The other day I received an email below.  At first glance, it could have been a new potential corporate client from overseas.  What, of course, it turned out to be was another poliferation of the Nigerian email scam.  Coincidentally, it appeared in my mailbox, along with another email notifying me that I won the UK lottery (another scam), the day after signing up to recieve email alerts from a foreign news source - a normal part of my research regarding international business law.

FROM THE DESK OF:DR.JAMES EBELL
NNPC COMPLEX,MAITAMA SULE,
ASOKORO ABUJA-NIGERIA.


Dear Sir,

     REF:FOREIGN RECEIVER/BENEFICIARY NEEDED.

Please, do not be surprised about this email communication, due to the urgency required I am using this medium to reach you. Myself and colleagues are active management officials of the Nigerian Petroleum Resources. We would like to employ your effort to act as the receiver/beneficiary of a contract payment sum of US$34Million. The said fund legally belongs to us, being proceeds from contract deals over-estimated and executed on our behalf over the years.

Our master plan is to make you the Subcontractor/consortium beneficiary of this fund by way of advancing you as a contractor to whom the corporation is indebted, to the tune of Thirty-four million United States Dollars only (US$34Mn). The blueprint is 100% tested and the workability is okay because it does not breach the laws internationally,since all the contract documentation is in our possession.

You will only need to be in correspondence with the paying bank/Apex bank via Telephone, e-mail or fax messages for effective and speedy remittance of the funds into any nominated bank account you will provide.  We have agreed to offer you 10% of the total funds calculated as(US$3.4Mn) for your anticipated assistance in consummating this transaction and to oversea our investment.You information is needed for proper and legal documentation proccesses.

COMPLETENAMES:.................................................

ADDRESS:...................................................................

CITY:...........................................................................

STATE:........................................................................

COUNTRY:.................................................................

CELL/PHONE NUMBERS.........................................

MARITAL STATUS:...................................................

AGE:............................................................................

OCCUPATION...........................................................

COMPANY.................................................................

Please,fill your information as required above and revert to me urgently for further information and oral clarification.Attached is a copy of my international passport for your assurances.

Best regards,

DR.JAMES EBELL.
Director,Procurement/Contract Services,
N.N.P.C-ABUJA.

It is not unusal for me to receive a legitimate email from a potential client from overseas and they can look very similar to this one.  As more and more domestic businesses become involved in international buiness transactions, it seems that these scams may continue for a long time.  In fact, the U.S. State Department notes that "[e]ach week, the U.S. Embassy in Abuja or the Consulate General in Lagos, Nigeria (along with many other embassies) handles several 'scam' cases in which businesspeople, many of them experienced in overseas transactions, have lost to confidence operators sums ranging from a few thousand to upwards of one million dollars."  Because of the world wide web and the off shore location of many of these perpetrators, it is virtually impossible to eliminate this type of fraud. 

First, don't ever think that you are too savy a businessperson to fall victim to a scam.  While interning at the Securities & Exchange Commission years ago, I was shocked by the number of sophisticaed businesspeople, accountants, lawyers (even a district attorney) who fell victim to stock scams.  More recently, I assisted a corporate client that lost nearly $1 million dollar investment development scam here in San Diego.  Even though the perpetrater was arrested, the government attorneys investigating the case estimated that investors, including my client, would probably 8 cents on the dollar from their investment.

So what can you do to protect yourself.

Every year, several corporate clients, particularly newly formed corporations, call to inquire about filing the Annual Meeting Disclosure Statement.  Its an official-looking document that arrives in the mail from organizations such as Corporate Compliance Recorder or Corporate Headquarters Compliance Division, or Compliance Annual Minutes Board.  Like a lot of other "junk mail," these mailing arrive in what appears to be an offical government envelope, and once you open the envelope there is a simulated goverment form entitled Annual Meeting Dislosure Statement.  This type of fraudulent and misleading mailing (deceptively trying to appear like a government agency) caused problems for companies like Publisher's Clearing House years ago but these unscrupulous business practices continue to be perpertrated by numerous companies across the United States.

The Annual Meeting Discloure Statement usually quotes the state law of the recipient's state of incorporation or corporate residence.  In California it usually quotes the California Corporations Code, like Section 1500, which states in relevant part:

Each corporation shall keep adequate and correct books and records of account and shall keep minutes of the proceedings of its shareholders, board and committees of the board and shall keep
at its principal executive office, or at the office of its transfer agentor registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares heldby each.  Those minutes and other books and records shall be kept either in written form...

To complete the Annual Meeting Disclosure Statement, the recipent is to provide the names and addresses of the corporations' directors and shareholders, and then mail it to the sender along with a filing fee of $100 to $175.  In some cases, the form even notes a late fee if the document is not returned before the "due date."

Here's the catch - California and many other states where is scam is perpetrated do not require the filing of this information or the minutes of any shareholder or director meeting with the Secretary of State.  This should not be confused the Statement of Information, which is required by the California Secretary of State.  Like most states, California provides most of its business and corporate forms via the internet so you.  If you are unsure if a form corporate form you received in the mail is legitimate, contact your attorney, accountant, or a goverment agency like the California Secretary of State.  If you have fallen victim to this or similar scam in California, you can contract the State Attorney General, the California Secretary of State, or local district attorney.

Even though corporations in California are not required to filed minutes of shareholders and directors meeting with the Secretary of State, holding meeting, at least annually, and keeping the minutes of those meeting are very important.  In California, the Coporation Codes requires an annual shareholders meeting for the election of directors.  The board of directors are responsible for the corporations' management and it is important to document all meetings and decisions made by the board.  Properly conducting meetings in accordance with state law and the bylaws of the corporation can protect the shareholders and directors from liability.  By failing to follow corporate formalities, shareholders may become personally liable for the debts of the corporation - a legal doctrine known a piercing the corporate veil.