought their own stock</a>. These stocks were subsequently used to bribe politicians, including the <a href="/wiki/Vice_President_of_the_United_States" title="Vice President of the United States">Vice President of the United States</a>. </p> <div class="mw-heading mw-heading2"><h2 id="Government_use">Government use</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=8" title="Edit section: Government use"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>To conceal secret missions and operations, governments may create dummy corporations. </p> <div class="mw-heading mw-heading3"><h3 id="Air_America">Air America</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=9" title="Edit section: Air America"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p><a href="/wiki/Air_America_(airline)" title="Air America (airline)">Air America</a> was an American passenger and cargo airline covertly owned and operated by the <a href="/wiki/Central_Intelligence_Agency" title="Central Intelligence Agency">Central Intelligence Agency</a> (CIA) from 1950 to 1976. It was used to secretly carry out American military operations in areas that would result in the United States violating treaty restraints as defined in the <a href="/wiki/1954_Geneva_Conference" title="1954 Geneva Conference">1954</a> and <a href="/wiki/International_Agreement_on_the_Neutrality_of_Laos" title="International Agreement on the Neutrality of Laos">1962</a> Geneva Accords.<sup id="cite_ref-10" class="reference"><a href="#cite_note-10"><span class="cite-bracket">&#91;</span>10<span class="cite-bracket">&#93;</span></a></sup> Air America was most significant for its position in "supplying and supporting covert operations in <a href="/wiki/Southeast_Asia" title="Southeast Asia">Southeast Asia</a> during the <a href="/wiki/Vietnam_War" title="Vietnam War">Vietnam War</a>", and was allegedly reported to have participated in transporting opiates on behalf of Hmong leader <a href="/wiki/Vang_Pao" title="Vang Pao">Vang Pao</a> during the CIA's <a href="/wiki/Laotian_Civil_War" title="Laotian Civil War">secret war in Laos</a>.<sup id="cite_ref-11" class="reference"><a href="#cite_note-11"><span class="cite-bracket">&#91;</span>11<span class="cite-bracket">&#93;</span></a></sup> </p> <figure class="mw-default-size" typeof="mw:File/Thumb"><a href="/wiki/File:Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/e/e0/Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg/220px-Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg" decoding="async" width="220" height="147" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/e/e0/Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg/330px-Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/e/e0/Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg/440px-Former_diplomat_and_hostage_in_the_Iran_Hostage_Crisis_Robert_Anders.jpg 2x" data-file-width="5184" data-file-height="3456" /></a><figcaption><a href="/wiki/Robert_G._Anders" class="mw-redirect" title="Robert G. Anders">Robert G. Anders</a>, a former Iran hostage, holding his fake Studio 6 card.</figcaption></figure> <div class="mw-heading mw-heading3"><h3 id="Air_Asia">Air Asia</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=10" title="Edit section: Air Asia"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1236090951"><div role="note" class="hatnote navigation-not-searchable">Not to be confused with <a href="/wiki/AirAsia" title="AirAsia">AirAsia</a>.</div> <p>Air Asia was a CIA proprietary headquartered in <a href="/wiki/Taipei" title="Taipei">Taipei</a> that once ran the "largest airplane maintenance facility in Southeast Asia" during the Vietnam War. Although the CIA sold the subsidiary in February 1975, it once served all of the <a href="/wiki/United_States_Air_Force" title="United States Air Force">United States Air Force</a> serviced in East Asia, and carried out covert aircraft operations centred in the Pacific.<sup id="cite_ref-12" class="reference"><a href="#cite_note-12"><span class="cite-bracket">&#91;</span>12<span class="cite-bracket">&#93;</span></a></sup> As of 1994, Air Asia is owned by the Taiwan Aerospace Corporation (TAC). </p> <div class="mw-heading mw-heading3"><h3 id="Other_CIA_use">Other CIA use</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=11" title="Edit section: Other CIA use"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>During the 1979 <a href="/wiki/Iranian_Revolution" class="mw-redirect" title="Iranian Revolution">Iranian Revolution</a>, the CIA set up a fake Hollywood film studio called Studio Six to aid in <a href="/wiki/Canadian_Caper" title="Canadian Caper">a plot to sneak American hostages out of Tehran</a>.