Legislators, Unions, and Tenants Say No More Shady Shell Companies, Urge Passage of the LLC Transparency Act

Legislation would reveal the identities of beneficial owners operating anonymous shell companies in New York, including negligent landlords and employers, Russian oligarchs, and tax cheats

Albany, NY Today, state legislators, labor unions, and tenant advocates rallied to demand passage of the LLC Transparency Act (A3484 / S995). The legislation would create a public registry of “beneficial owners” of limited liability companies (LLCs) doing business in New York. LLCs are a form of shell company that can easily be formed and operated anonymously, making them a preferred vehicle for various forms of white-collar crime, including wage theft, campaign finance violations, and money laundering. Anonymous LLCs have also been implicated in scandals as far-reaching as the Panama Papers and Pandora Papers and frustrate routine government activity, such as code enforcement. If passed, the bill’s public registry of beneficial owners would be the first such registry in the United States.

“There is no right to corporate anonymity, especially when it comes with such damaging social costs for New Yorkers,” said Assemblymember Emily Gallagher, prime sponsor of the LLC Transparency Act. “It shouldn’t be easier to get a library card than to start an anonymous shell company. This bill will shine a light where it’s needed most.”

Housing advocates offered their support for the legislation because of the benefits the legislation would offer to tenants, who routinely face anonymous LLC landlords that use anonymity to escape accountability, frustrate legal proceedings, or mask the size of their real estate portfolios or histories of code violations.

“It’s deeply unjust that many tenants in New York state don’t know who their landlord is because their landlord is hidden behind an anonymous LLC. This results in tenants unable to research their landlord properly before moving in and allows slumlords to hide a track record of neglect, unable to properly reach their LLC landlord during emergencies, and what we saw during the pandemic – even unable to access ERAP and other programs because their LLC landlords were unresponsive and hard to contact,” said Whitney Hu, Director of Civic Engagement and Research for Churches United for Fair Housing. “As a housing services organization serving thousands of members and church partners, we’re exasperated and tired with the abundance of LLC landlords hiding in plain sight. The state legislature passing the LLC Transparency Act would take us one pragmatic step further in building a safer, more transparent housing system.”

"Billionaires and slumlords across New York hide behind LLCs to avoid accountability and exploit tenants. The laws are simply broken. Countries around the world have taken action to shed light on the owners of LLCs so the public can hold them to account. It's time for New York to join them. As the largest real estate market in the United States, New York can set the standard for the entire country and inspire other states to take action. This bill is a commonsense reform that will help tenants and taxpayers alike," said Cea Weaver, Campaign Coordinator for Housing Justice for All.

"Fifth Avenue Committee and Neighbors Helping Neighbors have organized thousands of tenants in poorly maintained properties owned by 'LLCs' over many decades where tenants were often harassed.The LLC corporate structure, which enables bad actors to be anonymous, means that tenants and communities cannot easily hold LLC landlords accountable for violating laws, regulations and building codes.That's unacceptable and it's time for a change. The LLC Transparency Bill is overdue," said Michelle de la Uz, Executive Director of Fifth Avenue Committee and Neighbors Helping Neighbors.

Good government groups offered their support for the legislation because, if enacted, it would help expose corruption facilitated by anonymous LLCs.

"This important transparency legislation will help peel back the layers of New York's LLCs, giving state oversight agencies better tools to fight corruption and hold these businesses accountable under state law," said Rachael Fauss, Senior Policy Advisor for Reinvent Albany. "LLCs have too often been a vehicle to hide the substantial financial resources that are used to influence state government. Creating a public database of beneficial owners will give New Yorkers a powerful tool to know who is behind these secretive LLCs."

