Money Laundering

Tax Breaks for Oligarchs – The $100 Million Manhattan Apartment with a Property Tax Rate of 0.017%

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Screen Shot 2015-03-10 at 11.56.16 AMThe most disingenuous and sickening type of status quo defender is the person who blames the recent expansion in wealth inequality on a “lack of skilled workers.” Such a person is either a liar or an imbecile. There’s not much wiggle room there. Either this person doesn’t know that the Federal Reserve’s quantitative easing (QE) lifts asset prices while doing very little for the economy, or he or she is choosing to ignore it. Either this person doesn’t understand that the poor and lower middle class don’t own much in the way of stocks or bonds, or he or she is choosing to ignore it.

Since QE has been far and away the most important variable impacting the economy and markets since the crisis, ignoring its impact on wealth inequality is simply unforgivable. Yet, it’s more than that. Much more. Many of the polices existing in these United States not only encourage foreign oligarch money laundering into luxury skyscrapers that remain empty, but our society seems to go out of its way to ensure they have to pay as little in property tax as possible. Indeed, tax polices don’t benefit the rich, they benefit the super rich.

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A Warning to New York City – How Singapore’s Luxury Boom in Sentosa Cove Went Bust

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Screen Shot 2015-02-17 at 2.22.14 PMAcross Singapore, the property market was booming. Interest rates were low, prompting buyers to take on more debt. Confidence was high. Banks built regional headquarters in Singapore and jobs were created. Singapore’s skyline changed drastically. A new financial district rose and Marina Bay Sands, a three-tower building housing a casino with a boatlike structure on top, was built for a reported $5.4 billion.

With the government unable to contain the heated market, the growing presence of foreigners and the rising cost of housing became a flash point for discontent. And Sentosa, with its new villas, yachts and luxury condominium towers, became a particular symbol of the rising inequality for many citizens.

Faced with simmering discontent over rising living and housing costs, the government executed a succession of cooling measures that have hit the high-end market especially hard…

On Sentosa Cove, few people are buying. Most of the unsold units from recent developments have been taken off the market and are being leased instead.

The few recent sales paint a grim picture. Most sellers have taken sizable losses.

– From the New York Times article: A High-End Property Collapse in Singapore 

My hometown of New York City is currently ground zero for a luxury apartment building boom driven primarily by oligarchs using the units as savings accounts, and foreign criminals looking to launder wealth accumulated via corruption, fraud or worse. This isn’t a new story, I’ve been writing about it for several years (links at the end), but a recent New York Times piece titled, Stream of Foreign Wealth Flows to Elite New York Real Estate, has put the issue front and center.

Naturally, New York City isn’t the first, and certainly won’t be the last place to encourage hot foreign money to flow into its real estate sector in a haphazard and harmful manner that could have severe long-term repercussions once the boom turns to bust — which it invariably always does.

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How NYC’s Biggest Real Estate Project in a Generation is Being Financed by Selling Green Cards to the Chinese

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Screen Shot 2014-12-15 at 11.04.34 AMThe selling of U.S. green cards to foreigners, particularly the Chinese, has grown exponentially in 2014, and represents a significant public policy debate very few Americans are aware of. I covered the surging issuance of EB-5 immigrant visas a couple of weeks ago in the post: How the Pennsylvania Turnpike Commission is Selling Residency to Chinese “Investors” at $500k a Pop. Here’s an excerpt:

A major theme here at Liberty Blitzkrieg over the past year has been the creative ways in which corrupt Chinese oligarchs and government officials are maneuvering their way into the United States. To be clear, I am not anti-immigration by any stretch of the imagination. My mother was an immigrant. This is about being against corrupt and morally compromised individuals being welcomed here with open arms just because they have cash. We have enough domestic criminal oligarchs as it stands. These people have collectively captured the American political and economic system and control it to their own ends. Do we really need to import more of these types from abroad?

Here’s what I’d like to know. Who are these investors and who vets them? It is a known fact that corrupt Chinese officials and businessmen are scrambling to get themselves and their money out of their homeland as the government cracks down on corruption. How many of them are going to use this program to get into the U.S., and what will be the long-term impact to our society? Important questions that must be asked, but most likely aren’t being taken seriously.

While that article focused on a turnpike in Pennsylvania and mentioned a few other projects, it didn’t clarify how widespread the use of these visas has become in 2014. Specifically, there were 10,928 applications for EB-5 visas in the fiscal year ending September 30, 2014. This was up a stunning 72% from fiscal year 2013. Even more shocking, the number of applications in 2006 was 486. So the 2014 figure is up 22x in less than 10 years. That’s not normal.

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Video of the Day: Ferraris, Maseratis & More – How the Children of Chinese Oligarchs Live it Up in SoCal

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Screen Shot 2014-11-20 at 11.56.27 AMThe interesting thing about America in 2014, is that the worship of our own domestic criminals just doesn’t cut it anymore. In order to ensure our celebration of corruption is crystal clear to the entire planet, our “leaders” have eagerly opened the floodgates to criminals from all over the world. The most recent focus has targeted corrupt Chinese officials and their children, which makes sense as China is cracks down on corruption. While capital moves to where it is treated best, apparently so does criminality.

