Is Miami's Latest Real Estate Boom Fueled by Criminals and Money Laundering?

Categories: Unreal Estate

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Miami is less than four years removed from an epic real estate crash that wrecked the local economy, but it seems lately that new luxury condos are breaking ground every week. Most of the local economy is still in shambles. Unemployment remains high. The vast majority of local residents are still struggling. So for whom are all those luxury penthouses meant? Shady foreigners looking to drop ill-gotten cash on real estate, according to a report in the Nation.

"South Florida has always been a favorite destination for international visitors and political figures, whether it is for vacation or to purchase property along its sandy and sunny beaches," reads a May 2011 Treasury Department report cited by the Nation. "As such, Miami finds itself in the distinct position of being a reoccurring hot spot for funds pilfered by politically exposed persons (PEPs) and other criminal proceeds."

Among the cases mentioned by the Nation:

  • A member of the Russian legislature who was forced to resign after it was found he owned $2 million worth of property he didn't disclose.
  • Alvaro Lopez Tardon, an alleged Spanish drug lord, is facing trial for buying 14 condos in Miami in cash to launder more than $24 million in cocaine money.
  • A score of Venezuelans who illegally funneled their cash into Miami real estate after the election of Hugo Chávez.
  • The U.S. Government returning $2.7 million to Nicaragua after it was stolen by the country's president, Arnoldo Alemán, and partially invested in Miami real estate.

However, who exactly owns many high-end condos in Miami is difficult to track. Many are registered to business entities incorporated in Delaware or other offshore tax havens. Local politicians and business leaders in Florida are apparently fighting hard against laws that would require more sunlight in the shady area of foreign property ownership in America.

"There is a huge amount of dirty money flowing into Miami that's disguised as investment," Jack Blum, a Washington attorney specializing in money-laundering cases, tells the Nation. "The local business community sees any threat to that as a threat to the city's lifeblood."

The piece ends with this darkly funny account:

Jack Blum, the money-laundering investigator, recounted to me a work trip to Miami two years ago, when he was stunned to see condominiums going up in the poor Liberty City neighborhood. "I was in a cab and asked the driver what was going on," he said. "He didn't miss a beat -- he said, 'That's from money laundering.' When it's that obvious to cabdrivers, you know the situation is bad. But that's what the city's economy is built on, and it is a monumental challenge to fix it."

Sadly, this is nothing new. Miami's booms have always been built on criminal activity and money laundering. What the piece doesn't get into is the effect on Miami's lower and middle classes. Gentrification remains rampant. As developers carve out new areas to erect skyscrapers (Edgewater is only the latest hot spot), it causes rents to rise in the surrounding areas, spurring waves of gentrification and rent escalation elsewhere in a county that already has areas where income inequality is as bad as it is some parts of the Third World.

But hey, at least developers are getting rich(er), and no local leaders -- business, real estate, political, or otherwise -- seem particularly eager to stop it.

[The Nation: Miami: Where Luxury Real Estate Meets Dirty Money]

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46 comments
art2morales
art2morales

As a Venezuelan that has picked up a few cheap condos in Miami and elsewhere in the US, I know it's hard for an American to accept the fact that a person living in a third world country can honestly have $800,000 saved up to invest in real estate (my case). I mean, after all, we all grow bananas right? There are no honest well-earning professionals or hard working business owners in a country such as Venezuela, right? That just can't be. Venezuelans grow bananas, and the rich ones sell cocaine or are corrupt politicians, right? No way an honest Venezuelan can have more money than an honest American, because America is number one.

Well, let me explain. In my case, I am a Venezuelan educational consultant and college professor that since 18 has been applying the good 'ol fashion study, work, save and invest formula, and that's how I've gotten my savings. Like me there are many more, especially high earning professionals such as top doctors and lawyers (saving millions), then you have all the Venezuelan business owners (more millions), and on top of those are the Venezuelan industrialists (big millions). All these are capitalists that are trying to put their money outside of Venezuela because of Hugo Chavez and the communist ideals he left behind. The low Miami prices after the real estate crisis were a target of these capitals looking where to go. Right now, I'm also buying a place in Europe for just 120,000 Euro because it's cheap, and bound to go up in the future.

I would say that the criminal money is there, but it is a very small percentage compared to the billions invested by honest hard-working Venezuelan, Brazilian, and Argentinian professionals. It's just that for the average American, as I said before, it's hard to accept that Juan has made more money in his life than Joe, both in the same profession. It's not Joe's fault. It's a country-centric ego thing that he grew up with. 

frankd4
frankd4 topcommenter

 

................................also on the street level..........