<sup id="cite_ref-13" class="reference"><a href="#cite_note-13"><span class="cite-bracket">&#91;</span>13<span class="cite-bracket">&#93;</span></a></sup> This mission was depicted in the 2012 film <i><a href="/wiki/Argo_(2012_film)" title="Argo (2012 film)">Argo</a></i> starring <a href="/wiki/Ben_Affleck" title="Ben Affleck">Ben Affleck</a>. </p> <div class="mw-heading mw-heading2"><h2 id="Other_uses">Other uses</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=12" title="Edit section: Other uses"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <div class="mw-heading mw-heading3"><h3 id="Tax_avoidance">Tax avoidance</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=13" title="Edit section: Tax avoidance"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-default-size" typeof="mw:File/Thumb"><a href="/wiki/File:British_Virgin_Islands-CIA_WFB_Map_(2004).png" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/b/bd/British_Virgin_Islands-CIA_WFB_Map_%282004%29.png/220px-British_Virgin_Islands-CIA_WFB_Map_%282004%29.png" decoding="async" width="220" height="237" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/b/bd/British_Virgin_Islands-CIA_WFB_Map_%282004%29.png 1.5x" data-file-width="330" data-file-height="355" /></a><figcaption>British Virgin Islands, a popular location to set up dummy companies.</figcaption></figure> <p>Dummy corporations may be created to <a href="/wiki/Tax_avoidance" title="Tax avoidance">avoid tax</a> through disguising the true profits of a corporation through the use of <a href="/wiki/Tax_haven" title="Tax haven">tax havens</a>. The use of tax havens are particularly popular in the <a href="/wiki/British_Virgin_Islands" title="British Virgin Islands">British Virgin Islands</a> and many dummy corporations are created on the islands as a way to evade taxes.<sup id="cite_ref-:2_14-0" class="reference"><a href="#cite_note-:2-14"><span class="cite-bracket">&#91;</span>14<span class="cite-bracket">&#93;</span></a></sup> After a treaty enabling the islands to enjoy favourable tax treatment was terminated by the <a href="/wiki/United_States" title="United States">United States</a> under the <a href="/wiki/Presidency_of_Ronald_Reagan" title="Presidency of Ronald Reagan">Reagan administration</a>, the growth of the number of dummy corporations "exceeded beyond our wildest imaginations", according to the Financial Secretary Robert A. Mathavious.<sup id="cite_ref-:2_14-1" class="reference"><a href="#cite_note-:2-14"><span class="cite-bracket">&#91;</span>14<span class="cite-bracket">&#93;</span></a></sup> Although the tax havens itself are not illegal, the avoidance of taxation through the vehicle of tax havens are inherently illegal. </p> <div class="mw-heading mw-heading3"><h3 id="Defraud">Defraud</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=14" title="Edit section: Defraud"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p><a href="/wiki/Fraudster" class="mw-redirect" title="Fraudster">Fraudsters</a> may set up dummy corporations to create the illusion they are an existing corporation with a similar name. Similar to the "<a href="/wiki/Pump_and_dump" title="Pump and dump">pump and dump</a>" scheme, <a href="/wiki/Fraudster" class="mw-redirect" title="Fraudster">Fraudsters</a> mislead investors in order to sell securities in the dummy corporation, in this case, making investors incorrectly believe "that they are buying shares in the real corporation". The sale of securities through a fraudulent corporation is inherently illegal.<sup id="cite_ref-15" class="reference"><a href="#cite_note-15"><span class="cite-bracket">&#91;</span>15<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="Hiding_identity">Hiding identity</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=15" title="Edit section: Hiding identity"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>Another use is to prevent speculators from intruding on imminent plans of the parent organisation. Dummy corporations may also be used in crime to hide the identity of a criminal, similar to the use of a criminal <a href="/wiki/Pseudonym" title="Pseudonym">alias</a>. </p><p>Raymond Davis, a former <a href="/wiki/Blairstown,_New_Jersey" title="Blairstown, New Jersey">Blairstown, New Jersey</a> committee member, diverted $46,000 in public funds into a dummy corporation. The self-created dummy corporation was a vehicle to conceal his identity while stealing funds from a municipal complex project.<sup id="cite_ref-16" class="reference"><a href="#cite_note-16"><span class="cite-bracket">&#91;</span>16<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Legal_cases">Legal cases</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=16" title="Edit section: Legal cases"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p><i><b>Fraw Realty Co. Inc. v. Natanson</b></i>,<sup id="cite_ref-:1_17-0" class="reference"><a href="#cite_note-:1-17"><span class="cite-bracket">&#91;</span>17<span class="cite-bracket">&#93;</span></a></sup> 261 N.Y. 396, was a court case heard before the Court of Appeals in the state of New York concerning the legal usage of dummy corporations to hide the true owner of assets between two companies. The Natanson brothers were the sole stockholders of Normar Real Estate Corporation and Malex Realty Corporation, which faulted when Malex's assets were taken over by Normar, citing that Normar was the "real owner" of the two corporations—although this agreement was only spoken about, not officially stated. The court ruled in favour of Fraw Realty, as the brothers relinquished their <a href="/wiki/Constructive_trust" title="Constructive trust">constructive trusts</a> as their agreement was not explicitly stated.<sup id="cite_ref-:1_17-1" class="reference"><a href="#cite_note-:1-17"><span class="cite-bracket">&#91;</span>17<span class="cite-bracket">&#93;</span></a></sup> </p><p><b><i>Air-Sea Forwarders, Inc. v. Air Asia Company, LTD., and E-Systems, Inc</i>.