"McCarthy described the payments to Biden associates and family members as having flowed through "shell companies."
A shell company is "a corporate entity set-up that generally has no business operations," said David P. Weber, a professor in the accounting and legal studies department at Salisbury University's Perdue School of Business. Weber previously served as chief investigator for the Securities and Exchange Commission and as special counsel for enforcement with the U.S. Treasury Department.
Generally speaking, Weber said, "shell companies are entities formed in a jurisdiction that requires minimal documentation over who the beneficial owner is, have no active business operations or employees, and are formed for secrecy or privacy purposes."
In the popular understanding, shell companies usually have a negative connotation, often for good reasons, experts say.
Sometimes, shell companies can be created for legitimate purposes, experts said. For instance, they can keep income streams separate if they are to be taxed or regulated in separate jurisdictions, said Daniel Shaviro, a taxation professor at New York University Law School. Weber said he’s seen examples in which gay couples have used shell companies to hide the joint ownership of homes in countries where LGBTQ+ couples are persecuted.
More often, though, a true "shell company" is a red flag for financial investigators, experts said.
"Most shell companies are formed for illegitimate purposes, such as tax evasion, money laundering, other illegal activities," Weber said.
It’s not clear whether companies in the Hunter Biden case qualify as shell companies.
In analyzing the 21 companies cited in a GOP memo that were founded by, in partnership with, or linked to Hunter Biden, the Washington Post Fact Checker concluded that "virtually all of the companies (many of which now are defunct) had legitimate business interests. Others had clearly identified business investments."
For instance, the Fact Checker found entities such as separate companies founded by Hunter Biden that handled legal and lobbying work, the latter of which was
disclosed as required under federal law. Rosemont Seneca Partners and several offshoots were vehicles for investments Biden and his associates made in technology, energy and entertainment ventures. "
Announcing an impeachment inquiry into President Joe Biden on Sept. 12, House Speaker Kevin McCarthy said a Republican-l
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