(Phoenix, Ariz. – Sept. 30, 2009) Attorney General Terry Goddard has filed a lawsuit against the operators of an alleged scam that targeted more than 130,000 Arizona businesses between November 2008 and May 2009 and collected more than $350,000 from them.
Goddard filed the lawsuit Tuesday in Maricopa County Superior Court against Y.M.S., Inc., a Nevada corporation doing business as “Arizona Corporate Headquarters”; Y.M.S. president Gaston Muhammad, 43, of Georgia, and his wife and vice-president of Y.M.S., Ronna Muhammad, age unknown, also of Georgia.
The lawsuit states that an official-looking mailing, sent under the name Arizona Corporate Headquarters, implied that a business had to complete a form and return it with a fee of $125. The suit describes the mailing as deceptive and in violation of Arizona’s Consumer Fraud Act.
The form is titled “Annual Minutes Disclosure Statement” and includes the corporate ID number of the business as assigned by the Arizona Corporation Commission. It also includes a warning that “failure to comply with certain requirements could cause your corporation to lose limited liability status.”
According to the complaint, the mailing led thousands of Arizona business owners to believe that the forms were sent by a government agency and required a response and payment of $125 or the company could lose its corporate status.
The Muhammad's collected more than $350,000 from some 2,800 business owners who responded to the solicitation.
The Arizona Attorney General’s Office has received hundreds of complaints about the mailing since November 2008.
“This scam takes advantage of business owners who believe they are sending a required form and payment to the Arizona Corporation Commission when all the defendants do is cash the checks,” Goddard said.
He alleges that Y.M.S. and the Muhammad's violated the Arizona Consumer Fraud Act by:
- Using language that implied businesses were required by law to complete the form and pay the $125 fee or lose their corporate status.
- Mailing the solicitation to Arizona corporations and limited liability companies and implying that annual minutes are a state law requirement, when neither corporations nor limited liability companies are required to prepare or file annual minutes.
- Claiming that they would prepare corporate minutes in return for the $125 payment. According to court documents, the defendants only prepared the promised minutes in a very few cases and even then provided only fictitious general minutes for meetings that never occurred.
The complaint seeks to:
- Stop the defendants from doing business in Arizona or receiving any money from solicitations such as those described in the lawsuit.
- Require the defendants to return the money paid by the victims of the alleged scam and pay a $10,000 fine for each violation of the Arizona Consumer Fraud Act.
A copy of the solicitation is attached. This case was handled by Assistant Attorney General Rebecca Salisbury. For more information, contact Steve Wilson at (602) 542-8351.