The Legislature’s Joint Revenue Committee spent almost half of its two-day meeting in Lander last week discussing whether Wyoming’s private-trust and limited-liability-company laws are prone to abuse by bad actors — tax evasion, tax avoidance, money laundering, shielding assets from creditors and law-enforcement etc. Most — but not all — of the expert witnesses objected to that idea, telling lawmakers that Wyoming is neither a tax haven nor a harbor for illegal activity. One expert offered sharply different testimony.
“It’s apparent we have two widely different thoughts here,” Committee Chairman Sen. Cale Case (R-Lander) said during the meeting.
Legislative leadership assigned the topic following scathing reports in the Washington Post and elsewhere. But despite the international spotlight and the lengthy discussion, the committee adjourned without giving legislative staff instructions for further action on the topic, such as research or bill drafting. Case told WyoFile, “[I] definitely don’t think we are finished with this.”
Private trusts and LLCs are both legal entities that can be used to protect and manage assets. In Wyoming, in particular, both entities — either separately, or in combination with one another — can provide a high degree, if not complete, anonymity to involved parties thanks to little regulation and strong privacy laws.
Proponents describe the status quo as a strength that, when combined with Wyoming’s lack of an income tax, makes the state an attractive jurisdiction in which to house and protect wealth. Detractors say it is indeed attractive, though not to the right people, and provides little to no benefit to Wyoming residents that are not employed in the industry.
Independent of the moral hazard question Case said Wyoming’s trusts and LLCs are potentially an untapped revenue stream at a critical time for the state, hence his request for the topic and its assignment to the committee responsible for figuring out how to fund state government.
Trust companies in Wyoming hold at least $31.5 billion worth of assets in trusts — close to the GDP for the entire state.
Wyoming provides the legal structure but may not be getting a fair return, according to Case. Because the topic is extraordinarily complex, Case said it was important for the committee to begin its work with a “primer.”
Attorney Chris Reimer was the first of about a half-a-dozen local experts to walk the revenue committee through the ins and outs of Wyoming’s statutes on April 28. This was far from Reimer’s first experience with the Legislature. He had helped to draft and revise the very laws at the center of the discussion, he said.
As a partner with Long Reimer Winegar Beppler LLP, his practice includes setting up and administering private trust companies, “usually for out-of-state and international clients,” according to the firm’s website.
Aside from legal explanation, Reimer spent much of his time in front of the committee criticizing the work of the Washington Post and objecting to the idea that Wyoming may be enabling criminal activity. That was echoed by several others, including Scott Weaver and Betty Andrikopoulos of the Wyoming Trust Association.
Reimer did not completely deny the presence of criminal activity, though he characterized it as a thing of the past. For instance, Reimer brought up concerns about registered agents, who act as a representative for a company.
LLC filings are typically public record. The identities of the LLC’s members, however, can be kept private if a business formation company is hired to act as a registered agent. Wyoming does not require any training for these individuals, such as how to vet a company before representing them — a process which is not required by Wyoming law.
It’s also not uncommon for registered agents to know very little about the companies they represent, according to the Washington Post, which also linked several registered agents in Wyoming to companies facing accusations of wrongdoing in international court cases.
The Sheridan Press reported on the potential unintended consequences of the secrecy afforded by using a registered agent.
Reimer, however, said the potential for illegitimate businesses hiding behind a registered agent in order to disguise shady operations has been voided by the federal Corporate Transparency Act which was enacted in January 2021, but hasn’t yet fully gone into effect.
“The most important thing to take away from this is that a so-called secret shell company … that is a thing of the past,” Reimer said. “It is over.”
The CTA will require some legal entities to report certain basic information about themselves, their beneficial owners and who is authorized to act on their behalf. The data collection has begun but it has yet to be determined who will have access to that information.
The CTA’s unhurried rollout is a problem, according to Ryan Gurule. He’s policy director for the Financial Accountability and Corporate Transparency Coalition, a non-partisan group based in D.C. working to end the use of anonymous shell companies as vehicles for illicit activity, among other things.
“Wyoming has attracted and protected capital from people who threaten our national security, and undermine the stability of our financial and main street markets, including by using complex structures to avoid taxes, launder ill-gotten monies and hide assets,” Gurule told the committee, pointing to Igor Makrov, a Russian oligarch.
“He protects portions of his immense fortune via a Wyoming trust, managed by an unregulated Wyoming private trust company,” Gurule noted, as reported by the Washington Post.
That was of particular concern for Rep. Mike Yin (D-Jackson). He repeatedly raised questions about foreign nationals using Wyoming’s legal framework to hide assets from their home countries.
“Wyoming is not in a position to regulate Russian oligarchs,” Lucas Buckley, an attorney with Hathaway and Kunz, told the committee. Buckley’s firm offers commercial registered agent services, according to the Secretary of State’s office.
Rep. Pat Sweeney (R-Casper) was more concerned with how recent reports painted Wyoming’s reputation, which he felt were unfair.
“We’re being painted with this broad brush. Basically we’re a bunch of hicks out here and we don’t know what we are doing, which I totally, fundamentally disagree with,” Sweeney said. He then asked Chris Reimer what should be done, if anything.
“From where I sit and practice, there’s no law regarding information of entities or private trust companies or trusts that needs to be implemented in Wyoming,” Reimer said.
His peers in the Wyoming Trust Association also urged the committee against any kind of tax, saying it would drive the trust industry out of the state and into competing jurisdictions, like Nevada and South Dakota.
Case was not convinced. He said he continued to circle back in his mind to one question — what does Wyoming get out of this?
In terms of static assets, he said, the business is bigger than the mining industry or the oil and gas industry.
“As Wyoming changes, we’ve got to follow the money,” Case said.
Where to from here
“Part of my concern with the folks that testified at the hearing was that the majority of them have a vested interest in maintaining the status quo,” Jenn Lowe with the Equality State Policy Center told WyoFile.
It’s a very complex financial system, Lowe said, and the experts present contributed to good discussion. But she’s not sure where the topic goes from here since the committee did not give staff any direction.
“There’s a lot of money to be made in the trust industry, which is not a bad thing at face value, but on the other hand, I’m not sure that the folks that live here in Wyoming are seeing a return in benefit,” Lowe said.
The Joint Revenue Committee’s next meeting is in September.