An out-of-state operation is targeting new businesses in South Dakota.
The company hopes to convince them to pay more than necessary for documents they can easily obtain on their own at a fraction of the cost. SD Certificate Services was registered in South Dakota in October by a Florida man.
KELOLAND Investigates tracks down the operators behind this business and why South Dakota officials say it’s a rip off, which has prompting attorneys general across the nation to take action.
Crowser Gravel Pit just opened for business in Belle Fourche in November.
A short time later, Melanie and Brett Crowser received an official-looking letter congratulating them on registering their business with the state. It says, “You have one step left in order to obtain your elective South Dakota Certificate of Status,” which it says, “may be required for loans, to renew business licenses or for tax or other businesses purposes.”
“It’s an LLC we just established and I think it’s the small business; newly established, might not know a whole lot about; we’re still learning the ropes with the paperwork and I think that’s an easy target almost,” Melanie Crowser said.
To obtain that certificate, SD Certificate Services asks businesses to send a check or money order for $87.25 to his address in Brookings, which it turns out is a mailbox at the UPS Store.
“My husband thought, looks legit, go ahead and pay it. Somehow I just decided I’d better check with our attorney and she said, ‘absolutely not; it’s a scam–don’t pay it–don’t give them any of your information,'” Crowser said.
Mitchell Attorney Jim Taylor had clients who had just registered new businesses with the state bring in the same letter to him.
Kennecke: What did you tell your clients when they asked you about this?
Taylor: Well, I looked at it and I said, “Don’t waste your money, because this is nothing you need to do.”
If a business does need a Certificate of Standing from the South Dakota Secretary of State, all they need to do is go to the secretary’s website, click on a link and pay a $20 fee.
Kennecke: Do you think it’s unfortunate businesses are being targeted in this way?
South Dakota Secretary of State Steve Barnett: Yeah. We want to get the word out that people don’t have to pay this $67 up-charge so to speak to access this certificate of good standing, which again is probably only needed if the business is applying for a loan or a grant. It’s just an easy way for a company to make some money.
Taylor: It sort of walks that fine line. Do I think it’s unfortunate that these businesses get set up? probably–I think it’s more unfortunate there are people unscrupulous enough to try to prey on the uninformed.
South Dakota businesses are not the only ones being targeted. According to the company’s filing, SD Certificate Services is being run by Florida man, Royce Wedge, out of this home in St. Petersburg.
The Better Business Bureau has flagged Wedge, along with other company organizers, for running these certificate services in multiple states under various names across the country, giving CA Certificate Services an “F” rating.
The BBB lists 20 complaints and there is one response from the company that reads:
CA Certificate Service, LLC Response to Better Business Bureau Complaint
” It appears the basis of the complaint is that we are somehow posing as an official state agency and making it appear as if the companies we contact are required to respond or take action. Our company is nothing more than a private third-party service provider who, for a reasonable fee, will obtain an official Certificate of Good Standing from the Secretary of State for newly formed companies.”
However, attorneys general from other states across the country where these same operators have run certificate services companies, don’t agree.
Iowa’s attorney general has filed a lawsuit against the company’s organizers seeking a permanent injunction to stop them from sending what he calls “fraudulent mailers” targeting small Iowa businesses during a pandemic, charging $62.50 for a certificate which can be obtained for just $5.
Iowa’s civil suit is asking for IA Certificate Services to reimburse Iowans for any money they paid, plus civil penalties.
Michigan’s attorney general has filed a similar suit, claiming “fraudulent practices” against CA Certificate Services.
In a civil suit, Virginia’s Attorney General accuses VA Certificate Services, whose organizer is Royce Wedge, of “deceptive or misleading practices,” for targeting business in that state in a similar way as South Dakota.
KELOLAND Investigates also discovered that Royce Wedge operates FL Certificate Services and filed to do business in Kentucky as KY Certificate Services. According to Florida’s Department of State, Wedge also operates Certificate Services in Arizona and Oregon. The Secretary of State there has issued a warning and asks businesses who get the letter to report it.
“You kind of go into a rat hole of enterprises and limited liability companies across the country. If you get what looks like a legal document in the mail, go ask a lawyer if it’s really anything important or not,” Jim Taylor said.
KELOLAND Investigates tried to call the phone number associated with these certificate services, but only reached an answering service and left a message. Our call was not returned.
South Dakota has not taken any action against SD Certificate Services, however, the attorney general’s office of consumer protection has received three formal complaints, and tells KELOLAND Investigates it is aware that numerous other businesses may be impacted.
If you got the letter or paid the fee, you’re asked to contact consumer protection at at 1-800-300-1986 or email@example.com
Update as of Tuesday, January 19: The Florida Attorney General’s office tells KELOLAND Investigates that it has an active consumer protection investigation into FL Certificate Services and Royce Wedge after receiving 150 complaints and cannot comment any further at this time.