Author Topic: Providing interior design services to criminals prosecuted as money laundering  (Read 823 times)

LetterRip

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This is an interesting theory of money laundering,

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Federal prosecutors would allege, however, that by agreeing to decorate roughly two dozen of Santacruz’s properties – including a “postmodern hacienda” and an apocalypse-ready compound as the kingpin’s pursuers closed in on him – the designers had transformed his American cocaine profits into objects of value in Colombia.

It was money laundering, they argued, and an essential cog in the operations of a cartel that the head of the DEA had called “the most well-organized and well-financed crime organization in history.”

[...]

In a recent interview, Lerner called the case a “warning shot” to the business community that even if their services were legitimate, they could be prosecuted for having drug traffickers as clients.

“Nobody was saying that the decorators pointed knives and guns and pulled triggers and stuff,” said Lerner, now a partner at a New York law firm. “What we were saying was they were the bagmen for this organization.”

https://www.usatoday.com/in-depth/news/investigations/2019/11/06/cali-cartel-leader-dies-interior-decorators-take-fall-crime/4050770002

Fenring

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I've had an interest lately in what may be money laundering operations. Not sure if you were aware of the murmers going around (either earlier this year or maybe last year) about the popular theory that mattress retailers may be laundry schemes. The argument went something like "how can there be a mattress place on every corner of the same intersection, and no customers are ever seen in any of them?" And so forth. Basically, there are seemingly way too many mattress stores per capita per area to make any kind of commercial sense. I'm not sure what the actual nature of the scheme would be, however.

Another scheme I've been thinking about is one I can't even remember where I heard it, regarding modern art. Basically you have a market where some art is "worth" incredible amounts of money, hundreds of thousands or even millions, and there's essentially no way to say it isn't. Art is worth what someone will pay for it, right? So it has occurred to some that inventing high prices for art could be a way of laundering money, where presumably the drug lords are buying this art, 'artificially' inflating the modern art market, and it's understood that the sellers of the art will presumably not make off with the money but it will go back to the cartel somehow.

I don't know about the validity of either of these, but the idea of laundering schemes interests me in general. And of course when explained correctly, this topic can be good for many laughs as well:

https://www.youtube.com/watch?v=I4jnsSDRepo

TheDrake

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Interesting about the mattress stores.

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MAGNUSON: The thing is, though, they're selling not $1, $5 hamburgers. They're selling 1,000, $2,000 mattresses. And so they get to that million, million and a half dollars with basically 100 mattresses a month, is kind of (laughter) how the math works out. So - and a lot of that is weighted towards weekends. So the typical week is they might be open for 12 hours a day. And those weekdays, they might only sell a couple of mattresses.

BOBKOFF: And there's enough profit in those two mattresses to make money on that day?

MAGNUSON: Just enough. Just enough. The economics aren't actually that great for the store in that situation, but it's enough.

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BOBKOFF: All right. So first of all, it is true that there are a lot of Mattress Firm stores in the U.S. Five years ago, the chain had 700 stores. Earlier this year, there were 3,300. That's about a third of the 10,000 mattress stores in this country.

transcript

So some back of envelope math says that 10,000 stores need to sell 1200 mattresses a year, or 12 million mattresses. If we think about the average individual, we might buy one every 5-10 years, roughly (some people have multiple homes, some people sleep on a futon). So the math barely holds up, except that there are online channels now also. There are still some department stores out there too. It seems clear that MF overbuilt (or was up to no good).

Looking at a map in my area, I immediately find a MF 1.5 miles from another MF, and they are not alone. Mattresses, as far as I know, are not impulse buys where you'd benefit from canvassing the area. And these are with the same company, not competitors. Except... when I dig in I find that they FRANCHISE. So that's got to be a factor - people who get in over their head and fold.

Second, I happen to live in Austin where there is massive new development, new people moving to the area, who may or may not bother to keep their mattresses when they move.

Now, if I wanted to start a laundering conspiracy on reddit, I'd suggest looking into those weird computer repair shops that seem to be all over the place in strip malls...

Fenring

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Second, I happen to live in Austin

Hey! I enjoyed watching the bats at dusk last time I visited there.

