State officials collected roughly $1.8 million in fines from out-of-state companies operating illegally in Connecticut during the 2015 fiscal year, according to Secretary of the State Denise Merrill and Attorney General George Jepsen.
Merrill and Jepsen announced this week that the penalties were the results of a joint investigation by their offices. The fines were paid by 353 out-of-state companies that operated here without the legal authority to do business in Connecticut.
“Often, out-of-state companies are not aware that they must register before conducting business in Connecticut,” Jepsen said in a statement. “Registering with the state provides consumers with a layer of protection and helps ensure that all businesses are operating on a level playing field. Through joint enforcement with the Secretary of the State, it’s my hope that we can educate out-of-state companies so that those operating honestly and in good faith — and by far the vast majority of businesses do just that — can transact legally and openly in our state.”
During the 2015 fiscal year, fines from out-of-state companies totaled $1,759,135. Violators paid penalties ranging from $190 to more than $46,000, and the total collected was the largest annual amount netted since the offices’ joint effort began in 2007, according to Merrill and Jepsen.
The five largest penalties were paid by: The Washington Trust Co. of Rhode Island, which paid $46,740; NetApp Inc. of California, which paid $43,965; AMS Sales LLC of Minnesota, which paid $35,745; Industrial Technical Services Inc. of Massachusetts, which paid $30,542, and FNC Insurance Agency Inc. of Maryland, which paid $29,550.
“Here in Connecticut, we strive for fair competition in the marketplace so that all businesses in the state have a chance to make a profit in this economic climate,” Merrill said in a statement. “Whether intentionally or not, out-of-state companies that fail to register and obtain a certificate of authority to do business here undercut Connecticut companies and make it difficult to provide accountability for Connecticut consumers.”
State law mandates that various types of businesses — corporations, non-stock corporations, limited partnerships, limited liability companies, limited liability partnerships and statutory trusts — that are formed outside of Connecticut must get a certificate of authority from the Secretary of the State’s Office and pay a fee before conducting business here.
To date, about 5,000 out-of-state companies have filed for the proper authority through the Secretary of the State’s Office, according to Merrill and Jepsen. All out-of-state companies operating legally in the state are required to file an annual report with the Secretary of the State’s office each year.
Companies that don’t register with the state and are caught are fined $300 for every month they do business in Connecticut without the proper legal authority. Some companies also must pay the annual license fee required under state statute for years in which they should have been registered, according to state officials.
“This is not a gray area. The laws are quite clear on this matter,” Howard Schwartz, spokesman for the Connecticut Better Business Bureau, said in a statement. “Best marketplace practices dictate that businesses are not only registered, but also licensed and insured. We hope the amount of the collected fines will serve to educate more businesses about their obligation to obtain the proper legal authority to do business in the state.”