Sarasota Rep. McFarland files bill to secure Sunbiz.org, prevent hijacking of businesses

Sarasota State Rep. Fiona McFarland has filed a bill in the Florida House aimed at preventing the misuse of the state's insecure public record-keeping system for businesses.

McFarland, R-Sarasota, said she first learned about how the state's public business records filing database has been abused after a Herald-Tribune investigation last year that highlighted the use of Sunbiz.org to improperly assert control over Florida businesses.

She has since learned of two other Sarasota businesses that had their Sunbiz records changed for fraudulent purposes.

"You should have an expectation that a government database that is managed online is secure," she said.

The Division of Corporations falls under Florida's Department of State and has an easily searchable database of companies registered in the Sunshine State. Companies file annual reports that often include principals, registered agents and an address that appear on Sunbiz.org. That information can be readily changed.

"The Florida Department of State, Division of Corporations is an administrative filing agency, and as such all documents submitted to and filed by this office are accepted at face value," the agency's website reads. "Any document meeting the stipulated statutory filing requirements and accompanied by the required filing or processing fee(s) is accepted."

Previous coverage on biz hijacking:Stranger accused of using website flaw to hijack Sarasota man's real estate business

More:Man accused of hijacking Sarasota business countersues company he allegedly stole

'I ain't in jail':Felony charges for man accused of hijacking Sarasota real estate company

While it is a felony to file fraudulent paperwork with the Division of Corporations, the division doesn't actually check to see if the information filed or changed is accurate.

McFarland said she went online to see how hard it was to change the records maintained by Sunbiz a few weeks ago as she was preparing to file a bill to prevent the misuse of the database.

McFarland said she was able to change the registered agent, the company officials, the phone number and the address of a local restaurant company, but stopped short of sending the request to the Division of Corporations.

"I was one click away," she said.

She said if she's heard of three of her constituents having this problem in just the past six months, she's sure it's happening in other areas of the state as well.

McFarland's bill would allow the Department of State to implement passwords and verify the identity of people submitting documents to the state database.

Robert Houston was arrested in January after the Herald-Tribune detailed accusations that he had allegedly used the Sunbiz site to temporarily take control of a Sarasota real estate company last summer.

The company he allegedly hijacked held title to 21 Sarasota properties that Houston has been accused of then fraudulently mortgaging for more than $1 million, according to his arrest report and a civil suit brought by the actual owners of Glenco Properties Group Corp.

The use of the state's business records filing system to commit fraud goes back to at least 2018 when an article written for a Florida Bar publication detailed a similar case involving a Miami real estate company.

However, the extent of the site's vulnerability has not been publicly revealed. The Department of State has not responded to questions submitted by the Herald-Tribune seeking to better understand the state business database and how it has been used for fraud.

Some anecdotal evidence indicates that this type of fraud has been on the rise in recent years. An attorney who represented the lenders in the 2018 Miami case said he had represented 20 to 25 other Miami-area businesses after a corporate hijacking since then.

Every business, company and corporation in the state of Florida is required to register with Sunbiz.org, which then provides a publicly searchable database.

McFarland's bill, filed on Feb. 16 as HB 909, would authorize the Department of State, to implement password protected systems, allow the agency to verify credentials and allows the department to require verification of identities.

A related bill has also been filed in the Florida Senate by State Sen. Erin Grall, R-Fort Pierce. Grall's bill (SB 948) was filed on Monday.

Jim Glenn, the vice president of Glenco Properties Group Corp., has spent more than $30,000 in legal bills to clean up the mess caused by the hijacking of his Sarasota company last year. He's sued Houston and the companies that issued mortgages on his properties.

He said he thinks password protection would have prevented him from being victimized.

"I think it should have been done a long time ago," he said. "I was surprised to find it wasn't."

This article originally appeared on Sarasota Herald-Tribune: Sarasota lawmaker files bill to secure state business records website