Lawmaker Wants to Peek Behind the Curtain of LLCs
Sept. 27, 2017 — Bill would require disclosure of people behind shell companies.
The invisible owners of Limited Liability Companies – or LLCs, or shell companies – have become an uneasy fact of life in high-end New York City condominiums, and even a few cooperatives. Now a New York legislator wants to lift the veil protecting the anonymity of those super-rich real-estate buyers and political donors.
State Senator Brad Hoylman, a Manhattan Democrat, says he will introduce a bill in Albany that would require LLCs created or doing business in New York to disclose the identities and addresses of their “beneficial owners,” mandate an LLC public database, and make it a crime to give false or outdated information, the Daily News reports.
"LLCs have operated in near total darkness for too long, and my legislation would shine a badly needed light on them,” Hoylman said. “For the super-rich, these shell companies can be used as a convenient way to move vast sums of money without detection.”
Government reform groups in New York have long sought to close what is known as the LLC loophole that allows corporations to skirt campaign financial restrictions by creating multiple limited liability companies that have significantly higher campaign donation limits. Gov. Andrew Cuomo is the largest individual beneficiary from LLCs in the state.
But Hoylman had a different super-rich man in mind when he decided to try to unmask LLCs: the President of the United States. Hoylman’s bill was inspired by a Wall Street Journal report that found that about $300 million reported in a financial disclosure form filed by Donald Trump in 2016 came from assets held by 96 secretive limited liability companies. Trump continues to refuse to release his income-tax returns.
"In the face of mounting investigations related to Trump's ties to Russia and near-daily revelations about potential impropriety by members of his administration, it's critical that we untangle the secret web of Trump's hidden business interests," Hoylman said. "This legislation will help accomplish that goal."
To prevent people from laundering illegally gotten gains through New York City real estate, the U.S. Treasury Department in August strengthened its rules regarding disclosures for cash real-estate deals above $3 million in Manhattan and $1.5 million in the outer boroughs. The Real Deal teamed up with ProPublica in January to show how the real estate industry used LLCs to pump millions of dollars into Albany in order to protect the valuable 421a tax incentive.