What is a phoenix contractor and how do I spot one?
A phoenix contractor closes one LLC after lawsuits or complaints and opens a new one — same people, same trade, different name. Spot them by checking Secretary of State for multiple entities at the same address, dissolved within 2-3 years, with the same officers or registered agent.
The "phoenix" pattern is the defining contractor-fraud pattern of the last decade. A contractor accumulates complaints, lawsuits, judgments, or unpaid debts. Rather than fixing the underlying business, the owner dissolves the LLC, walks away from creditors and customers, and incorporates a fresh entity under a similar but distinct name. The new entity has zero complaints, zero lawsuits, and a clean license — for a while. Then the cycle repeats.
The mechanical signatures of a phoenix pattern are visible in Secretary of State records:
1. Multiple LLCs or corporations registered to the same physical address within a 5-7 year window. 2. Same officers, directors, or registered agent across entities. 3. Recent dissolution (last 24 months) of a prior entity with similar trade SIC/NAICS code. 4. Names that share a stem ("ABC Construction LLC" → "ABC Builders LLC" → "Alphabet Construction LLC"). 5. The current LLC's formation date is less than 24 months after dissolution of the prior one. 6. The new entity's license number was issued recently, despite the qualifier having 10+ years of "experience" claimed in their marketing.
Why phoenix contractors are dangerous: a freshly minted LLC has no complaint history because it has not existed long enough to accumulate one. Standard verification (single license lookup, BBB check) will return a clean result. The fraud is only visible if you cross-reference Secretary of State filings against prior entities at the same address with the same people.
The damage pattern: phoenix contractors typically take deposits, do limited initial work, then abandon the job before they could be sued under the new entity name. Customers who sue end up with judgments against an empty LLC with no assets. The owner has already moved the money and is operating under the next entity.
Groundcheck (earthmove.io/trust) has a dedicated phoenix-detection check that cross-references Secretary of State filings across all 51 jurisdictions, matches officers and registered agents across entities, and flags address-clustering. A "Critical" verdict on Groundcheck driven by phoenix-pattern detection is the single highest-confidence fraud signal in the product.
What to do if you suspect a phoenix pattern: stop the deal, refuse to pay any deposit, and report to your state Attorney General's consumer protection division. Phoenix fraud is a felony in most states when the dollar volume crosses the felony threshold (typically $2,000-$10,000).
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