State Fines Unregistered Companies $1.3 Million
The attorney general and secretary of the state announced Thursday that a combined effort by their offices collected more than $1.3 million in penalties from companies doing business in the state without registering to do so.
Businesses formed outside of Connecticut must register with the secretary of the state’s office to obtain a certificate of authority to conduct business in the state. At a press conference in her office, Secretary of the State Denise Merrill said registering is neither difficult nor expensive. Registration fees range from $40 to $120, depending on the type of business, she said.
The fines were collected from almost 330 businesses, some of which were likely not operating long in the state without registration and only penalized a few hundred dollars. But some companies were fined more than $20,000.
The five businesses paying the steepest penalties were:
- DAN Services Inc., an international safety service for divers based in North Carolina, which was penalized $26,955.
- The Providence Journal Company, a Rhode Island newspaper, charged $22,192.50.
- Global Med Technologies Inc., an international medical management and software company based in Colorado, charged $20,910
- Harris Environmental Services Systems Inc., a Massachusetts company specializing in environmentally controlled rooms, was penalized $20,842.50.
- Superior Technical Resources Inc., a New York IT employment recruiting company, penalized $20,685.
Merrill said the businesses that received the heaviest penalties were operating in the state without authority for many years. The penalty for operating unregistered is around $300 a month, she said.
The state has been consistent in enforcing the registration law and has collected more than $6 million in penalties over the last five years, she said. The purpose behind the requirement is to make sure that companies operating in Connecticut can be held accountable to consumers.
When businesses register they must list an agent for the service of process, someone who consumers can contact if they have grievances, she said.
“This is not a frivolous government action. This really makes an impact on our business community,” she said.
When they don’t bother to register, businesses cannot be held accountable for their work and can get away with doing a lower-quality job at a lower price, she said. That creates an unfair business climate for the companies who are playing by the rules, she said.
Attorney General George Jepsen said it’s important for out-of-state businesses to play by the rules in Connecticut. But both Merrill and Jepsen said many of the companies fined simply didn’t know about the requirement.
The purpose of the Capitol press conference was to educate businesses about the registration requirement, Jepsen said.
“The experience of my office has shown that in many cases businesses don’t know what the rules are. We need to do a better job educating the public and making these rules clearer,” he said.
The Providence Journal told the Associated Press that its failure to register was an “unintentional oversight.”
“As soon as it came to light, we rectified the situation by registering with the state and paid the requisite license fees and penalties,” said Deborah Tomilson, the papers’s vice president of business development.
Other businesses disputed the penalties, saying that their level of business activity in Connecticut was not higher enough to require registration, Jepsen said.
“There’s a whole range from people who sincerely believe they have no requirement to register,” Jepsen said, “… to fly-by-night contractors who deliberately and willfully try to fly under radar to avoid being recognized.”
When the penalty is assessed they try to make the penalty reflect the reality of the situation, he said.
At least two of the highest fined companies actually self-reported their violation, Merrill said.
Connecticut Better Business Bureau President Paul Scarpetti said that people should think twice about doing business with a company that chooses not to register with the state.
The comment elicited a question from leader of the Connecticut Green Party and journalist Ken Krayeske, who pointed out that when of the companies penalized was Burton Capital Management, LLC, which was fined $1,695.00. That company is run by Robert Burton a major benefactor of the University of Connecticut’s athletic department.
Krayeske asked if UConn should now be wary of Burton.
Merrill said Burton initially didn’t feel he needed to register with the state but said an agreement was eventually reached and he is now registered. She did not comment on whether the university should be wary of him. Jepsen did not comment either.
But Scarpetti clarified his own statement: “We were talking about people giving second thought to who they do business with and whether or not they’re registered, we’re talking about at the consumer lever for the most part.”