Scam of the day: the fake “company-registry” preying on new companies

Directors of newly incorporated UK companies are receiving official-looking letters from “Company Registry” requiring them to pay a fee. It’s a scam – and potentially a very lucrative one. We’ve looked into who’s behind it and identified one individual who the authorities should be questioning.

We frequently receive tip-offs from accountants and lawyers who’ve seen firms promoting dubious schemes of one kind or other. This often requires a large amount of analysis from us to work out exactly what’s going on.

But sometimes it’s obvious that what’s being proposed is wildly improper, even fraudulent. We’re publishing cases like this as “scam of the day” – documents and links plus a short explanation of why what’s proposed is a scam.

We hope that this helps warn potential clients off dangerous scams, and prompts the authorities to be more proactive identifying and closing down scammers.

The scam

If you incorporate a UK company, you are likely to receive a letter like this from “Company Registry” (company-registry.org):

It looks like an official document – an invoice for a service that has already been purchased (“Pending”, “Complete activation”, “These are the next steps”).

The reference to a “COVID 19 New Business Relief Deduction” again gives the impression this is an official letter.

If you go to the website to “activate your account”, everything continues to look official – entering your reference number reveals your company’s details, just as it would for a bona fide company registry:

But this is a scam, designed to look official but actually nothing to do with Companies House or HMRC.

The people behind the scam think putting this in small print on the back page absolves them of responsibility:

And there’s a disclaimer in very small print at the bottom of their website:

This doesn’t protect them at all. In fact the small print is damning, because it shows that the confusingly “official” presentation of the letter and website is by design.

Companies House has said this is a scam. So has the Association of Chartered Certified Accountants and many other people. We agree.

Could it be worse than a scam?

The “service” they are really selling is some kind of unspecified “document vault” in which companies can store their UTR (i.e. tax code), Government Gateway and Companies House authorisation codes.

This is information that would be extremely valuable to a fraudster, as it would enable them to make Companies House filings (e.g. installing themselves as directors and changing the registered office) and receive refunds from HMRC.

We don’t think anyone should be giving these details to any untrusted third party, and certainly not to the unknown individuals behind “company-registry.org”.

Who is behind company-registry?

The business is run by Company Registry LLC, which is registered in Arkansas, USA.

Very few details are publicly available for Arkansas companies:

The “Not Current” means that the company is late with its filings – it is (to use the US term) not in “good standing”.

The registered address is an office which used to be an accounting firm, but their website is down, their Facebook page hasn’t been updated for a year, and it’s unclear they’re still in business (although the realtors selling the building say that it’s let to an accounting firm). We wrote to them asking for comment and haven’t heard back.

We also wrote to Company Registry asking for comment, and received this “statement of deniability”:

(PDF download here.)

The letter isn’t on headed notepaper, doesn’t identify the legal name of the business, is written in italics and is curiously worded (with signs that ChatGPT was used). We wrote to Company Registry LLC asking why they’d sent us such a strange letter, but didn’t hear back.¹We know Company Registry received our message, because we pointed out they weren’t registered with the Information Commissioner, and they registered very soon after.

The letter is in the name of Octavian Balan who says he’s “legal counsel” but isn’t a qualified lawyer.²He told us he has a degree and a Masters in law, but Balan doesn’t seem to understand that doesn’t make him qualified.

Mr Balan has a LinkedIn page where he claims expertise across an impressive range of legal topics (“FCA related matters, crypto law, NFT law, tax law, VAT law, international law, fiscal law and corporate law”) and says he’s the founder and CEO of “global law firm” LegalX.³LegalX appears to have used a UK company in the past but now is an LLC incorporated in an unspecified jurisdiction. Its website says it’s a “reputable global law firm” and “global leader in litigation, arbitration and financial law” which is “comprised of elite lawyers with extensive legal experience”. Neither the website nor the LegalX LinkedIn or Facebook pages list any lawyers, or indeed any individuals other than Mr Balan. Neither Mr Balan nor LegalX is registered with the Solicitors Regulation Authority or any other regulator we’re aware of.⁴LegalX say they undertake UK litigation work (at £1,500 per hour); that is problematic, because the conduct of litigation is a “reserved legal activity” which is not permitted to be undertaken by a non-lawyer. LegalX says it has an office in Italy; the Italian prohibitions on non-lawyers practising are significantly more stringent than those in the UK.

Mr Balan denies running Company Registry and says he was just hired to act for it.⁵His explanation for his strange letter was “You do know that the right to expression exists, right? I can phrase a sentence however I prefer, thank you. That is the fundamental right to expression and to speech.“.

A criminal offence?

There is a specific criminal offence⁶In addition to general offences under the Fraud Act 2006. in the The Business Protection from Misleading Marketing Regulations 2008 for misleading advertising, meaning advertising which:

“in any way, including its presentation, deceives or is likely to deceive the traders to whom it is addressed or whom it reaches; and by reason of its deceptive nature, is likely to affect their economic behaviour”

We have heard from six people who were deceived by the mailshots from company-registry into thinking it was an invoice from an official body, and who went to the website and paid the fee.

So there are good grounds for believing a criminal offence has been committed. The offence carries a fine and/or imprisonment for up to two years.

There is a defence under the Regulations if a person can show they just made a mistake. That seems very unlikely given the small print – which even references the Regulations (presumably in an attempt to establish a defence; actually it does the opposite).

It is also possible that a tax offence is being committed. The fee charged by Company Registry LLC doesn’t include VAT, and a business with no UK establishment that sells digital services into the UK always has to be registered. If they have a UK establishment (e.g. because the business is actually run out of the UK) then the registration requirement would apply if their sales hit £90,000.

What should happen?

This is a large scale and well organised fraud, targeting many (and perhaps every) newly incorporated UK company.

We would hope that it is being investigated as a priority. The obvious first step would be to speak to Mr Balan. Given he isn’t a qualified lawyer⁷Or supervised by a qualified lawyer, his communications with Company Registry LLC aren’t subject to legal privilege.

Many thanks to the individuals and businesses who alerted us to this fraud.

• 1
  We know Company Registry received our message, because we pointed out they weren’t registered with the Information Commissioner, and they registered very soon after.
• 2
  He told us he has a degree and a Masters in law, but Balan doesn’t seem to understand that doesn’t make him qualified.
• 3
  LegalX appears to have used a UK company in the past but now is an LLC incorporated in an unspecified jurisdiction.
• 4
  LegalX say they undertake UK litigation work (at £1,500 per hour); that is problematic, because the conduct of litigation is a “reserved legal activity” which is not permitted to be undertaken by a non-lawyer. LegalX says it has an office in Italy; the Italian prohibitions on non-lawyers practising are significantly more stringent than those in the UK.
• 5
  His explanation for his strange letter was “You do know that the right to expression exists, right? I can phrase a sentence however I prefer, thank you. That is the fundamental right to expression and to speech.“.
• 6
  In addition to general offences under the Fraud Act 2006.
• 7
  Or supervised by a qualified lawyer