Let's undo the Corporate Shell Game
- Anthony Kathol
- 2 hours ago
- 4 min read
The following article came across my email inbox today from South Dakota Voices. See link below:
I have been following developments in Sioux Falls regarding the proposed new data center, which is working its way through the planning process after the Sioux Falls City Council changed the zoning of the parcel in question to industrial. People are vehemently upset about the back-room deals occurring and have raised the ire of locals, who have taken out a petition to put the matter on the ballot, allowing the citizens of Sioux Falls to challenge the zoning change. The citizens have until 12:00 Noon, Thursday, January 29th, to submit the necessary signatures to bring it to a vote in a special election.
The article highlights that the data center incorporated under Delaware secrecy laws in December 2024 and then filed as a foreign corporation with the State of South Dakota a few days later, and the corporate shell game weaves its web of deception from the general public once again.
Apparently, a local citizen submitted a Freedom of Information Act (FOIA) request to the city to obtain additional information about the project. To date, the citizen has not received the requested documents, and the city continues to slow-walk the request. The question is: Why does the city need additional time to provide the requested documents to the general public if it wants to be "transparent" about the project? Is it perhaps that once the public learns who is behind the proposed data center project, there will be more public backlash and support for signing the petition? This type of public deceit is why people no longer trust their government. Can anyone blame its citizenry when public employees and elected officials who work for the people use every stonewall tactic to hide information from the very people who put them into office?
The shell game begins when an out-of-state corporation finds a resident or law firm in South Dakota to serve as the registered agent, managing the "shell" by submitting all necessary annual reports and forwarding any relevant correspondence from the Secretary of State to the out-of-state corporation. See Gemini Data Center's filing application as a foreign LLC below:
Upon inspection, the LLC intentionally provides very little information, so the public cannot follow the money or identify who is actually behind the project. This is the essence of the "shell corporation." In other words, some other entity is backing Gemini, which is not disclosed to the public for various reasons, such as venture capitalists don't want their competitors to know what they are up to, let alone the public. The application is worth the paper it is printed on. The Secretary of State couldn't care less what you put down. One could list Mickey Mouse as the registered agent with a fictitious address and a P.O. Box number on the application, and as long as you pay the filing fee, you are good to go. There is no turning back, because the Secretary of State lacks the manpower to review the legitimacy of these shell corporations. Notice the lack of transparency. The LLC does not identify the board of directors, the address or contact information, the shareholder names and their percentage of ownership, or the registered agent's name living in South Dakota. Notice there is no email or phone number to contact the beneficial owner, Michael Anvar. This deception is intentional, so the public cannot follow the money trail. The legislature is aware of the problem but refuses to address the report-filing issue in South Dakota because the powers that be in Pierre want to be viewed as a pro-business-friendly state while keeping the public in the dark. The shell game is also used to lower a corporation's income taxes by setting up shop in South Dakota rather than in a less business-friendly state, all under the guise of economic development and job creation.
South Dakotans need to wake up and put an end to this corruption. If elected to the legislature, one of my first orders of business will be to stop the LLC report filing corruption that occurs at the Office of the Secretary of State so that there is full and open transparency as to who are the registered agents for the corporation, who are the corporations board of directors, with their legal address so that there is full disclosure as to who is doing "business" in South Dakota, which will assist the public in their investigatory inquiries in order to find answers to their public record searches or requests. I understand that many small businesses, including family farms and ranches, are incorporated in South Dakota, but at least one can easily identify who is farming or ranching the operation when driving by. Out-of-state corporations hiding behind shell companies are a whole new animal in the state's LLC mix. It is time to close this loophole so that, like the people in Sioux Falls, they can easily find answers and follow the money. However, it is our state government that makes it difficult to obtain the information and sides with the special interests and corporate elite rather than the interests of everyday South Dakotans. God bless.