A dummy corporation, dummy company, or false company is an entity created to serve as a front or cover for one or more companies. It can have the appearance of being real (logo, website, and sometimes employing actual staff), but lacks the capacity to function independently. The dummy corporation's sole purpose is to protect "an individual or another corporation from liability in either contract or import".
Typically, the dummy companies are established in an international location, usually by the "attorney or bagman" of the creator in order to conceal the true owner of the often-illegitimate and empty company.
The multinational security corporation Blackwater Worldwide was reported to have obtained over thirty dummy corporations in order to secure million dollar contracts from the United States government. After the backlash from Blackwater's "reckless misconduct" in Iraq, the security corporation successfully obtained lucrative American contracts under several subsidiaries.
Walt Disney World Company's use of Compass East Corporation, created in Delaware in 1964, is an example of a dummy corporation established in order to purchase land. On September 30, 1966, Latin-American Development and Management Corporation; Ayefour Corporation (a pun on Interstate 4); Tomahawk Properties, Incorporated; Reedy Creek Ranch, Incorporated; and Bay Lake Properties, Incorporated; all Florida corporations, were merged into Compass East Corporation. These corporations collectively purchased large masses of land in Central Florida that would eventually become the Walt Disney World Resort. The dummy corporations were established in order to prevent "unknowing landowners" from increasing prices of the land by disguising the true plans and owner of the purchased acres. While Disney's use of dummy corporations are within the confines of the law, the debate of whether the land was fairly obtained is still argued. Disney was also criticised for persuading the Florida government to waive municipal jurisdiction over the acquired land, allowing Disney to create anything on the land with little legal restriction. Today, that entity is known as the Reedy Creek Improvement District (RCID).
Glencairn, Ltd was an American company used by the Sinclair Broadcast Group to operate virtual duopolies during the 1990s when legal duopolies weren't legal by the Federal Communications Commission. The initial capital was supplied by Carolyn Smith, wife of Sinclair founder Julian Smith and mother of current Sinclair CEO David Smith. Carolyn Smith also controlled 70% of Glencairn's stock, eventually reaching 97%.
In 1999, the FCC relaxed its ownership rules and allowed one company to own two stations in the same market starting in 2001. This development brought the Sinclair-Glencairn arrangement to light for the first time. At the time, Glencairn was getting ready to buy Sullivan-owned KOKH-TV (channel 25) in Oklahoma City, Oklahoma, where Sinclair already owned KOCB (channel 34). When the FCC relaxed its rules, Sinclair simply replaced Glencairn as the buyer for KOKH. Glencairn then announced plans to sell five of its stations to Sinclair outright. It later emerged that Glencairn was to be paid for the proposed purchases with Sinclair stock, and that the Smiths controlled almost all of Glencairn's stock. Eventually, the FCC placed a $40,000 fine against Sinclair for illegally controlling Glencairn.
Glencairn was eventually renamed under its current name Cunningham Broadcasting in 2001, with Sinclair later launching similar sidecars with Deerfield Media and Howard Stirk Holdings once Sinclair began rapid expansion in 2011; the latter two companies are used where both Sinclair and Cunningham already own stations such as Baltimore.
The now-defunct Japan Asia Airways (JAA) was created in 1975 as a fully owned subsidiary company owned by Japan Airlines (JAL) designed to specifically fly the Japan-Taiwan route. As the Chinese government threatened to eliminate Japan Airlines Co., Ltd.'s (JAL) airport traffic rights coming to and from China, JAA was a solution to help decompress the politically sensitive issue. Several other airlines used similarly named subsidiaries to fly into Taiwan without the parent company losing their rights to fly to China; such as British Airways (British Asia Airways), Air France and Air France Cargo (Air France Asie and Air France Cargo Asie respectively) and Qantas (Australia Asia Airlines).
Packet Monster, Inc. was a Singaporean company in charge of running the popular Japanese forum, 2channel, but was discovered to be a dummy corporation "existing only in name". The forum is infamous for sexually explicit content, slander, extreme nationalism, and allegedly "facilitating drug deals". While the company was registered in an office building in central Singapore, the Singaporean Metropolitan Police Department discovered that Rikvin Pte Ltd. was the true firm working in the rented space. An employee of the firm admitted to conducting corporate secretarial work for Packet Monster, Inc., in combination of 2,000 other "companies" across the globe.
