Connecticut Nets $1.3M In Business Fines

HARTFORD (AP) — An effort by officials to track down out-of-state companies operating illegally in Connecticut by not having registered with the state has netted $1.3 million in fines.

Secretary of the State Denise Merrill and Attorney General George Jepsen discovered nearly 330 firms had not registered with the state to transact business.

The five largest settlements were paid by DAN Services Inc, in North Carolina; The Providence Journal Co., in Rhode Island; Global Med Technologies Inc, formerly of Colorado; Harris Environmental Systems Inc, in Massachusetts, and Superior Technical Resources Inc, in New York. Each was fined slightly more than $20,000.

Charles Rohrbach, chief financial officer at Harris Environmental Systems in Andover, Mass., said he is part of a group that acquired the company in 2007. The company manufactures and installs climate-controlled rooms, mostly for biotech and pharmaceutical companies and universities.

Mr Rohrbach said the settlement reached with state officials covers back to the 1980s and he believes it “appeared to be a coin flip” as to whether the firm should have registered. He said Harris Environmental does not have a Connecticut office and uses Connecticut-based subcontractors to perform work in the state, not employees from Massachusetts.

“We had, over all those years, paid sales and use tax, employment and state income taxes, so there was no issue on paying any taxes,” he said. “It was merely an issue with should we have filed with the secretary of the state and paid the $200 a year or whatever the amount was.”

Harris Environmental settled with the state by paying $20,842.50. Mr Rohrbach said the company is now properly registered.

The Providence Journal said it was “an unintentional oversight” that it hadn’t registered to do business in Connecticut.

“As soon as it came to light, we rectified the situation by registering with the state and paid the requisite license fees and penalties,” said Deborah Tomilson, a divisional vice president for the company.

Messages seeking comment left with the other companies were not immediately returned.

Av Harris, a spokesman for Merrill, acknowledged that some firms didn’t realize they had to pay for a “certificate of authority” to do business in Connecticut, a one-time fee that ranges from $40 to $120. Companies also have to pay an annual reporting fee that is typically about $150 or $185, he said.

Mr Harris said state officials want to educate the business community about their filing requirements as well as provide a disincentive to those trying to skirt the rules by releasing the list of the nearly 330 companies. The state’s definition of transacting business in Connecticut includes various activities ranging from maintaining an office to having point of sale take place in the state, he said.

“It is hard enough for Connecticut businesses to make a profit in this economic climate, without unfair competition from out-of-state companies who fail to register with the state,” Ms Merrill said in a statement. She said her office has heard from Connecticut companies who are being undercut by outside firms that don’t properly register.

She said the registration also helps to protect consumers because an out-of-state company is required to appoint someone to accept legal papers if any court action is taken.

Under state law, business corporations, nonstock corporations, limited partnerships, limited liability companies, limited liability partnerships, and statutory trusts formed outside of Connecticut must obtain the certificate of authority to do business in the state. More than 50,000 out-of-state businesses have properly filed, according to Merrill’s office.

The $1.3 million in penalties collected in fiscal year 2011, which ended June 30, was the highest amount collected since 2007, when more than $1.7 million in fines were amassed.

DAN Services Inc., which is a for-profit arm of a scuba safety association that sells dive accident insurance, settled with Connecticut for $26,955. The Providence Journal Co. paid $22,192.50; Global Med Technologies, which has since been taken over by Haemonetics of Braintree, Mass., paid $20,910, and Superior Technical Resources paid $20,685.