Delaware Seeks to Cancel LLCs Linked to Backpage.com (XBIZ)

Read the full article by Rhett Pardon at XBIZ.com

DOVER, Del. — Delaware is the most popular state for LLC formation, partly because businesses can be formed here without stepping foot in the state and businesses are not required to disclose true owners.

There are close to 1 million limited-liability companies incorporated in the state, a portion of them adult entertainment businesses.

Now, for the first time, state regulators are using newly granted powers to dissolve certificates of formation for four companies without a physical presence and not in “good standing.”

The four LLCs mentioned have been implicated with sex trafficking, and the company behind the LLCs is Backpage.com.

Delaware Attorney General Matt Denn filed a petition last week asking the Chancery Court to cancel the certificates of the companies.

Today, Backpage.com, once called “the world’s top online brothel,” is nonexistent. Its website was seized by the Justice Department, and its operators are under federal indictment. So far, the company has pleaded guilty to federal money laundering and state human trafficking charges, while its CEO has pleaded to similar crimes.

While it’s not known how many adult entertainment companies are incorporated in Delaware, the attempt by the state to rip away incorporation papers from companies should be concerning, one industry attorney said.