A sham company is a business that exists primarily to deceive others, often for financial gain. These companies may appear legitimate but typically engage in fraudulent activities, such as money laundering or tax evasion. They often have fake addresses, employees, or financial records to create an illusion of authenticity. Sham companies can be used in various schemes, including investment fraud or to hide the true ownership of assets. Authorities, such as the Internal Revenue Service (IRS) or Securities and Exchange Commission (SEC), actively investigate and prosecute these entities to protect consumers and maintain market integrity.