Turner Entertainment self-distributed much of its library for the first decade of its existence, but on 10 October 1996, Turner Broadcasting System was purchased by Time Warner and its distribution functions were largely absorbed into Warner Bros. and as a result, Turner now largely serves merely as a copyright holder for a portion of the Warner Bros. library.
In 1867 the Union Pacific Railroad setup a dummy company known as Crédit Mobilier. Union Pacific told the federal government that Crédit Mobilier will be the company constructing the eastern portion of the First Transcontinental Railroad. The federal government gave Crédit Mobilier around $150 million dollars to build the railway. Upon receiving the subsidies, Union Pacific took most of the money and bought their own stock. These stocks were subsequently used to bribe politicians, including the Vice President of the United States.
In order to conceal the true nature of their missions and operations, governments may create dummy corporations.
Air America was an American passenger and cargo airline covertly owned and operated by the Central Intelligence Agency (CIA) from 1950 to 1976. It was used to secretly carry out American military operations in areas that would result in the United States violating treaty restraints as defined in the 1954 and 1962 Geneva Accords. Air America was most significant for its position in "supplying and supporting covert operations in Southeast Asia during the Vietnam War", and was allegedly reported to have participated in transporting opiates on behalf of Hmong leader Vang Pao during the CIA's secret war in Laos.
Air Asia was a CIA proprietary headquartered in Taipei that once ran the "largest airplane maintenance facility in Southeast Asia" during the Vietnam War. Although the CIA sold the subsidiary in February 1975, it once served all of the United States Air Force serviced in East Asia, and carried out covert aircraft operations centred in the Pacific. As of 1994, Air Asia is owned by the Taiwan Aerospace Corporation (TAC).
During the 1979 Iranian Revolution, the CIA set up a fake Hollywood film studio called Studio Six to aid in a plot to sneak American hostages out of Tehran. This mission was depicted in the 2012 film Argo.
Dummy corporations may be created to avoid tax through disguising the true profits of a corporation through the use of tax havens. The use of tax havens are particularly popular in the British Virgin Islands and many dummy corporations are created on the islands as a way to evade taxes. After a treaty enabling the islands to enjoy favourable tax treatment was terminated by the United States under the Reagan administration, the growth of the number of dummy corporations "exceeded beyond our wildest imaginations", according to the Financial Secretary Robert A. Mathavious. Although the tax havens itself are not illegal, the avoidance of taxation through the vehicle of tax havens are inherently illegal.
Dummy corporations may be created by fraudsters to create the illusion of being an existing corporation with a similar name. Similar to the "pump and dump" scheme, Fraudsters mislead investors in order to sell securities in the dummy corporation, in this case, making investors incorrectly believe "that they are buying shares in the real corporation". The sale of securities through a fraudulent corporation is inherently illegal.
Another use is to prevent speculators from intruding on imminent plans of the parent organisation. Dummy corporations may also be used in crime to hide the identity of a criminal, similar to the use of a criminal alias.
Raymond Davis, a former Blairstown, New Jersey committee member, diverted $46,000 in public funds into a dummy corporation. The self-created dummy corporation was a vehicle to conceal his identity while stealing funds from a municipal complex project.
Fraw Realty Co. Inc. v. Natanson, 261 N.Y. 396, was a court case heard before the Court of Appeals in the state of New York concerning the legal usage of dummy corporations to hide the true owner of assets between two companies. The Natanson brothers were the sole stockholders of Normar Real Estate Corporation and Malex Realty Corporation, which faulted when Malex's assets were taken over by Normar, citing that Normar was the "real owner" of the two corporations—although this agreement was only spoken about, not officially stated. The court ruled in favour of Fraw Realty, as the brothers relinquished their constructive trusts as their agreement was not explicitly stated.
Air-Sea Forwarders, Inc. v. Air Asia Company, LTD., and E-Systems, Inc. was a court case concerning the legal legitimacy of the CIA's involvement in Air Asia, a dummy corporation. The owner of Air-Sea Forwarders, Erwin Rautenberg, was awarded $6.2 million after the CIA illegally broke a "oral secret agreement" arranged in 1981. Rautenberg was promised by the airline, a subsidiary of the CIA, that his freight-forwarding company would be its "exclusive forwarding manager", but did not disclose that this exclusivity will be terminated in the case of a "good cause". Rautenberg won against the former-dummy corporation, and was compensated for his loss.
