A federal judge dismissed a lawsuit last week that sought to require Colorado’s secretary of state to verify corporate filings in the state’s database to reduce the risk of future fraud.

Bernard Butts of Florida, who was 83 when he filed suit last year, alleged that he contacted a company listed in the state’s business registry because he was “seeking investment opportunities.” The company’s registered address appeared to be in a former government office building, which created “an air of governmental legitimacy to its operations.”

The company allegedly induced Butts to invest nearly $21,000 in 2023. When he attempted to withdraw the money a few months later, the company demanded an additional $10,500. Butts ended up losing his entire investment in the “pig butchering” scheme, a term for scams that entice investors and charge exorbitant withdrawal fees.

Butts sued Secretary of State Jena Griswold and Colorado itself for negligence and consumer protection-related claims. He alleged the state’s policy of not verifying business filings for potential fraud created a danger to the public. Butts sued on behalf of himself and anyone who recently lost money in fraudulent cryptocurrency investments through entities registered in Colorado.

In seeking to dismiss the lawsuit, the defendants pointed out that state law explicitly requires Griswold’s office to accept filings that meet the basic requirements. The office also has no duty to determine whether the filings comply with other laws. Finally, the acceptance of a document does not create “a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.”

“Any injury alleged by Butts is not ‘fairly traceable’ to an alleged ‘non-verification’ policy because Colorado’s business filing regime is governed not by a discretionary policy but by state law,” wrote the Colorado Attorney General’s Office.

“Defendants’ failure to take any actions with respect to the basic validity of corporate filings is, at best, a clear policy not to verify, and at worst — as alleged — a willful and wanton disregard for their duties and public safety,” responded attorney Robert V. Cornish Jr. for Butts. “If one scam artist is leveraging Colorado’s corporate registration apparatus, knowing that no one in Denver checks the bonafides of anything that is filed, rest assured that other scam artists, whether in California or Cambodia, are doing the same and will continue to do so without relief from this Court.”

U.S. District Court Judge Nina Y. Wang concluded that the defendants were entitled to various forms of immunity for several of Butts’ claims. While she disagreed that the requirements of Colorado law prevented her from providing relief to Butts, Wang determined that Butts lacked standing because he had not outlined how a court order would prevent future injury.

“Critically, Plaintiff does not allege that he intends to again rely on the Secretary of State’s public database to determine whether to invest in a company,” Wang wrote in a March 31 order. “Instead, Plaintiff asks the Court to simply assume that he will repeat his past conduct, that he will unwittingly invest in a fraudulent company, and that he will lose money as a result.”

Because she could not address Butts’ request to require the state to verify business filings going forward, Wang dismissed his lawsuit.

The case is Butts v. State of Colorado et al.