Dummy company
Encyclopedia
A dummy corporation or dummy company is an entity created to serve as a front or cover for one or more companies. It can have the appearance of being real (logo
, website
, and sometimes employing actual staff such as for public relations
) but lacks the capacity to function independently. The goal of a dummy corporation can be to conceal true ownership and/or avoid taxes. A dummy corporation is one way to cook the books in a dishonest attempt to hide the true financial status of a company. Another use is to prevent speculators from interfering with the holding organization's plans.
An example of a dummy company is the now-defunct Japan Asia Airways
(JAA). JAA was created in 1975 as a fully owned subsidiary company owned by Japan Airlines
(JAL) designed to fly the Japan-Taiwan route, which was a politically sensitive issue due to Japan's normalization of relations with the People's Republic of China.
Another example is Walt Disney World Company
use of Compass East Corporation which was incorporated in Delaware on December 7, 1964. On September 30, 1966, Latin-American Development and Management Corporation, Ayefour Corporation (a pun on Interstate 4), Tomahawk Properties, Incorporated, Reedy Creek Ranch, Incorporated, and Bay Lake Properties, Incorporated, all Florida corporations, were merged into Compass East Corporation. These companies were responsible for buying up the land that would become the Walt Disney World Resort.
Sometimes natural conservation groups use a dummy corporation to purchase land. The current owners might be reluctant, figuring they are not getting the best price for a non-profit, but if the purchase is to a dummy corporation with "land development
" in the name they might be more willing to sell.
At times governments might set up dummy corporations to hide actual intent. Air America was an American passenger and cargo airline covertly owned and operated by the Central Intelligence Agency
(CIA) from 1950 to 1976. It supplied and supported covert operations in Southeast Asia
during the Vietnam War
.
.
Logo
A logo is a graphic mark or emblem commonly used by commercial enterprises, organizations and even individuals to aid and promote instant public recognition...
, website
Website
A website, also written as Web site, web site, or simply site, is a collection of related web pages containing images, videos or other digital assets. A website is hosted on at least one web server, accessible via a network such as the Internet or a private local area network through an Internet...
, and sometimes employing actual staff such as for public relations
Public relations
Public relations is the actions of a corporation, store, government, individual, etc., in promoting goodwill between itself and the public, the community, employees, customers, etc....
) but lacks the capacity to function independently. The goal of a dummy corporation can be to conceal true ownership and/or avoid taxes. A dummy corporation is one way to cook the books in a dishonest attempt to hide the true financial status of a company. Another use is to prevent speculators from interfering with the holding organization's plans.
An example of a dummy company is the now-defunct Japan Asia Airways
Japan Asia Airways
is a defunct subsidiary of Japan Airlines which existed between 1975 and 2008. JAA was headquartered in the Japan Airlines Building in Shinagawa, Tokyo....
(JAA). JAA was created in 1975 as a fully owned subsidiary company owned by Japan Airlines
Japan Airlines
is an airline headquartered in Shinagawa, Tokyo, Japan. It is the flag carrier of Japan and its main hubs are Tokyo's Narita International Airport and Tokyo International Airport , as well as Nagoya's Chūbu Centrair International Airport and Osaka's Kansai International Airport...
(JAL) designed to fly the Japan-Taiwan route, which was a politically sensitive issue due to Japan's normalization of relations with the People's Republic of China.
Another example is Walt Disney World Company
Walt Disney World Company
The Walt Disney World Company manages and operates the Walt Disney World Resort near Orlando, Florida. The resort land is owned by the Walt Disney World Company, the Walt Disney Travel Company, and the Walt Disney World Hospitality and Recreation Corporation. All are wholly owned subsidiaries of...
use of Compass East Corporation which was incorporated in Delaware on December 7, 1964. On September 30, 1966, Latin-American Development and Management Corporation, Ayefour Corporation (a pun on Interstate 4), Tomahawk Properties, Incorporated, Reedy Creek Ranch, Incorporated, and Bay Lake Properties, Incorporated, all Florida corporations, were merged into Compass East Corporation. These companies were responsible for buying up the land that would become the Walt Disney World Resort.
Sometimes natural conservation groups use a dummy corporation to purchase land. The current owners might be reluctant, figuring they are not getting the best price for a non-profit, but if the purchase is to a dummy corporation with "land development
Land development
Land development refers to altering the landscape in any number of ways such as:* changing landforms from a natural or semi-natural state for a purpose such as agriculture or housing...
" in the name they might be more willing to sell.
At times governments might set up dummy corporations to hide actual intent. Air America was an American passenger and cargo airline covertly owned and operated by the Central Intelligence Agency
Central Intelligence Agency
The Central Intelligence Agency is a civilian intelligence agency of the United States government. It is an executive agency and reports directly to the Director of National Intelligence, responsible for providing national security intelligence assessment to senior United States policymakers...
(CIA) from 1950 to 1976. It supplied and supported covert operations in Southeast Asia
Southeast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
during the Vietnam War
Vietnam War
The Vietnam War was a Cold War-era military conflict that occurred in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. This war followed the First Indochina War and was fought between North Vietnam, supported by its communist allies, and the government of...
.
Dummy corporation to defraud
Dummy corporations may be created by fraudsters to create the illusion of being an existing corporation with a similar name. Fraudsters then sell securities in the dummy corporation by misleading the investor into thinking that they are buying shares in the real corporation.Dummy corporation to hide identity
Dummy corporations may be used in crime to hide the identity of a criminal, similar to the use of a criminal aliasPseudonym
A pseudonym is a name that a person assumes for a particular purpose and that differs from his or her original orthonym...
.