Woman blames Nevada’s minimal regulation for loss of life savings

Kiley Russell

Monday, March 8, 1999 | 10:37 a.m.

CARSON CITY - An elderly woman who says she lost $402,000 to a business that claimed to have links to a space alien urged lawmakers Monday to strengthen Nevada's loose corporation laws.

Betty Tuten, 72, of Las Vegas told the Assembly Judiciary Committee she was duped into giving nearly her entire life savings to E.J. Ekker and his Las Vegas-based Phoenix Institute for Research and Education. The company claims to get extraterrestrial guidance for investment decisions, among other things.

"Their material was very fear-oriented and stated all the banks, stock markets, insurance companies were going to fail," the retired teacher said. "The only safe place for assets was gold. We needed to hide our assets and that was possible through a Nevada corporation."

Unfortunately for Ms. Tuten, Nevada corporations enjoy a "Delaware of the West" regulatory environment, with minimal reporting requirements, no corporate income tax, no franchise tax and no personal income tax.

Many of the out-of-state companies that incorporate in Nevada to take advantage of this environment employ a resident agent to act as their point of contact and legal representative in Nevada - and these agents also face little scrutiny from state regulators.

That hasn't hurt state revenues. In fiscal 1998, the state's resident agents filed most of the 44,000 new business applications in Nevada, generating over $20 million in fees for the state, according to the secretary of state's office.

But Luke Perry of Las Vegas, a longtime advocate for tougher resident agent standards, said Nevada's loosely defined incorporation laws also allow unscrupulous agents and out-of-state companies to avoid government scrutiny.

"Resident agents should be licensed so the secretary of state can accept public complaints if someone is having a problem with them," said Perry, testifying in favor of AB286, which would require the agents to be licensed and bonded.

Ms. Tuten said she was told in 1991 that her money would be invested in gold and she might double her investment. Growing suspicious after three years, she demanded her money back. "I have made various demands for my funds and they will not return them," she said.

No Phoenix Institute representative spoke at the committee hearing, although the chairman, Assemblyman Bernie Anderson, D-Sparks, said he'd take written comments on his bill until Thursday.

Ron Kirzinger, a spokesman at the Phoenix Institute, said Ekker was in the Philippines, but he relayed a brief comment: Ekker said Ms. Tuten "understands perfectly that her loans are not eligible for redemption at this time," Kirzinger said.

Kirzinger added that a Carson City judge already had ruled against Ms. Tuten.

The secretary of state's office opposed the bill, saying there are too few complaints about resident agents to warrant stricter oversight.

"I would estimate that fewer than 100 complaints were received in the last year. Typically, such complaints have led to inquiries from our office and in most instances, the resident agent and the complainant worked out a solution," said Scott Anderson, deputy secretary of state for commercial recordings.

Also opposing the bill were representatives of the Nevada Association of Resident Agents and Acorn Corporate Services.

While no immediate action was taken on AB286, the committee did pass SB19, requiring resident agents to have actual street address rather than post office boxes or mail services.