Gelfand v. Horizon Corp was a court case challenging the legality of firing an employee over the sale of land through a dummy corporation. Gelfand, the prosecutor, was working as a real estate agent for Horizon Corporation, and sold a large tract of land to a dummy corporation he set up in collaboration with his wife, and two interest holders, without the knowledge of the real estate company. Gelfand consequently sold the land to a third party for a profit of $57,500, and was immediately fired and denied of his commission after his actions came to surface. Gelfand won the case against Horizon Corporation, and the company was entitled to pay Gelfand's commission of his sales excluding his sale with the third party, despite Gelfand's "breach of fiduciary duty".
A dummy corporation is one way to cook the books in a dishonest attempt to hide the true financial status of a company. While the use of dummy corporations is not inherently illegal, the usage of these corporations can go against the ethics of the parent company, which can in turn spark controversy between the organisation and the public.
Air America was an American passenger and cargo airline covertly owned and operated by the US government from 1950 to 1976. It was used as a dummy corporation for Central Intelligence Agency (CIA) operations in Indochina. The CIA did not have enough work to keep the asset afloat and the National Security Council farmed the airline out to various government entities that included the US Air Force, US Army, USAID, and for a brief time France. Essentially, Air America was used by the US government covertly to conduct military operations, posing as a civilian air carrier, in areas the US armed forces could not go due to treaty restraints contained in the 1954 and 1962 Geneva Accords.In the mid-1980s the Air America name was adopted by a scheduled passenger airline based in Los Angeles, Total Air, which operated Lockheed L-1011 TriStar wide body jetliners with flights serving Baltimore (BWI), Detroit (DTW), Honolulu (HNL), London (LGW) and Los Angeles (LAX).Daniel Ohman
Daniel Öhman, born 20 May 1973, is a Swedish investigative journalist with the Swedish Radio.
He has been a member of the investigative team since 2004 and has won several national and international awards.
With his colleague Bo-Göran Bodin, Daniel Öhman 2012 revealed how a Swedish Government agency helped Saudi Arabia to plan a weapons factory. To conceal the cooperation from the public a dummy corporation was set up with the help of the Military Secret service. Project Simoom, as the investigation was called, led to the resignation of Defence minister Sten Tolgfors and the cancellation of the military cooperation with Saudi Arabia.
The investigation won several national and international awards including, Prix Europa for Best European Radio Investigation and the American investigative reporters and editors (IRE) finest award "IRE medal".
It was later turned into a book "Saudivapen" The movie rights are sold to Götafilm.In 2014 Daniel Öhman again in cooperation with Bo Goran Bodin was awarded The Prix Europa for their documentary "The Insider", which revealed that the Ericsson corporation had used bribery to secure a defense contract in Greece.
Before that Daniel Öhman worked on a three year long investigation of the Food Industry and the environment called "The price of food" (Matens Pris). The investigation received several awards and was later turned into a book: "Matens Pris".EMKA, Ltd.
EMKA Limited is a division of Universal Television with the sole function of overseeing the 1929-1949 Paramount Pictures sound feature film library.Franz von Rintelen
Captain Franz Dagobert Johannes von Rintelen (19 August 1878 – 30 May 1949) was a German Naval Intelligence officer in the United States during World War I.Front organization
A front organization is any entity set up by and controlled by another organization, such as intelligence agencies, organized crime groups, banned organizations, religious or political groups, advocacy groups, or corporations. Front organizations can act for the parent group without the actions being attributed to the parent group thereby allowing them to hide from public view.
Front organizations that appear to be independent voluntary associations or charitable organizations are called front groups. In the business world, front organizations such as front companies or shell corporations are used to shield the parent company from legal liability. In international relations, a puppet state is a state which acts as a front (or surrogate) for another state.Guillermo Suárez Mason
Carlos Guillermo Suárez Mason (January 2, 1924 – June 21, 2005) was an Argentine military officer convicted for Dirty War crimes during the 1976–1983 military dictatorship. He was in charge of the Batallón de Inteligencia 601.Mars Attacks
Mars Attacks is a science fiction-themed trading card series released in 1962 by Topps. The cards feature artwork by science fiction artists Wally Wood and Norman Saunders. The cards form a story arc, which tell of the invasion of Earth by cruel, hideous Martians, under the command of a corrupt Martian government who conceal the fact from the Martian populace that Mars is doomed to explode (due to internal pressure in the planet's core) and therefore proposes a colonization of Earth to turn it into their new homeworld. The cards depict futuristic battle scenes and bizarre methods of Martian attack, torture and slaughter of humans, as well as various Earth nations being attacked and the Martians turning several Earth insects and arachnids into giants by unknown means and controlling the minds of the monstrous arthropods so that they will assist them in their plan for conquest. The story concludes with an expeditionary force of humans volunteering to embark on a counterattack on Mars, in which the Earth force attacks the Martians in their manner (bayoneting and bullets). This necessitates the Martian that are still on Mars to defend their homeworld. The Earth attack forces, after destroying the Martian cities and killing the Martians, depart just before Mars is destroyed in the predicted cataclysm, thus ensuring the peace and safety of Earth as the Martian race is seemingly doomed to extinction (but see "Adaptations and merchandising" below).
