Attorney General files lawsuit to halt “Certificate of Good Standing” scheme targeting RI businesses and non-profits
PROVIDENCE, R.I. – Attorney General Peter F. Neronha announced that his Office has filed a lawsuit against two businesses and an individual, allegedly responsible for perpetrating a deceptive scheme targeting thousands of businesses and non-profits throughout the state, seeking a court order to halt further conduct and monetary penalties for violating Rhode Island’s Deceptive Trade Practices Act (DTPA). The Office of the Attorney General worked closely with the Rhode Island Secretary of State’s Office during a months-long investigation into the allegations against the alleged perpetrators.
As alleged in the complaint filed in Rhode Island Superior Court, Centurion Filing Services, LLC, d/b/a RI Certificate Services; Business Document Center, LLC; and Dean Marshlack have misled new small businesses and non-profits in Rhode Island into paying an exorbitant fee for a Certificate of Good Standing that businesses do not need and can be obtained directly from the Rhode Island Secretary of State at a significantly lower cost.
Several lawsuits alleging similar deceptive and predatory practices have been filed against Centurion and Marshlack in several states, including in Iowa, Michigan, and Mississippi.
“For too long, the defendants named in today’s Superior Court complaint have deceived hard working business owners out of money they could have instead used to operate their enterprises,” said Attorney General Neronha. “Rhode Island business owners, who are anxious to comply with the law, have fallen victim to this scheme, and if the conduct is not swiftly stopped, I fear that many more will follow. It is worth noting that but for the prudent action of the General Assembly to amend our state’s consumer protection law in 2021, this Office would have not been able to pursue monetary penalties on behalf of Rhode Island consumers.”
State law requires all businesses, for-profit and non-profit, doing business in the State of Rhode Island to register with the Secretary of State. As alleged in the complaint, the defendants have mailed misleading letters to a possible universe of over 10,000 newly registered businesses claiming that they had to complete an additional step of securing a Certificate of Good Standing to finalize their registration with the Rhode Island Secretary of State. The defendants’ solicitations invite businesses to pay a $84.50 or $87.25 fee to secure the certificate.
In reality, Rhode Island businesses are not required to obtain a Certificate of Good Standing to complete official registration with the Secretary of State’s Office. A Certificate of Good Standing is a document issued by the Secretary of State’s Office to verify that a Rhode Island business entity is in good standing with the State and may be asked for by another state if an entity wishes to register to do business in that other state (or for other reasons).
Certificates of Good Standing are readily obtainable from the Secretary of State’s website for $7.00 for nonprofit corporations, or $22.00 for for-profit corporations. As part of their scheme, the defendants charge an approximate 384% markup to for-profit companies and least a 1,200% markup for nonprofit corporations to obtain the certificate.
The Attorney General is seeking (1) a court order to permanently halt the defendants from operating in Rhode Island; (2) reimbursement of every business or entity for which the defendants received payment; (3) civil penalties of up to $10,000 per violation of the DTPA; and (4) costs and attorneys’ fees.
Special Assistant Attorney General Etie-Lee Z. Schaub is handling the case on behalf of the Office of the Attorney General.
Defendant Centurion Filing Services, LLC (Centurion) is a Florida Limited Liability Company with its principal place of business at 2312 4th Street North, Suite 104, St. Petersburg, Florida 33704. RI Certificate Service is a d/b/a Centurion uses. On mailers sent to newly formed Rhode Island businesses, Centurion, d/b/a RI Certificate Service identifies its address as 11 South Angell Street, Suite 498, Providence, RI 02906, which is a UPS store.
Defendant Business Document Center LLC (BDC) is a Delaware Limited Liability company with a principal place of business at 16192 Coastal Hwy, Lewes, Delaware, 19958. On mailers sent to newly formed Rhode Island businesses, BDC identifies its address as 11 South Angell Street, Box #374, Providence, RI 02908, which is a UPS store.
Defendant Dean Garrett Marshlack is, on information and belief, a resident of the State of Florida. Marshlack is the creator, sole owner, President, manager, and registered agent for Centurion.
As alleged in the Attorney General’s complaint, the defendants have sent solicitations by mail to businesses appearing on a list of new entities registered with the Secretary of State’s Office that is published on its website on a weekly basis.
The solicitations sent by the defendants to businesses leads the reader to believe that they have to complete an additional step of securing a Certificate of Good Standing to secure a valid registration. The defendants’ solicitations invite businesses to pay an $84.50 or $87.25 fee to secure the certificate. Once the defendants obtain payment from businesses, they submit requests for certificates with the Secretary of State’s Office, which then are delivered to the businesses, while the defendants pocket the difference.
The design of the mailed solicitation is also misleading to recipients because it used elements common to official forms for necessary filings.
At least 10,264 new businesses have been published on the Secretary of State’s website since the defendants were first known to do business in Rhode Island.
Deceptive Trade Practices Act
Following its enactment in 1969, Rhode Island’s consumer protection law, the DTPA, was eroded by a series of court interpretations to the point where it earned the state the distinction from the National Consumer Law Center as being one of the “terrible two” jurisdictions in the country.
In 2021, Attorney General Neronha worked with co-sponsors Representative Charlene M. Lima (D-Dist. 14, Cranston, Providence) and Senator Stephen R. Archambault, (D-Dist. 22, Smithfield, North Providence, Johnston) as well as House and Senate leadership and members of the General Assembly to pass legislation that restored the authority of the Office of the Attorney General to protect Rhode Island consumers against violations of the DTPA.