I have been highlighting this trend all year, with the post: Open the Floodgates – Chinese Inquiries on U.S. Real Estate Soar 35% After Easing of Visa Rules, being the latest. In that piece, we learned that:

Chinese inquiries about real estate investment in the United States surged 35 percent this week after the two countries agreed to extend the terms of short-term visas, China’s top international property portal said on Friday.

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Chinese Homebuilders Expand in America as U.S. Auto Loans Hit Record Levels

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Just a little tale from the streets of America
Sparkled promises paved with pathos and hysteria
Trenchant, weary native sons
Step back, step back
And see the damage done
Meander to the horizon 
The streets of America

– Bad Religion, Streets of America

Late last week I published a post titled, Your Wall Street Slumlord Arrives in Europe – Goldman and Other Financial Firms Launch “Buy to Rent” in Spain, in which I highlighted the fact that U.S. financial oligarchs had recently turned their sights toward Spanish real estate after feasting on the American market for several years and driving home prices to unaffordable levels for much of the native population.

Interestingly, today I came across an article in the Wall Street Journal that noted Chinese homebuilders are beginning to make a more aggressive push into the U.S. market. One of the main reasons for this phenomenon appears to be:

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U.S. Senator Wants to Ban Bitcoin – To be Followed by Book Burnings and Witch Hunts

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Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans. – Senator Joe Manchin, in his letter calling for a ban on Bitcoin Whenever you hear a politician say he or she wants to do … Read more

How the Mainstream Media Would Cover “Cash” if it Was a New Invention

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Those of us involved in the Bitcoin world are all too familiar with the consistent hyperbolic, fear-mongering so pervasive in the mainstream media’s coverage of Bitcoin.  None of that should be surprising since many of them simply do not understand it, and when you couple ignorance with a natural reflexive response to defend the status quo, you get some pretty terrible reporting.

The death of Bitcoin has been greatly exaggerated many times, including last fall when the Silk Road was shut down. Yet rather than being destroyed by the episode, it came out far stronger. Something I expect to be the case again after the Mt. Gox situation (read my thoughts on it) is behind us.

Meanwhile, if you are sitting on a lot of BTC and want to directly move it into other assets, such as gold and silver (which have been moving sharply higher in 2014), it is really easy to do. Amagi Metals is a Denver precious metals dealer and one of the first to accept BTC.

Now from Ledra Capital is a amusing article demonstrating how the mainstream media might portray cash if it were invented today. The piece is titled “Bizarre Shadowy Paper-Based Payment System Being Rolled Out Worldwide”, and I have provided some excerpts below:

World governments announced a plan today to allow citizens to anonymously carry parts of their wealth on their person and exchange it with others using small pieces of colorful paper printed with nationalistic and Masonic imagery along with numbers that purportedly represent the amount of wealth each piece of paper represents (if the paper is not a counterfeit). These pieces of paper are formally a “note” from each nation’s central bank, but they are also called “cash” by many – this is a technical matter that is too complex to cover in our basic primer; Suffice it to say, that it is representative of the complexity and user-unfriendliness of this new system. 

The launch of cash has provoked an immediate reaction from law-enforcement agencies worldwide that universally condemned the development.

“Cash is a 100% anonymous and untraceable payments technology.   It is like a weapon of mass destruction launched against law enforcement,” said Mike Smith, the recently confirmed FBI Director.  “It is the perfect payment mechanism for criminals, drug cartels, terrorists, prostitution rings and money launderers.   We don’t know how we will be able to combat such a technology and fully expect that a new generation of super-criminals will emerge, working in the shadows of a world where they can conduct their illicit affairs without leaving a trace.” 

Banking Superintendent of New York State, Mike Smith had the following to say: “I can’t think of any reason that a law-abiding individual would want to use cash. At a bare minimum, we believe there should be a licensing procedure for individuals or businesses that plan to use cash, a ‘Cash-License’ as it were. This license will limit ‘cash’ to trust-worthy individuals who keep detailed auditable records of all their cash transactions in order to keep New York safe from criminals.”

Though hard to imagine, cash operates with no consumer protection at all.   If your ‘bills’ are stolen or lost, they are gone forever.

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Blast from the Past – Adam Kokesh Interviews Charlie Shrem (October 2012)

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Last week, I wrote an article expressing my disgust at the selective prosecution of BitInstant CEO Charlie Shrem. The piece was titled, Some Money Launderers are More Equal than Others Part 2 – CEO of BitInstant is Arrested. The aggressiveness of the prosecution and the arrest itself reminded me of what has been done to countless … Read more

Some Money Launderers are More Equal than Others Part 2 – CEO of BitInstant is Arrested

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No man escapes when freedom fails, the best men rot in filthy jails. And those who cried, “appease appease” are hung by those they tried to please.

