Attorney General Bob Ferguson today filed consumer protection lawsuits against two companies and their owners for sending more than 210,000 deceptive letters to small business owners in Washington. The letters deceptively appear to originate from the government, and demand payment for a “Certificate of Status” or a workplace poster that are available from the government free of charge or for a fraction of the monetary demand. More than 15,000 Washington businesses paid these two defendants more than $1.2 million in response to their deceptive letters.
Ferguson’s two lawsuits, both filed in King County Superior Court, assert CA Certificate Service, which also does business as WA Certificate Service, and Labor Poster Compliance violated the state Consumer Protection Act hundreds of thousands of times. The lawsuits name the four co-owners of CA Certificate Service — James L. Beard, Dean G. Marshlack, Chad M. Davis and Joshua T. Strawn — and two co-owners of Labor Poster Compliance, James L. Beard and Chad M. Davis. The four defendant owners are located in the St. Petersburg, Florida area, and their companies operate nationwide.
The two companies sent at least 210,784 letters into Washington state since March 2019. Ferguson asserts these letters unlawfully duped small business owners into making unnecessary payments to the companies.
At least 14,743 Washington business owners paid $82.50 to CA Certificate Service — a total of approximately $1.2 million. The Attorney General’s Office estimates over 318 Washingtonians paid Labor Poster Compliance $79.25 — a total of more than $25,000.
Ferguson will also soon file motions for preliminary injunction to shut down the companies’ operations in Washington and prevent further mailings of their deceptive letters while the cases are ongoing. The Attorney General’s Office continues to receive complaints about the letters and Washingtonians have so far filed 90 complaints.
The Attorney General’s Office will ask the court to require both companies to pay back the money they obtained deceptively from Washington business owners, seek civil penalties of up to $7,500 per violation of the Consumer Protection Act and pay attorneys’ costs and fees.
“Small businesses power our economy,” Ferguson said. “With this lawsuit, I intend to get the impacted business owners their money back – with interest.”
If you suspect you are the target of similar scams, please contact the Attorney General’s Office. You can file a complaint online at atg.wa.gov/file-complaint or call the office toll-free at 1-800-551-4636.
How CA Certificate Service’s scam works
Several times each week, CA Certificate Service’s owners use computer software to pull business owner information from the Washington Secretary of State’s web site. It grabs publicly available information like the business’ name, registration date, principal address and its unique identifier number.
Shortly after registering their business, the company mails letters to Washington business owners through its print and mail vendor located in Florida. CA Certificate Service uses a different business name, “WA Certificate Service,” when it sends the letters with a localized Washington return address.
The letters and envelopes imitate official government mail, and create a false sense of urgency that the business owner is required to purchase a “Certificate of Status” for $82.50 to complete the business registration process.
Declarations from Washingtonians that will be included with the motion for preliminary injunction note that several people believed the letters were real government correspondence because they followed their business registration date so closely. A few of those Washingtonians wrote that after mailing in their payment they felt suspicious, and conducting their own research they realized it was a scam. Many cancelled their checks or asked the business to send their money back.
One King County resident wrote that she asked the company for a refund shortly after mailing in her check in November 2019 but does not recall receiving it. She received a certificate from the Secretary of State’s Office the month after sending in her check. She subsequently filed a complaint with the Attorney General’s Office.
The Secretary of State’s Office does not require purchase of this certificate to complete the registration process. A Certificate of Status, also called a Certificate of Existence, simply shows a business is current and authorized to conduct business in Washington. Washingtonians can purchase the certificate directly from the Secretary of State for a $20 fee.
From March 2019 through mid-December 2021, the company’s owners distributed more than $3.6 million amongst themselves from its national earnings. Three of the men — Marshlack, Davis and Strawn — each generally received 30 percent of those illegal gains, while Beard received 10 percent.
The company has similar operations that target businesses in Georgia, Michigan, Minnesota, Nevada, Ohio, Utah and Virginia. The Michigan Attorney General, the Utah Department of Commerce and the Virginia Attorney General have previously sued the company. In March 2019, the Washington Secretary of State issued an alert about the scam, but the company continued to operate in the state. Georgia and Ohio have also issued alerts to warn business owners about the misleading and deceptive letters.
Labor Poster Compliance: similar owners, same type of scam
Since December 2021, Labor Poster Compliance has disseminated almost 16,000 deceptive letters into the state that appear to be bills sent by or on behalf of a governmental agency. Like CA Certificate Service, it obtains business owner information from data made publicly available by the Secretary of State.
The company sends a letter that urges people to pay $79.25 for an all-in-one workplace poster that it claims has required disclosures of certain state and federal laws. The company further cites federal laws that require placement of this poster in the business, and includes threats of penalties and legal action for non-compliance.
However, because some of the businesses had no employees, posting workplace posters is not required. Further, business owners can obtain workplace posters for free from the Washington Department of Labor and Industries, Washington Employment Security Department and the U.S. Department of Labor.
Assistant Attorneys General Shidon Aflatooni and Sebastian Miller, investigator Scott Henderson, paralegals Khalid Ali and Courtney Amidon and legal assistants Kristina Winfield and Chris Kiefer are handling these cases for Washington.
Ferguson’s prior enforcement actions standing up for small business owners targeted in scams
In March 2016, a King County Superior Court judge ordered civil penalties and restitution of $1.15 million in Ferguson’s lawsuit against Mandatory Poster Agency. The judgment included $793,540 in civil penalties and up to $362,625 in restitution for victims.
The Michigan-based company duped thousands of Washington small businesses into paying for documents many people thought were coming from a state agency. The judge found Mandatory Poster Agency violated the state Consumer Protection Act 79,354 times.
Mandatory Poster Agency sent envelopes marked “Important: Annual Minutes Requirement Statement” to roughly 80,000 Washington businesses between 2012 and 2013. Ferguson asserted the company deceived more than 2,900 small businesses into paying $125 each to prepare documents that looked like they came from the government.
Also in March 2016, a Thurston County judge ordered LA Investors, LLC, a California company that duped new Washington property owners into buying overpriced deeds, to pay more than $3.6 million for its deceptive practices.
The court found the company violated the state Consumer Protection Act at least 256,998 times by sending deceptive mailers. It sent official-looking notices implying that consumers needed to buy a dramatically overpriced $89 copy of their deed. Deeds typically cost only a few dollars from a local county office, and many property owners can obtain a copy of their deed for free online.
Source: Washington Attorney General