How Criminals Use Shelf Corporations to Their Benefit

A shelf corporation is a legal entity created for tactical purposes. A shelf corporation is basically a corporation that is formed on paper but nothing is done with the corporation for years and does not engage in any real business. The only thing that is done with the shelf corporation is that, over time, the owner of the shelf corporation will establish some credit history, file taxes, and open bank accounts in the name of that shelf corporation that demonstrate that the company has some minimal activity.

You may be questioning the purpose of shelf corporations, but there are legitimate purposes. There are two common purposes for which someone would form a shelf corporation. They are frequently formed for holding business assets. The other common purpose for a shelf corporation is for the sale of the shelf corporation. Many small businesses struggle in their first years when it comes to their credit history and obtaining any type of loan. That’s where a shelf corporation can come in handy. A small business owner can purchase a shelf corporation as a turn-key business package that has a credit history that will ultimately grant them the qualifications to obtain a loan, line of credit, or government contract.

However, criminals can use the tactic of creating a shelf corporation, too. It is easy for a criminal to create a shelf corporation with a name that is similar to a well-known company for the purpose of misleading consumers, suppliers, or creditors. Sometimes the criminal will need to create a series of shelf corporations to pull off such a scheme, but don’t be naive, these criminals can fool even the most experienced reviewer. With this knowledge, it is absolutely essential to keep a watchful eye out for criminals that are impersonating a business with the intent to mislead you for their financial gain.

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