Secretary of State asks committee to let office remove fraudulent business filings after spike in synthetic-entity fraud

Deputy Secretary of State Erin Hennessey and Tom Connolly, director of the Corporations Division, asked the House Commerce and Consumer Affairs Committee to approve language allowing the Secretary of State to verify and remove certain fraudulent corporate filings under House Bill 406.

Hennessey said the request followed reports of ‘‘company hijacking’’ and ‘‘synthetic entities’’: actors filing annual reports or new entities that used an existing business’s name and address to open bank accounts, obtain cards, or apply for loans. In one case described to the committee, an employer said a bank sent a truck payment book to a legitimate business after a falsified filing had led to the purchase of a vehicle.

"Right now, we do not verify who they are," Tom Connolly said. He explained the office removed notarization requirements decades ago when filings went electronic, and the Department lacks statutory authority to take down unauthorized filings quickly. HB 406, drafted using language from a Connecticut law, would let the Secretary of State verify claims of unauthorized filings and remove entries after receiving a sworn statement from an aggrieved business.

Business groups voiced concerns about unintended consequences and asked for time to review statutory language. Nate Grama of the Business and Industry Association said the…