The same laws fostering Wyoming's business-friendly attitude can be abused to make it fraud-friendly, too, officials from the Secretary of State's office said last week.

"We are a fraud magnet," Pat Arp of the office told the Joint Corporations, Elections and Political Subdivisions Interim Committee in Casper on Nov. 13 and 14.

So the committee approved a draft bill at its meeting in Casper for consideration during the 2008 budget session that would tighten regulations that allow the formation of companies that do not reside or exist in Wyoming.

Secretary of State Max Maxfield and officers from the securities division have been meeting with the committee this year to explain the congressional encouragement for Wyoming, Delaware and Nevada to crack down on fraud or Congress will act on its own.

In May and last week, Karen Wheeler of the securities division said Wyoming was the first state to allow the creation of Limited Liability Companies. Wyoming requires minimal filing and fee requirements, and allows one person to hold all offices in a company and to remain anonymous.

But those benefits also make Wyoming an easy mark for those intent on committing fraud, such as the creations of shell companies that are corporations in name only and have no presence other than a mailbox, securities division director Tom Cowan said in May.

In order for companies to have legal papers served upon them, known as service of process, they need registered agents to pass along that information.

But Wyoming does not require the registered agents to be with the companies or even live in the state.

The U.S. Department of Justice noted these problems in separate reports in 2005 and 2006.

Wyoming allows entities to be formed by people who don't live in the United States and it allows registration of those entities with minimal information, which can become fronts for money laundering operations, according to the Department of Justice.

The bill approved by the Joint Corporations Committee creates consistent requirements for registered agents, record retention and producing records if requested by law enforcement.

It also set standards for commercial registered agents that represent hundreds of companies, and provides ways to enforce the law.

However, the draft bill met with resistance from representatives of commercial registered agent companies.

The Delaware-based CT Corporation supports standards for registered agents, said its vice president for governmental affairs Jerry Daniel.

But the requirements for more information go too far and will put a burden on registered agents, of which only 95 will be affected by the draft bill, Daniel said.

"As a private business, we're not going to give out that information without a subpoena," he said.

The concerns about potential fraud are overblown anyway, Daniel said. "I think a lot of this is bad press; nothing you did put you in this position."

Sen. Grant Larson, R-Teton/Fremont, wasn't impressed by what he considered to be a double standard on Daniel's part.

"What I think I'm hearing you say is you want to be independent," Larson said. "You don't want to have records, you just want the name of the registered agent (on file) for process."

Reach Tom Morton at (307) 266-0592, or at Tom.Morton@trib.com.