3) the voters are in on the scam or allow it with most of the others NON-VOTING temporary visitors or seasonal residents (who would NEVER allow such goings on in their respecable home communites - what happens in MIAMI would never fly in SCARSDALE NY or BRONVILLE NY or ALPINE NJ or BEVERLY HILLS CA)

4) the little people are poor (uneducated non-union and non-english speaking) rely on this underground economy and will never speak up against it, illegal as it is - (where else would drug kingpins be able to freely obtain cheap labor and walk the streets and be super-heros to the local people ?) HIALEAH will always be safe and predominately spanish and protected AS LONG AS they keep their mouths shut on the ILLEGAL DRUG industry they derive their paychecks from

frankd4
frankd4 topcommenter

.....................the CLIMATE exists here in MIAMI = period = better than anywhwere else in the country = the weather is nice YES BUT ....................

1)the police can be bought off - ( imagine a south american drug kingpin living in the TRUMP TOWER on FIFTH AVENUE in NYC with the technology and resources of the N Y P D aimed at him ?)

2) the developers own the municipal commissioners making the building decisions - (so just wire in you LLC proceeds in CASH - no questions asked = period = do you think the rockefellers or kennedys or MAYOR BLooMBERG would allow billionaire hispanic druglords tell them what to do ?)

and as it is often said ..........MIAMI is so convieniently CLOSE to the UNITED STATES

James G. Camp
James G. Camp

But that's the thing with the US Federal Government, they'll allow it to happen, keep tabs on who invests and watch them closely. Using the anti-terrorist legislation they have the freedom to listen in on these folks anyway imaginable. When they have enough on them, they will seize the property, freeze bank accounts and take what they want back. Over the last 13 years they were stealing on the front end of prosperity, made even more in the collapse with the bailouts and now on the back end of it as the recovery cycle, is as shady as any of the business cycles prior to it. Think of it as the Rico Act on steroids, fortified with the all of the anti-terrorist legislation/Patriot Act legislation.

jgcamp99
jgcamp99

Who better than our own government to make these assertions. The same crew that sold illegal arms to drug cartels in Mexico is calling out those that are coming here as foreign investors, investing with cash.


Asüka Bazüka
Asüka Bazüka

A big part of it is the chinese buyers flooding the market.

Roxana Gosney
Roxana Gosney

Discovery America its always been that way:-((

Æon Flux
Æon Flux

Until the next big hurricane, sure. There's something to be said about "I'll huff, and I'll puff, and I'll blow your house down." MIA actually will.

cmon2121
cmon2121

Cmon.. what US gateway city doesn't have it's share of shady LLC's owning real estate

Viv Ian
Viv Ian

For sure, buying those properties "cashiluro"!

Phil Ramirez
Phil Ramirez

Of course is the "Gateway Of The Americas", since every corrupt politician or hustler launders his money here (it's the cocaine boom, once again but with hi-rise units!!). 90% of Dominican politicians owns property in Miami, namely Doral, Brickell and south Broward... And their mistresses inhabit those properties!! What makes you think that the rest, won't follow suit.

Phil Ramirez
Phil Ramirez

Duhhhhhhhhh! Which of you, in your sane minds would think that these "foreign investors" are attracted by?! Weather? Low taxes?? Hialeah and its world renown "Tocame La Pinga" hospitality?!?! Miami is the new "Panama-Cayman Island" hybrid when it comes to global money laundering.

Roy Gonzalez
Roy Gonzalez

Who's the newb who even bothered asking this?

Kristan Patton
Kristan Patton

now this is the kind of thing you guys should be writing about now 20 reasons why miley cyrus is a bad twerker

Nick Perdue
Nick Perdue

Does a club thrashed drunk girl shit in the alley?

frankd4
frankd4 topcommenter

.................................at $700 a square foot bought sight-unseen paid-in-full with a wire transfer IN from an off-shore LLC...........maybe a few,  a very few people, operate that way for legitimate reasons BUT according to many if not most experts these deals are ALL drug-related to some extent

PLUS considering these buyer do not consider the units RE-SALE value i mean what else is it ?

Alex Anico
Alex Anico

if it worked last time...i guess why not...=/

Khori Andre Royal
Khori Andre Royal

Miami's real estate booms are always fueled by drugs and criminal enterprises.

Rebecca Chancy
Rebecca Chancy

This one and the last one and the one before that... and oh yeah, Cocoplum too, and the one right after that lol

Najsoj Osnola
Najsoj Osnola

i think we all know the answer to this question

Ivan Osorio
Ivan Osorio

without reading the article and being a longtime resident. short answer. Yes.

frankd4
frankd4 topcommenter

....................................same as when building in STORM PRONE areas suseptible to hurricane exposure get APPROVED - the whole thing evetually becomes an insurance claim

frankd4
frankd4 topcommenter

...........................no PROSECUTOR will ever make a name going after the small fry or else every advertisement on TV in the early AM hours would yield enough (FOREX scam  gold scams  penny-stocks scams real estate scams)  evidence to convict bus-loads of white- collar fraudsters..............wait for the WHALEs when the numbers approach the billions then the game is on................so basically if you are a MIAMI drug dealer you will be able to continue unabatted into the millions (and IF you are smart just stop there) ........................BUT get to big and you will become a target....................so all the small fry get squeezed to roll on the WHALE so get out before it hits the fan and avoid being squeezed

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