On the morning of May 10, employees in the Colorado Secretary of State’s Office saw something odd.
An extraordinary number of new LLCs were being created every few minutes from computers in Venezuela, paid for by a known financial trickster, and registered in Northglenn.
IT staff implemented a human-verification system, which failed to stop the flood, and then blocked any new filings from Venezuela. Federal, state and local police were called.
Their investigation, outlined in court documents this month that BusinessDen obtained in a records request, determined that 15,828 fraudulent companies were formed in Colorado between February 2022 and May 2023 by a man named Marcio Garcia Andrade.
Andrade registered them all at 2236 E. 109th Drive, a nondescript townhouse whose landlord — a doctor — and tenant were both unaware of the fake filings, according to investigators.
A spokesperson for Andrade said the fraud allegations are a “misunderstanding” and that all of his business filings were legitimate, legal and good for Colorado.
The alleged fraud occurred at an auspicious time for Andrade and an inauspicious time for taxpayers. The Secretary of State’s Office cut the cost of new LLC filings from $50 to $1 beginning in July 2022 and ending in May, when the program ran out of money. By shifting administrative costs from companies to the government, it cost taxpayers $8.4 million.
“It is fantastic that this fee relief has been utilized by so many Colorado business owners and entrepreneurs,” Griswold said May 19. “… I will always work to cut costs and red tape for Colorado businesses that are the backbone of our communities.”
Griswold’s press release, coincidentally filed on the same day that Andrade allegedly registered his last fraudulent LLC, touted the creation of 155,000 new LLCs in just 11 months. But more than 10 percent of those were fraudulently created by Andrade, her office says now.
By filing when he did, Andrade “received $766,262 in benefits…appropriated from the state treasury,” Deputy Secretary of State Christopher Beall wrote in an affidavit this month.
The state isn’t alleging that Andrade made off with $766,262, but rather that, by virtue of the lower filing fee, he essentially received a discount of that much on government services.
The Colorado Attorney General’s Office sued Andrade on Sept. 8 in Denver District Court, along with 11 companies and people who may have assisted with his allegedly fake filings. The lawsuit seeks to be paid that $766,262 from Andrade and the other defendants. Some defendants appear to be phony names, such as “Mr Juliwa” and “Mr Lesage.”
In a statement Thursday, the Secretary of State’s Office said it “took swift action to mitigate the fraudulent actions” and let the AG’s Office know about them. “We are glad to see their office pursue this matter against bad actors who sought to take advantage of the filing processes, and hope for a speedy resolution that holds these individuals accountable,” it said.
Andrade has been known to anti-fraud enforcers for years. In 2019, the Federal Trade Commission accused him and several of his companies of promising to repair people’s bad credit, taking millions of dollars in fees and then not helping them. When customers complained, Andrade and the companies threatened to sue them, the FTC said.
One of Andrade’s firms sold so-called “shelf companies,” which are LLCs that are created on paper, sit unused for several years, and are then sold. Because they have existed for years, the companies often have an easier time attracting investors, customers and credit.
As part of a settlement with the FTC in 2020, Andrade and others agreed to turn over $9.6 million and to stop running fraudulent credit service companies, records show.
This month’s lawsuit indicates that the state believes Andrade registered his 15,828 new companies for $1 each in order to sell them for much higher prices in future years.
“Fraudulently filed shelf corporations cause havoc in the Colorado marketplace,” it claimed.
A person who declined to give their name but referred to themself as Andrade’s administrative assistant told BusinessDen by email Thursday that Andrade “has not engaged in any illegal activities” and the many LLCs he has started “are entirely legitimate.”
“Every single one of the corporate entities that Mr. Andrade has incorporated will ultimately be transferred to an entrepreneur who will use it for legitimate revenue-generating activities that will benefit both the Colorado government and the Colorado economy,” they said.
Andrade had permission to register his shelf companies at the Northglenn address “for many years” and only recently learned the house was sold, they said. It changed hands in July 2022.
“We are certain that this misunderstanding will be resolved with the Colorado Attorney General,” they went on to say, “as Mr. Andrade has always acted in good faith and with the clear intention of bringing businesses to invest, operate and create jobs in Colorado.”