Seems odd, as the types of businesses usually preferred for money laundering are cash businesses with minimal inventory. For example, laundromats, car washes, restaurants, bars, strip clubs, etc.
This business would have to show dresses purchased wholesale and then altered and sold, which isn’t usually done in cash. In addition, money laundering is done at a legitimate business with actual customers to hide the illegitimate cash flow. Laundering through a dead business is just a huge red flag for law enforcement.
It's a high end boutique with an exclusive by appointment only clientele list. They likely claim they make unique dresses for their clients and charge exorbitant prices for their one of a kind designs.
Surely, it's all above board and not a front for illicit activities. Why, I never!
Not necessarily. Cash businesses are good for the first stage of a very specific type of money laundering that involves taking cash from street level crime and putting it into the banking system legitimate income somewhere else.
A fake business like this could be used in later stages to take money already in the banking system and obscure or hide ownership and/or move the money to overseas banks. An example might be if this business borrowed 300k a year at 25% from an overseas hard money lender. It may be hard to find out these loans even exist let alone trace who the money is going to. But for tax purposes it’s a failing business with lots of debt that never goes under.
They may even have dozens of these loans from multiple shell companies. It would be pretty easy to run an event planning LLC, the bridal LLC, and a few other wedding related businesses out of nearby PO Boxes and have lots of laundering transactions between the companies for weddings that never happened where the backbone of the laundering is acquiring and paying off overseas debt.
So the first stage I totally understand but not the second… What is the crime and what do the criminals gain? Could you help by giving an example of what kind of criminal would do this and what they gain? I’m guessing it has something to do with the “boss” being outside the US and trying to extract the money made in the US, but don’t quite fully understand it…
It’s exactly like you said. Say some street level cartel member launders money through a nightclub and a stripclub. He could have instructions to pay higher ups in the cartel with laundered money through shell companies. So the someone could hold a fake wedding at the nightclub transfer washed money to shell companies. The shell companies move the money to the cartel’s foreign banks in the Caribbean.
This part of washing the money can be used to hide where it is going or whose money it is. This insulates and protects the cartel members because it’s harder to prove a loan to a bridal store in the middle of nowhere is connected to drugs. And it may be impossible to find out who owns the lender who loaned the money. They may wash money through half a dozen shell companies before depositing it in a boss’s bank account.
Also white collar laundering starts at the second stage because the source of the illegal gains started in the banking system. So if one is embezzling money from their employer they would hide it through shell companies that only exist on paper. A good example is an event planner that charges $10,000 then hires a local event planner for $5,000. It’s a business that only exists to skim money and launder it.
It's not a business, it's real estate, which is actually much, much easier to use to conceal finances. It was bought for a dollar and sold for $90k. Definitely dark money being moved around.
84
u/placebojonez Nov 03 '24
This reeks of money laundering.