The cards proved popular with children, but depictions of explicit gore and implied sexual content caused an outcry among concerned parents and schoolteachers, leading the company to halt production. The cards have since become collectors' items, with certain cards commanding over $3,500 at auction.In the 1980s Topps began developing merchandise based on the Mars Attacks storyline, including mini-comic books and card reprints. An expanded set of 100 cards called Mars Attacks Archives was issued in 1994 by Topps and spawned a second round of merchandising. Director Tim Burton released a film called Mars Attacks! in 1996 based on the series, spawning a third round of merchandising. In 2012, Topps released a 50th anniversary expanded set of 75 cards called Mars Attacks Heritage, leading to a fourth round of merchandising that continued into 2017 with the release of a sequel series, Mars Attacks: The Revenge!Norman Saunders
Norman Blaine Saunders (January 1, 1907 – March 7, 1989) was a prolific 20th-century American commercial artist. He is best known for paintings in pulp magazines, paperbacks, men's adventure magazines, comic books and trading cards. On occasion, Saunders signed his work with his middle name, Blaine.Plan Z
Plan Z was the name given to the planned re-equipment and expansion of the Kriegsmarine (German navy) ordered by Adolf Hitler in early 1939. The fleet was meant to challenge the naval power of the United Kingdom, and was to be completed by 1948. Development of the plan began in 1938, but it reflected the evolution of the strategic thinking of the Oberkommando der Marine (Naval High Command) over the two decades following World War I. The plan called for a fleet centered on ten battleships and four aircraft carriers which were intended to battle the Royal Navy. This force would be supplemented with numerous long-range cruisers that would attack British shipping. A relatively small force of U-boats was also stipulated.
When World War II broke out in September 1939, almost no work had been done on the new ships ordered under Plan Z. The need to shift manufacturing capacity to more pressing requirements forced the Kriegsmarine to abandon the construction program, and only a handful of major ships—all of which had been ordered before Plan Z—were completed during the war. Nevertheless, the plan still had a significant effect on the course of World War II, in that only a few dozen U-boats had been completed by the outbreak of war. Admiral Karl Dönitz's U-boat fleet only reached the 300 U-boats he deemed necessary to win a commerce war against Britain in 1943, by which time his forces had been decisively defeated.Restore Our Future
Restore Our Future is a political action committee (PAC) created to support Mitt Romney in the 2012 U.S. Presidential election. A so-called Super PAC, Restore Our Future is permitted to raise and spend unlimited amounts of corporate, union, and individual campaign contributions under the terms of the Citizens United Supreme Court decision.Restore Our Future was founded by Romney aides in 2010. Charles Spies, the group's treasurer and former general counsel for Romney's 2008 campaign for the Republican presidential nomination, described Restore Our Future as "an independent effort focused on getting Romney elected president." The group reported raising over $12 million in the first half of 2011, in the form of large donations from approximately 90 wealthy individuals and corporations. As of July 2012, Restore Our Future had raised more than $60 million, nearly half from Wall Street contributors. Spies declined to discuss specific contributors to the PAC.Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.Securities fraud can also include outright theft from investors (embezzlement by stockbrokers), stock manipulation, misstatements on a public company's financial reports, and lying to corporate auditors. The term encompasses a wide range of other actions, including insider trading, front running and other illegal acts on the trading floor of a stock or commodity exchange.Shell corporation
A shell corporation is a company or corporation that exists only on paper and has no office and no employees, but may have a bank account or may hold passive investments or be the registered owner of assets, such as intellectual property, or ships. Shell companies may be registered to the address of a company that provides a service setting up shell companies, and which may act as the agent for receipt of legal correspondence (such as an accountant or lawyer). The company may serve as a vehicle for business transactions without itself having any significant assets or operations. Sometimes, shell companies are used for tax evasion, tax avoidance, and money laundering, or to achieve a specific goal such as anonymity. Anonymity may be sought to shield personal assets from others, such as a spouse when a marriage is breaking down, from creditors, from government authorities, besides others.
