Risk Management Blog

In its June 5 Sunday edition, the Sacramento Bee published the investigative article Intrigue, offshore connections to Sacramento in ‘Panama Papers’ leak (see quotes below from the article). While First Corporate Solutions (FCS) is featured as a Sacramento-based service company, the investigation’s focus centers on the shortcomings and lack of transparency in the US corporate law system. It also confirms that FCS has done nothing wrong, illegal or unethical.

“Although First Corporate’s name turns up in the Panama Papers in connection with California regulatory filings, the records show no signs of contact between Silverburg’s company and Mossack Fonseca.”

When contacted by the Bee, FCS CEO David Silverburg had no hesitation in discussing his company and its appearance in the Panama Papers. Wanting to be fully transparent, Mr. Silverburg made himself fully available for the interview. As the article points out,

“Being named in the Panama Papers isn’t in itself an indication of illegal or shady activity. It is not against the law to create a shell company or store assets overseas, and legal and financial experts say there are valid reasons to do so: buying foreign real estate, for instance, or operating a business in another country. Some individuals or companies are seeking legal tax shelters or to protect proprietary research.”

In fact, there are specific legal reasons why FCS’ name appeared in the Panama Papers.; we provide an essential compliance service called “Registered Agent,” a legal requirement in most states, to receive Service of Process on behalf of businesses and then forward it to our client or their legal counsel.

“For many of these service companies, one part of the job is to act as “registered agents,” where their main responsibility is to be the legal point of contact if a client gets sued. If a company wants to do business in a particular state, it has to hire a registered agent there. The agents accept physical delivery of a lawsuit and forward the paperwork to the client’s law firm or other representative. It is in its role as registered agent that Silverburg’s firm has come into contact with companies named in the Panama Papers.”

But the focal point of the article is really about the lack of transparency in the US corporate system and the lack of legislation to provide it.

“Critics say it’s also an indictment of fundamental shortcomings in U.S. laws, which allow companies to incorporate without disclosing their owners’ identities.”

“In California and every other state, many business service companies don’t know the identities of the true owners of the companies they serve. State laws don’t require them to find out. Federal law doesn’t, either, although some members of Congress have tried in recent years to pass laws that would force owners to identify themselves.”

Ultimately, CEO Silverburg revealed that he personally wouldn’t mind more openness in the system. “The whole idea of beneficial ownership being transparent,” he said, “how bad could that be?”

With almost 30 years of company history, FCS is committed to continue providing UCC secured transactions and legal compliance solutions to our clients with experience and integrity.