Updated: 5:25 p.m.
Fifteen business entities — including six associated with President Donald Trump’s former campaign chairman Paul Manafort and two connected to his former attorney Michael Cohen — could lose their Delaware certificates of formation.
Delaware Attorney General Kathy Jennings on Thursday filed complaints in the state’s Chancery Court to dissolve the LLCs and incorporations allegedly used to hide criminal activities.
Jennings is using a new Delaware law first created to dissolve limited liability companies associated with the sex-trafficking website Backpage.com.
“We do not make a decision to petition for cancellation lightly, but we have an obligation to protect the rule of law,” she said. “Using a Delaware LLC to facilitate a crime is an abuse and we will not tolerate it.”
Manafort is accused of using his companies to illegally conceal millions of dollars in income from the Ukranian government. Delaware’s Department of Justice said that helped Manafort avoid $1.4 million in income taxes while funding lavish personal expenses. Manafort pleaded guilty last year to charges involving money laundering and failing to register as a foreign agent.
The president’s former lawyer Michael Cohen allegedly used his Delaware LLCs to coordinate a $130,000 payment from Trump to adult film actress Stephanie Clifford, whose stage name is Stormy Daniels. Cohen has said that payment was to keep Clifford quiet about her former sexual relationship with Trump.
The state is also targeting several other LLCs used for criminal activities, including two companies allegedly used to launder money for the “Cartel of the Suns,” a group of high-level members of the Venezuelan armed forces. They’re accused of smuggling cocaine into Mexico and the U.S. for the Revolutionary Armed Forces of Colombia.
Other LLCs allegedly were used by Foreign Narcotics Kingpin Designation Act to launder money associated with illegally importing several medications into the U.S. and funneling the money to Argentina.
Jennings also wants to dissolve Masters International Inc, which was placed on a federal sanctions list in 2009 for undermining the democratic processes of Zimbabwe.
The complaint is made possible by a new Delaware law allowing the Attorney General’s Office to petition to cancel a company’s formation if it abused or misused its LLC privileges.
In June, four limited liability companies associated with Backpage.com were ordered to give up their Delaware certificates of formation after former state Attorney General Matt Denn petitioned to revoke the website’s incorporation status.
Backpage.com’s former CEO Carl Ferrer pleaded guilty in 2018 to money laundering and conspiracy to facilitate prostitution. The federal government also shut down the website the same year.
However, before the change in the law, Backpage.com was allowed to renew its license, despite the federal indictment accusing Ferrer and six other executives of facilitating prostitution, money laundering, and criminal conspiracy.
Delaware law allows the true owners of LLCs to remain shielded and serves as a major incentive for companies to incorporate in the First State. The state has more than 800,000 LLCs and receives more than $200 million annually from taxes, penalties, and interest from these companies.
“Delaware is a global business destination and we’re very proud of that fact and have a great deal of respect for legitimate businesses that operate out of Delaware and are incorporated here,” Jennings said. “Today we are upholding that brand by shielding it from abuse.”