“LLCs were invented by corporate lawyers in Wyoming in the 1970s to hide sleaze -- and here in New York they're hiding a lot of it.Sleazy employers use them to hide wage theft and bad working conditions, sleazy landlords use them to screw tenants on rent and repairs, billionaires and wealthy corporations use them to dodge taxes and avoid paying what they owe, and international oligarchs use them to hide things we can't even imagine. New York has millions of LLCs with billions in assets and trillions in potential liabilities, and right now it's all secret. This legislation would stop the secrecy, uncover the sleaze and empower regular people to fight for what's right.We're happy to be part of the effort to pass it," said Mike Kink, Executive Director of the Strong Economy For All coalition.

"For too long LLCs have been used as a vehicle for bad actors to peddle political influence or to hide illegal activities.Greater disclosures for those who are responsible for the LLC is a critical component of public accountability.U.S. Supreme Court Louis Brandeis made his famous statement that 'sunlight is said to be the best of disinfectants.'When it comes to LLCs, the more sunlight, the better," said Blair Horner, Executive Director of NYPIRG.

In addition to the bill’s sponsors, Assemblymember Gallagher and Senator Hoylman-Sigal, legislators from the Hudson Valley, where code enforcement has been hampered by anonymous LLC landlords, and New York City, including Assemblymembers Linda Rosenthal, Phara Souffrant Forrest, MaryJane Shimsky, Sarahana Shrestha, Zohran Mamdani, Jonathan Jacobson, and Marcela Mitaynes, and Senators Jessica Ramos, Cordell Cleare, and Kristen Gonzalez, offered their support for the bill for a suite of reasons, showcasing the broad benefits the legislation would have if enacted.

"It is dangerously easy to form a limited liability company to hide your identity from employees or tenants and evade liability, taxes, and the law. I proudly cosponsor this bill to ensure accountability for owners of shell companies and end the impunity that comes with anonymity," said State Senator Gustavo Rivera.

“Anonymous limited liability corporations are dangerous and limit the accountability of these organizations. Anonymous LLCs enable bad actors to hide assets, violate campaign finance laws, and sidestep housing code violations. Businesses shouldn’t be able to benefit from the LLC system without accountability for their actions. That’s why I support the LLC Transparency Act: to ensure that there is transparency in LLC ownership and to protect New Yorkers from anonymous actors seeking to avoid our justice system,” said Assemblymember Harvey Epstein.

“Ensuring LLC transparency is essential for allowing accountability and to protect the rights of tenants. For far too long, people who profit from abusive and negligent practices have been allowed to continue undeterred, enabled by anonymity. This bill will bring crucial sunlight to this sector and will give lawmakers and government a crucial tool against those seeking to prey upon New Yorkers. I am proud to stand with Assemblymember Gallagher to fight predatory companies and I urge the legislature to act now to protect New Yorkers and ensure justice can be done,” said Assemblymember Phara Souffrant Forrest.

“I'm proud to stand alongside labor unions and tenant advocates to support the LLC Transparency Act. It's essential that we fight against global corruption in New York and this bill will be a positive step forward in protecting tenants from anonymous landlords. Public information is power for the people, so let's make it clearer who is profiting off of tenants in our state,” said Assemblymember Marcela Mitaynes.

The bill has been endorsed by the Hotel Trades Council, the New York District Council of Carpenters, the New York State Regional Conference of the Bricklayers and Allied Craftworkers, Bricklayers and Allied Craftworkers Local No. 1, and the North Atlantic States Regional Council of Carpenters. A similar measure, SB 594, is being pursued in California’s state legislature with the support of the California Labor Federation, and the California chapters of AFSCME, SEIU, and Unite Here, among many other groups. Organized labor’s support for beneficial ownership transparency stems from the deceptive practices of abusive employers, who play shell games with LLCs to avoid accountability, for example when confronted with judgments in wage theft cases, to hide prior labor violations, or to structure projects under numerous LLCs to avoid project-labor-agreement cost thresholds. The bill has also been endorsed by the New York State Land Title Association, the Office of the New York County District Attorney Alvin Bragg, the Financial Accountability and Corporate Transparency (FACT) coalition, the Community Service Society, Housing Rights Initiative, and transparency groups OpenOwnership and OpenCorporates.