To Be Or Not To Be (in existence)

Thanks to everyone who helped to spread the word and bring our page count to 10,000! We appreciate all of the support, information and encouragement we have received. Due to a recent question asked on the site regarding a company’s ability to continue to transact business despite not legally existing, we thought that it would be this week’s topic of discussion.

So here is the situation: the company, Proceaux Properties, LLC was formed in 2004 by Gail R. Proctor and Marlena C. Jareaux. The company was formed in order to essentially process the rent payments of the tenants of the houses owned by the two homeowners, and pay for their associated expenses for those houses out of the same bank account. It was thought that business might get to the point where the company could actually purchase properties in its own name one day, but that day never came because the partnership was dysfunctional and non-working. Here are the original incorporation papers for that company:

 

Download (PDF, 66KB)

With those papers and an employer identification number from the IRS, a business checking account was opened in 2004 at Suntrust Bank. A company’s legal right to do business in the State of Maryland is contingent on it complying with rules. In Maryland, a company has to keep a resident agent registered with the State, and it has to file the appropriate personal property tax form each year. If those things are not maintained, the State will change the corporate entity’s status to “not in good standing”. If the personal property tax form is not timely filed, the State will institute a department forfeiture against the company. The entity is then “forfeited” and is no longer a legal entity in the State.

A few things were done regarding Proceaux Properties, LLC. First, Ms. Proctor resigned as the resident agent in June of 2011. This was done in the same month that she stopped using the rent monies to pay any of the mortgage obligations for the rental properties in Baltimore city. Once an LLC loses its legal right to do business in Maryland, it also loses its right to uphold a lawsuit. So in the case of Proceaux Properties, LLC, she instituted a new resident agent. Both of those forms are here:

 

Download (PDF, 61KB)

 

Download (PDF, 81KB)

You can see and download all of the above forms by going to this website  http://sdatcert3.resiusa.org/ucc-charter/CharterSearch_f.aspx and simply put in the name of the company. You actually can do this for ANY business in Maryland.

All was apparently well, until it was time for the 2012 personal property tax required filing. What you won’t see here on this site, because we can’t put it up, is that the FINAL Federal tax return was filed for the company in mid 2012 for the tax year 2011 by Ms. Proctor!! That would mean that there is no return for 2012 and will be none for 2013. Mortgages weren’t being paid, foreclosures had been filed for a few of them by the lenders, yet tenant rent payments were still being deposited monthly into the company Suntrust Bank account controlled solely by Ms. Proctor. If you go to the website above, search the company “proceaux properties” and click on “personal property”, you will see that no personal property return was done for 2012 or 2013 as is required.

Once it was actually learned that a FINAL Federal return was done for Proceaux Properties, LLC, it was verified by Marlena with the IRS, and the EIN for the company was closed. No EIN, no legal entity. So how is it that Ms. Proctor continues to collect tenant rent payments each month even now in August of 2013?

§ 4A-919. Penalties for transacting business.
 

(a)  Misdemeanor; fine.- Any person that transacts business in the name or for the account of a limited liability company knowing that its right to do business in Maryland has been forfeited and has not been reinstated is guilty of a misdemeanor and on conviction is subject to a fine of not more than $500. 

(b)  Prosecution.- A prosecution for violation of the provisions of this section may not be instituted after the date articles of reinstatement of the limited liability company are filed. 

 

It will come as no surprise to any visitor to this site that our fish is (still) breaking the law. There is ONE signer on that Suntrust checking account for Proceaux Properties, LLC- Gail Renai Proctor. Income is not being reported to the Internal Revenue Service (sounds like more tax evasion), and business is being done by her each month in the State of Maryland despite the company having no legal standing to be in any contract bearing its name. Note to the tenants: you are paying an entity that doesn’t exist and if anything goes wrong, you have no entity to pursue in a court action (that may have been the plan). Note to Suntrust Bank: is what you’re doing somewhat equivalent to allowing money-laundering? Seems so to us. Note to MD and US tax authorities: don’t you wonder if there’s any (more) money that you may be missing? Maryland, you are missing $600 and in a few months, it will be $900. Let us guess: you don’t have a way of checking to see if an LLC continues to operate despite its forfeiture, and you’re relying on the honesty of its owners? Hmmm. Who knew it was so easy to operate a business in MD under the radar and avoid paying State fees?

 

18 thoughts on “To Be Or Not To Be (in existence)

  1. Jay M

    She certainly has known for years that the State of Maryland hasn’t been so good at checking things out where she is concerned. Makes it easier to do what you know is wrong if you don’t think anyone really cares about it. IJS.

  2. Diamondback

    I don’t understand why a department forfeiture is even done if no one checks to make sure that it is followed. Do they really think that people will follow the rules if they don’t want to?

  3. Bout that life

    Check it people wanna get all hyped about it bein ratched livin in the city cos someone might take you for bad. Crime like this robs you more an happens more.

  4. Had No Idea

    Thanks for posting this K. People should know the full story about what she is doing. No company would or should be allowed to do this with rent money generated from houses owned by TWO people. I wish someone would think they could “manage” my rental, take the rent money, not pay my mortgage with it and instead keep it for themselves all through a company that doesn’t even exist. I don’t think so.

    1. shap law1

      File criminal charges against her. Property managers who embezzle money of property owners can be and have been criminally charged for such things here in Maryland. The commenter is correct that it is not only immoral but illegal.

      1. Warren B

        Maryland recently published their list of top deadbeats who haven’t paid their taxes. Called “Caught in the Web”, and its designed to try to shame publicly into compliance. Interesting that companies on the list are often not even in business anymore, but kept operating. Interesting that there are a few lawyers on the list, one who misappropriated money and was charged by the State.

    1. shap law1

      Likely not. The money is to be made by clients who get themselves into legal hot water. This client doesn’t seem to be the brightest bulb in the pack. Ironically, an easy target herself.

  5. random one

    Like I wrote before, trust is what is needed in the world, and someone who has no problem with stealing from someone who trusted them should be prepared to get what they gave. It’s karma.

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