With Nevada's economic woes painfully well documented and the state scoring a dismal ranking of 45th in CNBC's recently released "Top States for Business" 2011 survey, one would think that Carson City would be trying to spark and support small-business creation, which is the driving force of any economic turnaround. Unfortunately, the opposite is the case as small-business owners such as myself have had their investment confidence shattered - not because Nevada's workers are any less capable or because of tax considerations, but out of the simple fact that the state does not enforce its business laws.
Last year, the small business I owned in Nevada was dissolved by a disgruntled accountant who filled out a form with the Secretary of State's Office that automatically dissolved the business. In Nevada, a business form submitter's credentials or affiliation to a limited liability company (LLC) is not verified by the Secretary of State's Office, and in my case, neither was the ludicrous signed declaration that my company never commenced business.
To revive the business, it not only cost me more than $600 in fees with Nevada, but the loss of reputation and time proved almost irreparable. Shortly after I revived my business, this same former accountant again submitted the same dissolution form with the Secretary of State's Office, once again fraudulently dissolving the company. This former accountant played upon the fact that in Nevada, anyone can dissolve a legally registered LLC simply by fraudulently submitting a "before commencement of business dissolution form" with the Secretary of State's Office. It does not matter if the business has, in fact, commenced or that the submitter has nothing to do with the business because his credentials and affiliation are not checked or cross-referenced - the business is simply automatically dissolved. Worse than this, Nevada law is not enforced. In my case, twice I presented the evidence and signed dissolution forms along with the Nevada law (NRS 239.330) that is more than clear that "it is a category C felony to knowingly offer any false or forged instrument for filing in the office of the Secretary of State."
After the second fraudulent dissolution of my business, the Nevada Secretary of State's Office, understandably embarrassed and upset that a mockery had been made twice of its system, referred me to the Nevada Attorney General's Office to open a criminal case. The AG's office, after much discussion, hesitatingly referred me back to the Secretary of State's Office, which in turn notified me that it is simply a "filing agency and not a law enforcement authority," and again referred me back to the Attorney General's Office.
Unfortunately, even with a state law on the books that is crystal clear, and with evidence including two fraudulently signed forms, the Nevada Attorney General's Office has tried to shuffle off enforcing and upholding state law to other offices that claim they are not law enforcement agencies. Those offices, in turn, try to pass it off to others in a bureaucratic exercise that resembles Russia more than what Nevada should look like if it is indeed serious about attracting and maintaining small businesses and turning around its economic situation.
After months trying to restore my business and its reputation, I was forced to move the company out of Nevada. And sadly, my business has not been the only to leave because of the state's failure to uphold and enforce even its most basic business laws.
Even more than tax incentives, the most fundamental obligation a state has to attract and keep small business is to have an enterprise climate that instills investor confidence by having simple and transparent business laws that are enforced. Nevada has the simple and transparent business laws. They simply are not enforced. And absent their enforcement, Nevada will continue to see an exodus of small businesses, and the state will keep struggling economically.
• Mark Lenzi s a civil engineer and majority owner of SP Network LLC. He can be reached at mark.lenzi@spnetworkllc.com.