COLORADO (KOAA) — When Mark Roybal got a letter from the IRS addressed to his Pueblo West home earlier this month, he was confused; he’d already filed his taxes and received a refund.
After he opened the letter, he realized it was addressed to an LLC he’d never heard of.
“I was thinking, how did this happen?” said Roybal. “I’m kind of a curious guy, I work in data, so out of curiosity, I put in that company into Google and Colorado businesses, and it took me to the Secretary of State’s office.”
The business’ name was a combination of seemingly random letters paired with “LLC”. It was a similar experience News5 reported last month with Tim Johnson in Colorado Springs.
- Watch News5 coverage of that experience below:
It’s a problem News5Investigates has heard from dozens of homeowners about and even reached out to homeowners whose addresses were on a database of recently registered businesses.
“It's concerning when you start getting stuff from the IRS to an LLC and I was concerned that they’re doing something that’s illegal, and my address is tied to this LLC,” Sarah Harrison in Colorado Springs told News5.
Buddy Bolster was also shocked to learn his address was being used for an LLC with which he had no affiliation.
“It just irritates the heck out of me when I see this, and people just kind of let it slide and just not do anything about it,“ said Bolster.
Diane Terhune, also in Colorado Springs, wants to see more checks in the system.
“[the] Secretary of State has a database. Why isn't someone dumping the database and looking for the same addresses and stuff, you know? ” said Terhune.
Roybal downloaded a database online that showed every business registered since the beginning of the year in Colorado, he found hundreds of businesses registered in the last three months with similar names: random letters.
The filings also list a separate LLC as its “registered agent,” which is a person or business who receives legal documents and correspondence for the state, the registered agent for the businesses Roybal found is often tied to multiple LLCs.
“It kind of gave me a sense of relief knowing that, wow, I wasn't the poor, unlucky person that got picked on by somebody, that it's just a lot of people,” said Roybal.
Roybal reported the business as fraudulent to the Secretary of State and the IRS. He said trying to verify his information with the IRS was a lengthy process. He feels there’s not enough verification in setting up a business in Colorado.
News5 Investigates reported the state has a backlog of fraudulent filings of about 1,800 cases it has sent to the Attorney General’s office.
“I would just think that there has to be a check, there has to be a verification. Anything you do, you have to have a verification that it's valid,” said Roybal. “You know, if there's that many out there. I think the attorney general has better things to do than investigate this type of fraud that could be avoided before it starts.”
As News5 has reported, in 2022 state lawmakers added a process for Coloradans to report business fraud. State lawmakers are now trying to streamline the process to investigate these cases.
The bill currently making its way through the Capitol does not address the ease with which people can use someone else’s home address on a business filing.
“There's always more that we can do to perfect our systems,” said Sen. Lisa Cutter (D-Jefferson County). “It would be ideal if we were able to verify addresses upfront eventually, and I think that's something that the state would definitely consider looking into, but that requires a lot of resources.”
Resources, including labor and technology costs. The state is currently facing a budget deficit, and Cutter says now is not the time to make investments in additional verification processes.
“I think it's a great idea. I think that when you're looking at hungry kids, and you're looking at families of children with intellectual and developmental disabilities not requiring the services and the things that they need to sustain them, then it's very difficult,” said Cutter.
The bill would allow the Secretary of State's office to mark a business as fraudulent without sending it to the Attorney General’s office if there’s a fraudulent LLC as the registered agent.
“We want it to be easy for businesses to open up here; entrepreneurism is incredibly important to Colorado, but also we want to protect people,” said Cutter. “I think this bill is a good balance with that.”
Cutter added she feels adding ways to streamline the process to investigate fraudulent filings, it could also discourage fraud in the state. Homeowners want to see more done to protect their information.
“They need to take this seriously,” said Bolster.
The bill passed through the House and is now in the Senate. If homeowners receive mail addressed to an LLC they did not create, they can report it to the Secretary of State’s Office by filling out this form and emailing businessfraud@coloradosos.gov.
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