Wyoming — the least populated U.S. state — has overtaken Delaware for the most corporate registrations per capita, cementing the Cowboy State’s reputation as a top secrecy destination for the ultrawealthy, according to new data released today.
The analysis, compiled by corporate data firm OpenCorporates and shared with the International Consortium of Investigative Journalists, shows that the number of Wyoming incorporations shot up by 30% in 2023, while Delaware’s rate of growth slowed.
The spike in new incorporations has raised concerns in Wyoming about a possible influx of bad actors seeking to exploit the state’s laws that allow anonymous limited liability companies, or LLCs, to overlay highly opaque trusts. Local officials are scrambling to keep up with a proliferation of anonymous entities in the state.
“The obvious question is: Who is incorporating there, and for what purpose,” Chris Taggart, the founder of OpenCorporates, told ICIJ.
‘The Cowboy Cocktail’
For years, Wyoming’s financial industry has competed with its neighbors to attract business by offering secrecy to those seeking to cover their tracks. Like other states around the country, Wyoming collects no information about ownership of companies that register there. But the state’s corporate services industry has advertised special features of its business laws that allow people to use corporations to set up especially secretive trusts.
Ultrawealthy people around the world have increasingly turned to trusts to keep assets out of the hands of tax authorities, financial crime investigators and civil litigants, including spouses during divorce proceedings. Trusts are legal arrangements that can generate a high level of opacity and protection by separating assets from their original owners — at least when such distance is convenient for tax planning or other purposes.
Wyoming’s business code can take this a step further. A common arrangement in Wyoming is referred to as the “cowboy cocktail,” which allows an LLC — instead of a named person — to be designated as the controller of a trust. If an anonymous shell company is put at the helm of a trust, the veil of secrecy becomes even thicker than in a usual trust structure. The cocktail gains real potency if the trust in turn holds a separate Wyoming-registered LLC, creating another layer of corporate secrecy.
As a part of its 2021 Pandora Papers investigation, ICIJ and its partner reporters uncovered more than a dozen ultrawealthy foreigners who had chosen Wyoming as the location to set up secretive trusts and stash their fortunes. This included a Russian billionaire as well as an associate of a dictator, according to ICIJ’s reporting.
These trusts do not require any assets to be actually transferred to Wyoming. Instead their ownership simply takes a legal detour to a place where financial tracks are easily covered. Even so, the state’s revenue from its business filings alone have risen to $42 million, according to local news outlet the Cowboy State Daily.
ICIJ’s reporting, based on leaked financial records, showed that Igor Makarov, a billionaire who made most of his fortune in Russia and the former Soviet Union, set up a trust in Wyoming in late 2016. This trust in turn held three companies registered in the British Virgin Islands, including one that owned a 13-seat private jet, according to ICIJ’s previous reporting. After Russia’s 2022 invasion of Ukraine, Makarov was sanctioned by multiple countries, including Canada. He was not sanctioned by the United States. In 2021 Makarov told ICIJ through his lawyer that the Wyoming trust was established under professional advice and that he made all required disclosures and followed all transparency laws.
Makarov’s Wyoming trust was revealed in a leak of more than 11 million financial records called the Pandora Papers. The files also describe a fortune traced to Kalil Haché Malkún of the Dominican Republic, who had served as estate manager to brutal Dominican Republic dictator Rafael Trujillo. The records show that Haché had set up a trust in Wyoming.
ICIJ more recently reviewed a series of leaked promotional documents that give a window into Wyoming’s special appeal to the firms that serve the ultrawealthy people across the globe. One document, generated by a Cyprus-based corporate services firm called ConnectedSky, points to the state’s privacy laws and its “responsive legislature” as contributing to Wyoming “overtaking the Cayman Islands, Singapore and New Zealand” as the go-to place to form LLCs and trusts.
Wyoming “is not a target of the Inland Revenue Services to discover unreported taxes,” the document states, appearing to refer to the name used by several national tax authorities around the globe. ConnectedSky did not respond to specific questions about the document but said that it “and/or any associated companies are duly regulated companies, which always abide respective laws.”
Gary Kalman, the director of the U.S. office of Transparency International, a group that advocates for stronger anti-money-laundering laws, sees the document’s discussion of unreported taxes as a “surprising and concerning thing to highlight.” Kalman added that the document’s “brazen promotion of secrecy should be red flags for law enforcement” about the sort of business that Wyoming is attracting in general.
The rising business of secrecy
The new analysis by OpenCorporates shows that, last year, the number of Wyoming incorporations shot up by 30% — an unprecedented one-year rise. Delaware, long the U.S. hub for incorporations, has seen a slowing rate of its growth in that sector, according to OpenCorporates. For years, Delaware has seen major publicly traded corporations, including Tesla, move their corporate headquarters to other states like Texas that have been attracting large firms through low taxes and courts favorable to business interests. Other states, like South Dakota, Alaska and Wyoming have made efforts to attract registrations through strong financial privacy laws. But Wyoming is the only state in the country with its registration rate growing in a meaningful way against its population, according to OpenCorporates.
Perhaps tellingly, 40% of Wyoming’s total LLC incorporations list their addresses at two buildings in the town of Sheridan, a center of the state’s registration business, according to the OpenCorporates analysis.
These two buildings house the offices of the two firms Registered Agents Inc. and Cloud Peak Law, which together registered 55% of all incorporations in Wyoming in 2023, according to OpenCorporates.
Registered Agents Inc. is a national company that reportedly has offices in every U.S. state. According to a recent report in Wired Magazine, Registered Agents Inc. maintained a practice of listing fictional names of people on company formations — a practice that may have pushed legal boundaries. The Wired story said that “six allegedly fake names were listed as officers for 887 of businesses registered to the” same Sheridan address.
Registered Agents Inc. and Cloud Peak Law did not respond to ICIJ requests for comment.
In 2022, Wyoming’s statehouse rejected a Republican-sponsored bill to increase regulation and transparency of trusts in Wyoming. Curt Meier, Wyoming’s State Treasurer, said the industry of lawyers who form trusts pushed back effectively against reform efforts. “They don’t want to have us interfere with their business opportunities,” Meier told ICIJ.
Last year, the state’s legislature again declined to advance a proposed bill to tighten oversight of corporate registration.
Chuck Gray, Wyoming’s Secretary of State, who oversees corporations in the state, told ICIJ that reform is needed to keep bad actors out of the financial system. It is “critical we take legislative action to add teeth to our enforcement procedures to stop fraud and abuse of corporate filings, especially by foreign adversaries,” Gray said in a statement to ICIJ. He added that three draft bills aiming to tighten the state’s oversight of the registration industry could be taken up in next year’s legislative session.
Secrecy is a national problem. — Gary Kalman, Transparency International
A 2021 federal law, known as the Corporate Transparency Act, mandates most U.S. companies report their ownership to the U.S. Treasury Department. This will help shed some light on the ownership of Wyoming corporations, but access to that data will remain tightly restricted to certain law enforcement officials and some financial sector employees.
Kalman says that despite its differences from other states, Wyoming isn’t such an anomaly on a national level. Every state in the country currently allows people to register anonymous firms, although New York recently adopted a new law to implement an ownership database for all registered firms there. As Kalman put it, “Secrecy is a national problem.”