</b> was a court case concerning the legal legitimacy of the CIA's involvement in Air Asia, a dummy corporation. The owner of Air-Sea Forwarders, Erwin Rautenberg, was awarded $6.2 million after the CIA illegally broke an "oral secret agreement" arranged in 1981. Rautenberg was promised by the airline, a subsidiary of the CIA, that his freight-forwarding company would be its "exclusive forwarding manager", but did not disclose that this exclusivity will be terminated in the case of a "good cause". Rautenberg won against the former dummy corporation, and was compensated for his loss.<sup id="cite_ref-18" class="reference"><a href="#cite_note-18"><span class="cite-bracket">&#91;</span>18<span class="cite-bracket">&#93;</span></a></sup> </p><p><i><b>Gelfand v. Horizon Corp</b></i> was a court case challenging the legality of firing an employee over the sale of land through a dummy corporation. Gelfand, the plaintiff, was working as a real estate agent for <a href="/w/index.php?title=Horizon_Corporation&amp;action=edit&amp;redlink=1" class="new" title="Horizon Corporation (page does not exist)">Horizon Corporation</a>, and sold a large tract of land to a dummy corporation he set up in collaboration with his wife, and two interest holders, without the knowledge of the real estate company. Gelfand consequently sold the land to a third party for a profit of $57,500, and was immediately fired and denied of his commission after his actions came to surface. Gelfand won the case against Horizon Corporation, and the company was entitled to pay Gelfand's commission of his sales excluding his sale with the third party, despite Gelfand's "breach of fiduciary duty".<sup id="cite_ref-19" class="reference"><a href="#cite_note-19"><span class="cite-bracket">&#91;</span>19<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Controversy_and_problems">Controversy and problems</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=17" title="Edit section: Controversy and problems"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>A dummy corporation is one way to "<a href="/wiki/Creative_accounting" title="Creative accounting">cook the books</a>" in a dishonest attempt to hide the true financial status of a company. While the use of dummy corporations is not inherently illegal, the usage of these corporations can go against the ethics of the parent company, which can in turn spark controversy between the organisation and the public.<sup id="cite_ref-20" class="reference"><a href="#cite_note-20"><span class="cite-bracket">&#91;</span>20<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=18" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><a href="/wiki/Front_organization" title="Front organization">Front organization</a></li> <li><a href="/wiki/Shell_(corporation)" class="mw-redirect" title="Shell (corporation)">Shell corporation</a></li> <li><a href="/wiki/Straw_owner" title="Straw owner">Straw owner</a></li> <li><a href="/wiki/MEFO" title="MEFO">MEFO</a>, a dummy company that covertly financed Nazi Germany's <a href="/wiki/German_re-armament" class="mw-redirect" title="German re-armament">rearmament program</a> prior to World War II.</li></ul> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Dummy_corporation&amp;action=edit&amp;section=19" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap mw-references-columns"><ol class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite class="citation web cs1"><a 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Inc. vs. Natanson. 33 Columbia Law Review 1066. State of New York. Apr. 1933. Online.</span> </li> <li id="cite_note-18"><span class="mw-cite-backlink"><b><a href="#cite_ref-18">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite id="CITEREFRamos1986" class="citation news cs1">Ramos, George (August 6, 1986). <a rel="nofollow" class="external text" href="https://www.latimes.com/archives/la-xpm-1986-08-06-mn-1475-story.html">"Suit Over CIA Deal Nets Freight-Firm Owner $6.2 Million"</a>. <i><a href="/wiki/Los_Angeles_Times" title="Los Angeles Times">Los Angeles Times</a></i>. <a href="/wiki/ISSN_(identifier)" class="mw-redirect" title="ISSN (identifier)">ISSN</a>&#160;<a rel="nofollow" class="external text" href="https://search.worldcat.org/issn/0458-3035">0458-3035</a><span class="reference-accessdate">. Retrieved <span class="nowrap">November 1,</span> 2015</span>.</cite><span title="ctx_ver=Z39.88-2004&amp;rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&amp;rft.genre=article&amp;rft.jtitle=Los+Angeles+Times&amp;rft.atitle=Suit+Over+CIA+Deal+Nets+Freight-Firm+Owner+%246.2+Million&amp;rft.date=1986-08-06&amp;rft.issn=0458-3035&amp;rft.aulast=Ramos&amp;rft.aufirst=George&amp;rft_id=https%3A%2F%2Fwww.latimes.com%2Farchives%2Fla-xpm-1986-08-06-mn-1475-story.html&amp;rfr_id=info%3Asid%2Fen.wikipedia.org%3ADummy+corporation" class="Z3988"></span></span> </li> <li id="cite_note-19"><span class="mw-cite-backlink"><b><a href="#cite_ref-19">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222"><cite class="citation book cs1"><i>Agency and Partnership: Keyed to Course Using Hynes and Loewenstein's Agency, Partnership, and the LCC</i>. 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