by CZ Edwards ReaderApp
“Current conditions mirror what happened after the housing market collapsed. Prices tumbled and property was abundant, but the only people who could afford to buy were those who hadn’t been crippled by the financial crisis.”
Who has cash? Money Laundries.
I know, I harp on money laundering, but behaviorally? It’s hoarding, and hoarding interests me as a symptom of anxiety & trauma.
Also, hoarding & money laundering are massive criminal crimes, and so should be treated, not as civil cases.
Money Laundering 101 for those who don’t want to go watch 2 seasons of Burn Notice tonight:
Jason sells a lot of fake drugs to college students, making $100K in cash over 1 year. He pays his rent ($1000/mo in cash) & eats $35/day of fast food/beer. Rents dance hall: $500/month, and spends $8000 a year on baggies, Altoids to crush & mix with cornstarch, oregano, actual bath salts, and rock candy.
100K – 12,000 – 14,000 (food)-$6K – $8K = $60K someone like Jason has to deal with.
No bank account.
He can’t go buy a new car for cash.
(This, by the way, is one of the reasons why customized, 20+ year old cars are often beloved by drug dealers: they can get a revamped ride with legal paper, for the cost of a brand new car, but for cash.)
If Jason is dumb & drops that money in a bank account in large chunks, the bank has to report him. The limit is $10,000 but you dump $9,995? They’re still reporting you. That’s called structuring, and it’s why Denny Hastert went to prison, because it was too late to prosecute him for being a child molesting shitstain.
But Jason would someday like to have a nice house in Tampa, maybe, not in Jacksonville. So he really does need to save his illegal money and make it look legitimate, the profits of his dance team and DJ gigs.
Thus, he turns to a money launderer, who, for a fee, cleans his money.
The key with money laundering is the person who has the money ALWAYS LOSES some of it. It’s the reverse of profit, or investment. It costs money to launder.
But if you can’t use ANY of your illegal money? It might as well be Monopoly money. Half, clean, is better than none.
So: You got money you gotta clean up. You give it in big bags of dirty cash to a money launderer, who has a deal with a bunch of high cash businesses: she brings them cash they can use, they get a percentage, they cut her checks for “legit” services.
These businesses: franchise fast food (not corp stores) & small biz fast food/coffee/bakeries; gyms & fitness centers, bars & dance halls, cleaning services, personal services. Usual cut is around 20%.
A good front: high cash usage, high turnover, low inventory, service use. You’re looking for someone who can reliably deposit $500-$2000 in cash EVERY SINGLE DAY without it getting noticed as weird.
Remember, the problem Skyler White had was they only had the one business (the car wash) & she didn’t know how to pay for laundry.
So the gym owner deposits the $1000 the laundry want him to wash, then he writes the friendly shell company a check for $800, for “web services” or “promotional materials” or “social media influencing.”
Now: That $800 is clean, and it can be used to pay Jason. W2 & withholding.
That’s way over-simplified, and since I was using Jason Mendoza, that’s gonna get him scooped up by the feds if he doesn’t end up creatively and stupidly dead before they get him.
But really? Most money laundering is that stupid, just more layered. Every layer is loss, but every layer is protection. The farther the dirty money travels before it gets back to its first, the harder it is to trace, and the longer it takes before you go to prison.
Ask Paulie Walnuts about how far his money traveled. Cyprus, where his good friend Wilbur took care of it.
That’s it. The goal is to get it into something where there’s taxes paid and it’s a transferable property that you can foist off on someone unsuspecting, for actual cash.
Real estate is GREAT. That’s the goal. You want it clean enough that you can buy a house with it.
Now, you also want to do this in as large a chunk as you possibly can, because while Jason Mendoza is probably happy with $60K in laundry services a year…
The Russian oil biz is hundreds of billions. There’s not enough CASH on the planet to do the simple scam.
The most profitable drug on the planet really is oil, not fentanyl or meth or cocaine. Everyone uses oil, it’s fungible as hell, and some of it is illegal, because certain countries have not played nice with the other children.
But it’s hard to tell Iranian oil from Saudi oil. It’s hard to tell the oil apart. It’s not impossible. There are tests. They’re expensive, and there’s a lot of intentional crippling of the regulatory agencies. I leave this as an obvious exercise for the student as to why.
The drugs? The human trafficking? The bitcoin? Even the nukes?
It’s all subsidiary to getting oil into the market and the money into the hands of the oligarchs, be they Iranian religious leaders, Saudi princes, or Former Soviet bosses in the right place at the right time.
Which is why the *best* case for the Trumps is they were useful idiots who were willing to look hard the other way, to stick their fingers in their ears and do EVERYTHING in their power to believe they deserved 250% profit on troubled real estate.
Trump Sold a $40 Million Estate to a Russian Oligarch for $100 Million—and a Democratic Senator Wants to Know Why
I think they’re stupid, but not that stupid. No one is that stupid. They knew.
Potted plants in their offices knew they were laundering money & hiding assets in about 50 acrimonious Russian divorces.
Wilbur Ross wasn’t an accident. He was the Russian bank contact in Cyprus.
Wilbur says he’s not a pig, if you got stiffed by the government, he’d be happy to lend you his money with interest…
But that’s the high big time. A few over-priced, stupid apartments? Does it really matter?
Not as much, no, but that’s not where most of the laundering happens. It happens at the basic apartment building level. Because of a thing called a Real Estate Investment Trust.
Let’s take… a California dingbat apartment building. Usually 4-8 apartments. (Earthquakes can be a problem…) They sell for $10-$20M, depending, and bring in $8K-16K month in revenue.
So… let’s say you’ve got 25 money laundry clients, all with about $3 million (after you & your washing cut) they need to invest. $75 mil? Let’s buy 6 dingbats and put them in an REIT. Which hires a management team, which collects $2K rent from each apartment, each month.
6 buildings, 8 apartments each x $2K = $96K month in revenue. The management company takes 20%.
Your money laundry clients get $76K per month of clean money and it all came from legal, legit rent investment income property.
REITs clean the money better than a dry cleaner.
I am oversimplifying, but not by much. There are some shell corps in there, some in Caymans or Seychelles, but also Delaware, Wyoming, North Dakota, and Nevada.
What happens when there’s not much real estate to put in a REIT?
Well, remember, there’s loss in money laundering?
A REIT backed by money laundering doesn’t really care if it costs $5M or $10M for an apartment building. In a way, the $10M apartment building is better, because it cleans more money in one go.
And they can outbid someone looking to own a 6 apartment dingbat.
If the REIT buys a building for an inflated price, and they’re getting clean money monthly? They can just sit on it until someone legit comes along, having convinced a bank to make them a very large mortgage on an inflated price.
Look at expensive cities. It’s not an accident.
Remember: a money laundry HAS cash. They don’t have to go to a bank for a mortgage. They know they will lose some money, but half legitimate is better than none at all.
THIS is what, ultimately, at root, drives a housing market where someone will pay $2K a month for a 1 bedroom.
The way out? Fund financial crime enforcement. Fund SEC. Fund FBI as what they used to be – lawyers – rather than SWAT.
At the state level, demand the Attorney General’s fraud department is funded better than traffic enforcement. Demand transparency from EVERY elected official.
Watch your city councils closely. If someone is a landlord & is on city council, it’s your job to make them DEEPLY uncomfortable at EVERY event, because public housing is against their self-interest.
We have to ask them hard questions about money. We can’t be delicate.
Attention, in the form of sunlight, is what prevents corruption.
We spent a couple decades not paying enough attention, so we now have to pay it with interest. We will spend the rest of our lives being hypervigilant to root it out, but it can be done.
That’s what I got. ~end