Recently, a Chinese woman in Southern California earned extra income by helping overseas clients register U.S. companies, only to find herself visited by the FBI and facing a potential five-year prison sentence after being charged. Attorney Daniel Deng warns professionals in company registration, accounting, and corporate services not to underestimate the risks associated with company formation; if a client later engages in illegal activities, the service provider may not be able to fully absolve themselves of liability.
Ms. Ma, an economics major who had previously worked at an accounting firm for two years, began taking on freelance work involving accounting and company registration while studying for her CPA exam. Initially, she helped friends of former clients set up U.S. companies; later, she acquired a large volume of clients through friends in China. The service was billed at $2,000 per case, with Ms. Ma earning approximately $500 to $600 per order after the fee split. The work was relatively straightforward, and she helped establish over a hundred companies within six months.
However, some of the California companies she helped form were later suspected of being used to purchase chips and other sensitive products subject to U.S. export controls. Some companies even used a P.O. Box rented by Ms. Ma as their contact address, triggering an FBI investigation into her activities. In reality, Ms. Ma was not involved in the actual operations of these companies, nor did she participate directly in the chip transactions. She stated that she had never even met some of the clients and was unaware of the nature of their actual business activities.
Her attorney, Daniel Deng, noted that the crucial factor in such cases is the extent of the individual’s knowledge. If prosecutors can prove that the individual knew—or should have known—that clients were using the companies for illegal activities yet continued to assist with formation, provide addresses, open accounts, or offer other support, they could face significant criminal liability. Even without direct evidence of the individual admitting “knowledge,” prosecutors may infer their awareness based on a series of objective circumstances. Red flags that could trigger further investigation include: never meeting the client in person; ignorance of the company’s actual business; the rapid formation of a large number of companies; multiple companies sharing the same P.O. Box or contact details; all clients being based overseas; and the immediate, large-scale purchase of high-value or sensitive goods following company formation. An isolated anomaly does not necessarily imply that a client is acting illegally, nor does it automatically mean the service provider has committed a crime; what truly matters is the overall context and whether the service provider knowingly continued to offer assistance—or persisted in doing so after discovering significant irregularities. This is particularly critical when dealing with semiconductors, high-tech products, export controls, cross-border fund transfers, or sanctions; service providers must not focus solely on the profit potential of a single transaction while ignoring the client’s background and the purpose of the deal, as doing so could lead to allegations of complicity.