This chapter focuses on assets that are hidden or laundered through a legitimate business operation. Cash is both the easiest and the hardest asset to deal with, and will be the subject of our mini-expose` for the next few pages.
Much of the cash introduced into a business for laundering started out as some other type of asset that was converted, such as antique cars, stocks, or real estate. Pizza also works.
Me, the FBI, and Hot Anchovies
Years ago, when I was an Army counter terrorist (CT) specialist, I had a friend who was FBI CT SWAT. His son and my sons used to frequent a certain pizza joint in a large shopping mall near our home. One day, the Bureau guy tells me to stay away from the pizza place for the next few days. Good enough.
Three days later, the FBI raids our friendly pizza place in the mall. People are taken away in handcuffs. No more pizza.
Seems the pizza people had several different activities going on — besides selling pizza. It went something like this: Certain Special People (CSP’s) would come in to buy two or three pizzas. The CSP’s would hand over a lot of money (“purposeful overage”) which would be enough to cover the pizza and the drugs in the pizza boxes. The cash would be dirty, and needed laundering. (“Dirty” in this case meant that it had been derived from other illicit activities.)
That cash was then either negotiated as change for other customers, or simply deposited at the end of the day. No CSP ever visited the place twice. Of importance as well is that this mall is about 2 minutes’ drive from I-95. Easy access from another state, and quick egress to a different state.
Advantages to Hiding Assets in a Business….
While all property can be traced through some type of paperwork, cash cannot be. (Yes, I know Hollywood talks about “marked” bills, but that currency is not marked per se; the serial numbers are recorded. Have you any idea how much time and drudgery would be involved?) Lack of records of cash transactions makes it difficult if not impossible to connect illegitimately gained cash with honest business transactions. Illegitimate cash funneled into a business is probably not reported, if the purpose is just to clean the cash (like the Anchovy case). If the purpose were to support the business, the infusion of cash would probably be offset by fabricated expenses.
If the dirty cash is used as revenue, and not reported, then the revenue is not taxed. In the Anchovy Caper, the incoming cash was actually revenue, but not just for pizza. I’m certain the IRS got involved at some point.
Let me clarify. Illicit cash must be laundered, so that it appears to come from legitimate enterprise, for one reason: Bulk. No one needs to launder a couple of thousand dollars. He would, however, need to launder a couple of million. As I mentioned earlier, he (or you) could not just deposit two million bucks in your local friendly bank branch without drawing a lot of attention! If you are doing millions a week in drugs, how would you spend it? Answer: Really really slowly! Other answer: You invest it, convert it, break it up into little pieces, turn it into something it isn’t, and so on.
Or, you could just put that million you found in the woods in your closet for a rainy day. But for heaven’s sake, don’t spend it all in one place!
…. and Disadvantages
Large amounts of cash are difficult to handle. Milliions of dollars in cash present a logistical problem in concealment if kept on business premises. They present as well opportunities for theft by employees, associates, and contractors. Lack of records makes it difficult to protect cash — if you do not have verified records, you cannot accuse someone of stealing a given amount of cash.
Finally, many assets cannot be acquired for cash without generating inquiries as to the source of the cash. Two examples: restaurant furnishings are very expensive, especially when one begins installing ovens, cooking vats, and walk-in freezers. The vendors would certainly be curious and not a little intimidated if the restaurateur (Guido the Laundry Man) paid hundreds of thousands in cash for these appliances. Now think over the horizon: Those vendors would be faced with having to deposit that cash in their bank accounts!
Another example is airline tickets. Next time you buy airline tickets costing a couple of thousand — or even several hundred dollars — try paying cash for them. See if you don’t encounter a little delay while you answer questions to people carrying badges.
And do not mention my name. I disavow all knowledge of you and your behavior.
Next time: What a tangled web we weave….