Shell companies do have legitimate business purposes. They may, for example, act as trustee for a trust, and not engage in any other activity on its own account. This structure creates limited liability for the trustee. A corporate shell can also be formed around a partnership to create limited liability for the partners, and other business ventures, or to immunize one part of a business from the risks of another part. Shell companies can be used to transfer assets from one company into a new one, while leaving the liabilities in the former company.Sister Street Fighter
Sister Street Fighter (女必殺拳, Onna Hissatsu Ken, UK title: Revenge of the Dragon, German title: Die Karate Tiger) is a spin-off of The Street Fighter (1974). The plot revolves around Lǐ Hóng-Lóng (李紅竜 Li Kōryū), the female martial artist of the title. When her brother Lǐ Wàn-Qīng is kidnapped by drug lords, she seeks revenge. The drug lord's colorful collection of "killers" includes a toga-clad group of Thai Boxers called the "Amazons Seven", along with representatives of almost every martial art. Hóng-Lóng breaks into the drug lord's compound with the help of Seiichi Hibiki (Sonny Chiba) and other members of the Shorinji Kempo dojo. After all of his minions are defeated, the drug lord himself battles Hóng-Lóng, wearing a steel claw in imitation of Han, the villain from Enter the Dragon (1973). This was the first in a trilogy of films. It was followed by Sister Street Fighter: Hanging by a Thread (1974) and The Return of the Sister Street Fighter (1975).Skunk Works
Skunk Works is an official pseudonym for Lockheed Martin's Advanced Development Programs (ADP), formerly called Lockheed Advanced Development Projects. It is responsible for a number of aircraft designs, including the U-2, the Lockheed SR-71 Blackbird, the Lockheed F-117 Nighthawk, Lockheed Martin F-22 Raptor, and the Lockheed Martin F-35 Lightning II, which are used in the air forces of several countries. Its name was taken from the moonshine factory in the comic strip Li'l Abner. The designation "skunk works" or "skunkworks" is widely used in business, engineering, and technical fields to describe a group within an organization given a high degree of autonomy and unhampered by bureaucracy, with the task of working on advanced or secret projects.Straw owner
A straw owner is a person who owns property legally or has the legal appearance of owning something but does so on behalf of another, sometimes for a fee, and typically solely to hide the identity of the effective owner. Most instances of straw ownership are legal, but the arrangement is sometimes made for nefarious, illegal purposes.
In the realm of real estate, a "straw owner" would be the person who holds title to the property, and for all legal purposes and outwardly the owner, but who acts on behalf of a hidden person who installed them as the legal owner. Though the practice itself is legal, widespread, and sometimes beneficial to the parties involved, it is sometimes used to hide assets from the courts and creditors or used to purchase real estate for money laundering or to hide illegal gains.The Last Coyote
The Last Coyote is the fourth novel by American crime author Michael Connelly, featuring the Los Angeles detective Hieronymus "Harry" Bosch. It was first published in 1995 and the novel won the 1996 Dilys Award given by the Independent Mystery Booksellers Association.The Unknown (novel)
The Unknown is the fourteenth book in the Animorphs series, written by K.A. Applegate. It is narrated by Cassie.Watchdogs (Marvel Comics)
The Watchdogs are a fictional right-wing terrorist group appearing in American comic books published by Marvel Comics, usually as enemies of Captain America.
They have also been adapted into other media, having appeared on the TV series Agents of S.H.I.E.L.D.X (company)
X Development LLC. (formerly Google X) is an American semi-secret research and development facility and organization founded by Google in January 2010, which now operates as a subsidiary of Alphabet Inc. X has its headquarters about a mile and a half from Alphabet's corporate headquarters, the Googleplex, in Mountain View, California.Work at X is overseen by entrepreneur scientist Astro Teller, as CEO and "Captain of Moonshots". The lab started with the development of Google's self-driving car.On October 2, 2015, after the complete restructuring of Google into Alphabet, Google X became an independent Alphabet company and was renamed to X.
On 25 October 2018, The New York Times published an exposé entitled, "How Google Protected Andy Rubin, the ‘Father of Android’". The company subsequently announced that "48 employees have been fired over the last two years" for sexual misconduct. A week after the article appeared, Google X executive Rich DeVaul resigned pursuant to a complaint of sexual harassment.