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huntmur · Jul 27, 2009, 12:36 PM

I have just learned (indirectly) that my employer [through a broker] purchased a shelf corp (with tax returns) a year or so ago [before I started]. They secured an individual (now titled CFO) with perfect credit and pay him a sizable monthly paycheck for "use of his credit ability". They then set up a virtual office in Northern California and established a land-line phone number. Over the next few months they worked all the kinks out of the credit report [via the use of the same broker] and finally (just recently) the broker has helped them prepare [uncollateralized] loan/lines of credit applications and they submitted them to 10-12 banks all in the same day at the same time.

Is this fraud?

stevetcg · Jul 28, 2009, 06:08 AM

Its "shell", not shelf.

It is possibly fraudulent, depending on their intentions. It appears as though they intend to take out large lines of credit and default on them (illegal) but there are some schenarios that this might not be illegal.

If you are concerned with YOUR protection, I would consult a local labor lawyer.

excon · Jul 28, 2009, 06:22 AM

Originally Posted by huntmur

Is this fraud?

Hello h:

Doesn't look like it to me... Intent is the key, and I haven't a clue what their intention is. Do you?

excon

AK lawyer · Jul 28, 2009, 03:20 PM

Originally Posted by huntmur

... They secured an individual (now titled CFO) with perfect credit and pay him a sizable monthly paycheck for "use of his credit ability". ...

The CFO had better keep a close watch on things, else he may find himself in serious financial trouble.

Fr_Chuck · Jul 28, 2009, 04:50 PM

And you care why? Are they paying you your paycheck ? Did you do any of the setting up of these things.

But basically it was done a lot a few years ago. I don't have a link, but I understand it has become illegal in a few states to buy credit for use of getting new credit.

The only concern I would have, are they making money, are just borrowing a lot of money to go out of buisnesss

huntmur · Aug 1, 2009, 10:25 AM

Thanks for all the answers. In response to all four replies.

Once the funds would be realized they would be given to the shell company and then loaned to ours.

If intent is the key, I have nothing to worry about because these guys are as honest (as far as I can tell) as you would hope to find in any business partners.

As far as paying the pay check, that's my job in this company :) I too am a principle and owner. As COO, my concern is and has always been in having something derail this wonderful effort we have achieved in launching our startup. Having run three businesses in the past, my approach is generally more straightforward and conservative. In any event, Im the guy that always looks over the shoulder to spot issues down the road.

Thanks again for all your help. Very much appreciated.