TheDrake

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I remember walking under a road once, just a simple walkway, and realizing halfway in that there were a bunch of bats hanging over my head. Not my favorite.

TheDeamon

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So some back of envelope math says that 10,000 stores need to sell 1200 mattresses a year, or 12 million mattresses. If we think about the average individual, we might buy one every 5-10 years, roughly (some people have multiple homes, some people sleep on a futon). So the math barely holds up, except that there are online channels now also. There are still some department stores out there too. It seems clear that MF overbuilt (or was up to no good).

Looking at a map in my area, I immediately find a MF 1.5 miles from another MF, and they are not alone. Mattresses, as far as I know, are not impulse buys where you'd benefit from canvassing the area. And these are with the same company, not competitors. Except... when I dig in I find that they FRANCHISE. So that's got to be a factor - people who get in over their head and fold.

Second, I happen to live in Austin where there is massive new development, new people moving to the area, who may or may not bother to keep their mattresses when they move.

A lot of people will replace mattresses when they move, rather than move their mattress. You're also looking at only the consumer end of the market. You're forgetting the hotel/motel industry, which will also "consume" a large amount of bedding supplies as well(and at least some of them will "procure locally" for PR if nothing else). Which moves into another matter. Most of those mattress stores also sell bed-related items as well. Matress protectors, mattress pads, pillows, sheets, blankets, comforters, etc. It isn't just restricted to selling the bed itself.

Fenring

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That's all fine, except some reports I heard were of the same chain having outlets on different corners of the same intersection. Even if those were franchised the home office usually controls locations of franchise outlets, and in fact are contractually bound to 'protect' their franchisees by not overcrowding a given area. Not sure how carefully all companies manage this kind of thing, but I'd be surprised that the 1st franchise owner wouldn't go ape***t if a 2nd one was opening across the street, assuming it's all on the up-and-up.

TheDrake

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I tend to think that people in the hotel and motel industry are not heading down to the showroom to buy mattresses. They are going to have a contract and have the mattresses shipped from warehouses.

TheDrake

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What if the government is building out these mattress stores to become migrant detention centers:o

Fenring

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I tend to think that people in the hotel and motel industry are not heading down to the showroom to buy mattresses. They are going to have a contract and have the mattresses shipped from warehouses.

Plus there's no way they're paying retail prices anyhow, so a franchise outlet would be useless to them. So that makes even less sense that there are so many of these.

TheDeamon

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I tend to think that people in the hotel and motel industry are not heading down to the showroom to buy mattresses. They are going to have a contract and have the mattresses shipped from warehouses.

Plus there's no way they're paying retail prices anyhow, so a franchise outlet would be useless to them. So that makes even less sense that there are so many of these.

Retail stores can do "cost+" sales to customers who buy in large enough quantities. They still make money, just not as much. But yes, I'd agree larger hotel chains probably buy direct from the manufacturer and contract for direct delivery that way.

Pete at Home

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I've had an interest lately in what may be money laundering operations. Not sure if you were aware of the murmers going around (either earlier this year or maybe last year) about the popular theory that mattress retailers may be laundry schemes. The argument went something like "how can there be a mattress place on every corner of the same intersection, and no customers are ever seen in any of them?" And so forth. Basically, there are seemingly way too many mattress stores per capita per area to make any kind of commercial sense. I'm not sure what the actual nature of the scheme would be, however.

Another scheme I've been thinking about is one I can't even remember where I heard it, regarding modern art. Basically you have a market where some art is "worth" incredible amounts of money, hundreds of thousands or even millions, and there's essentially no way to say it isn't. Art is worth what someone will pay for it, right? So it has occurred to some that inventing high prices for art could be a way of laundering money, where presumably the drug lords are buying this art, 'artificially' inflating the modern art market, and it's understood that the sellers of the art will presumably not make off with the money but it will go back to the cartel somehow.

I don't know about the validity of either of these, but the idea of laundering schemes interests me in general. And of course when explained correctly, this topic can be good for many laughs as well:

https://www.youtube.com/watch?v=I4jnsSDRepo

The movie  “Mickey blue eyes” takes on the art scheme laundry.