– Anon

Last May, I wrote an article titled: Some Money Launderers are “More Equal” than Others, which likened the U.S. government to the pigs that ruled the roost in George Orwell’s classic novel Animal Farm. In that article, I decided to compare the way the “authorities” used money laundering laws against Liberty Reserve, versus the way they tip-toed around massive money laundering for Mexican drug cartels that HSBC engaged in. Since I wrote that article, JP Morgan has been fined tens of billions of dollars for a cornucopia of criminal activities. Meanwhile, we have yet to see a single executive arrested or put behind bars. Why?

I think it is quite obvious. The United States’ “economy” has devolved into nothing more than a state-sanctioned criminal racket. A handful of oligarchs and the corporations they control, are immune from prosecution no matter what they do. They have a complete and total license to steal with impunity. Meanwhile, if a peasant is caught stealing 10 dollars or found with a dime bag of weed, it is jail for life. ‘Merica.

So now I turn your attention to the breaking news that Charlie Shrem, the impressive, young and very talented kid behind Bitcoin exchange BitInstant, has been arrested. I had a chance to meet Charlie in person last summer at the Inside Bitcoins conference in NYC (I will be once again attend their next conference April 7-8). In my wrap-up article on the conference I wrote:

The event kicked off with keynote speaker Charlie Shrem, founder and CEO of BitInstant. For those who aren’t familiar with it, BitInstant is one of the more convenient ways to acquire bitcoins for cash. Incredibly, he is a mere 23-years old and started the company while still enrolled at Brooklyn College. He shared his experience of pitching venture capital firm after venture capital firm, and his subsequent rejection by each and every one of them. He eventually convinced his mother to seed him the $10,000 needed to start the company.

Shortly after the speech, I was able to chat with Charlie in the hallway and he couldn’t have been nicer. He immediately pointed to my “Bought with Bitcoin” shirt and told me he wanted one. The shirt’s in the mail man.

In light of the above, it makes sense that the U.S. government wants him in jail. It has become quite clear that the “authorities” are intent on either putting all our greatest minds in jail, such as Barrett Brown, or driving them to suicide, as was the case with Aaron Swartz, or forcing them into exile, as is the case with whistleblower-hero Edward Snowden. Meanwhile, it is open season for oligarchs to hunt peasants. USA! USA!

From Time:

Charles Shrem, who ran a New York-based Bitcoin exchange, was arrested Monday and charged with engaging in a money laundering scheme with a user of Silk Road, the notorious deep web black market.

In the federal criminal complaint, the Southern District of New York charges Shrem, the 24-year-old CEO of BitInstant, with three counts, including one count operating an unlicensed money transmitting business, one count of money laundering conspiracy and one count willful failure to file suspicious activity report.  Robert Faiella, a Silk Road user who operated under the name “BTCKing,” was charged with one count of operating an unlicensed money transmitting business and one count money laundering conspiracy.

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Manhattan Apartment Rental Rates Drop for Third Month in a Row

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Now this is interesting. Investors looking at real estate should be aware of two main things at the moment. Those two things relate to what is really driving this centrally planned, manufactured rebound in U.S. real estate. It’s really a tale of two distinct trends. In formerly hurting markets such as Arizona, Nevada and Florida, private equity investors have flooded into what is a now gigantically crowded to “buy-to-rent” trade. Meanwhile, in the prime markets such as New York City and San Francisco, we have seen the “money laundering trade,” where rich oligarchs move their often ill-gotten gains into trophy real estate assets abroad.

We have seen many signs all year that the first key pillar to the manufactured rise in housing was becoming strained, as rents continued to rise while incomes continued to fall. It doesn’t take a genius to realize that this can only last so long, and many of the early investors in “buy-to-rent” have already gotten out or are trying to.

As far as the second pillar, well at some point the oligarchs will have purchased enough homes in London and Manhattan and then what? Interestingly, the seemingly unstoppable rental market in Manhattan is showing signs of cracking. What this ultimately means is unknown, but it’s an interesting data point nonetheless.

From Bloomberg:

Manhattan apartment rents fell for a third month in November and the vacancy rate reached the highest in at least seven years, signs the market is weakening amid a spike in homebuying and the lure of leasing in Brooklyn.

The median monthly rent in Manhattan dropped 3 percent from a year earlier to $3,100, according to a report today by appraiserMiller Samuel Inc. and brokerageDouglas Elliman Real Estate. The vacancy rate climbed to 2.8 percent, the highest since the firms began tracking the data in August 2006.

“With the scare about rising mortgage rates, it poached a lot of demand from the rental market,”Jonathan Miller, president of New York-based Miller Samuel, said in an interview. “On top of that, what else is poaching demand from the Manhattan rental market is Brooklyn.”

Manhattan landlords agreed to offer concessions, such as a month’s free rent, on 7.2 percent of all new leases in November, up from 4.2 percent a year earlier.

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