901 Strada LLC - LLC

In one high-profile L.A. case, there’s been a long-running dispute about the true owner of a massive home being built in Bel-Air by developer Mohamed Hadid. The site is owned by 901 Strada LLC, an entity that lists no owner. (Francine Orr / Los Angeles Times)

James Rufus Koren
April 8, 2016

Delaware and Nevada aren’t the only states where it’s possible to set up a company without saying who owns it.

In California, too, owners can set up a limited liability company, or LLC, without telling state officials who’s behind the curtain.

That anonymity has come under close scrutiny since the release this week of the so-called Panama Papers, which revealed that dozens of global politicians hid assets in offshore shell companies set up by a Panamanian law firm.

And it’s been an issue of debate in Los Angeles, where wealthy investors have acquired high-priced real estate through LLCs that have obscured their identity.

Attorneys who work in the field argue that an individual’s investments aren’t a matter of public record and that LLCs can serve legitimate purposes. For instance, a celebrity might buy a house through an LLC to make it more difficult for fans — or haters — to find their address.

That anonymity is also just a step or two removed from one of the main benefits limited liability companies and corporations were created to provide: a legal separation between a business and the personal assets of an investor.

But Heather Lowe, legal counsel for Washington advocacy group Global Financial Integrity, said LLCs and shell companies often are used to obfuscate the source of ill-gotten cash or cover up illegal activity.

“They’re used to do the illegal things,” Lowe said. “The idea is to try to separate the criminal from the crime, and that’s what they’re used for.”
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In California, perhaps the easiest way to set up an anonymous firm is to create a limited liability company, one of the most common types of business entities.

Nikole Zoumberakis, an associate at downtown L.A. law firm Buchalter Nemer, said in California, like in most other states, officials do not require a list of the company’s owners.

“You don’t have to tell the state who the owners of that LLC are,” Zoumberakis said. “The state of California does not know who the owners of a California LLC are if the owners don’t want them to know.”

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