Of course not. If I was a launderer, liquor would be pretty high on my list of arbitrarily overpriced products.
Okay, so I think I get it. This only works out if they didn’t/couldn’t put forth the time and effort to sell the other bottles legitimately. That was the point of confusion. If I could wave a magic wand and sell 100% of my inventory each night, then there is no profit to be gained by laundering. The launderer is basically buying the unsold liquor from the bartender, who then gives him back a chunk of the money. The bartender makes some profit, even if it is less money than he would have if he sold the liquor at market price. The launderer gets to spend his newly clean money, even if he has lost some of it, so they both walk away happy.
You basically got it, but the point you’re missing is that the launderer is the bartender. Criminals buy or start cash-intensive businesses precisely so they can use them to launder ill-gotten gains and make them appear legitimate.
If you want to level up, you also buy the liquor store. Then you can start generating phantom bottles for your phantom shots.
Yes. Which is why they commonly split amongst several “businesses”. You also want to seen to be middling in success. If its too successful, you get attention anyway, if its empty most of the time, yet makes a huge amount of dough, then it flashes “front” to the investigators in neon signs. They like to do just enough to actually have reasonable amount of business to explain away the extra cash.
[QUOTE=Little Nemo]
But they’re a bar. Their business is selling five dollar shots of Stoli. Every time they threw out a bottle of Stolis they were throwing out the sixty dollars of profit they would have made by serving it legitimately and replacing it with sixty dollars of illegal profits. How is that coming out ahead? They might as well quit the crime business and run a legitimate bar.
[/QUOTE]
Its quite common for fronts to be successful businesses in their own right with actual staff who work at nothing but the purported business, and be innocent about the “extra-curricular”. We had a poster here (WhyNot) if memory serves, apologies if I mixed you up), who was such a worker and had no idea or clue, even though they actually had some bookkeeping responsibility.
A legitimate bar or indeed any business is going to be a lot more easier to launder money or whatever through, compared to one which was a sham. You can show cash flows and put forward witnesses who will say truthfully, oh yeah we cetainly regularly had days when we must have made that much money.
Well in the bar scenario above your really only talking about maybe an extra $200 or so a day. Not really enough to launder the thousands they make off drugs.
It just seems to me a foolish way to go about it. Why destroy valuable inventory? Why not do the same thing at a place that sells services like a barber shop? The barber performs ten haircuts during the day at twenty dollars a piece for two hundred dollars. But at the end of the day you slip in three hundred dollars from some illegal business and the barber says he performed twenty-five haircuts during the day and that accounts for the five hundred dollars in the cash register. And you didn’t have to destroy a hundred dollars worth of real inventory to do it.
If you don’t want to pay taxes on your income, you just keep it as cash.
The whole point of money laundering is to convert cash into real electronic money that can be used to buy expensive stuff. You can only buy so many things in this life with cash, for the rest you need hard money, which means money in a bank account.
So the money launderer needs to pay taxes on the laundered money, otherwise it isn’t laundered money, it’s still dirty money. That’s the whole point, to convert dirty money into clean money.
So yeah, that’s the whole point, but they still try to avoid paying taxes. Like by Smurfing, making many small deposits into a bank account- usually by having guys buy MO under $2900.
Because not using up enough inventory is an enormous red flag if anyone looks at your books. And I’d think that the difference between a 10-cut-a-day shop and a 25-cut-a-day shop would be really obvious to casual observation. (I would not fall over from shock if some of the perpetually-empty barber shops in my city were fronts)
I’m sure that the money launderers would love to clean their cash without spending any money on inventory, but the scheme actually seems rather good. For an illegal money laundering scheme. [ol][li]Invoices for inventory will match up to sales[/li][li]Busy bar doing $2000 in sales doesn’t look too different from busy bar doing $2800 in ‘sales’[/li][li]No one to say ‘by the way, the booze for my underage kegger was bought under the table from bar-X’ when they get caught by the cops for something unrelated[/li][li]Minimum of accomplices[/li][li]Scales up better than a service-only scheme[/li][/ol]
They whole point is to not get noticed (since I don’t think there exists a money laundering scheme that would hold up under intense investigation) and the cost of inventory is cheap insurance. So long as you aren’t doing it in front of someone will to turn informant, of course :smack:.
[li]Busy bar doing $2000 in sales doesn’t look too different from busy bar doing $2800 in ‘sales’[/li][/QUOTE]
An important part of which is that alcoholic beverages come in a very wide range of prices. A dozen shots can vary from $20 to $1000 without looking much different. Haircut prices don’t vary that much, at least not for haircuts offered at the same place, so if you suddenly make an order of magnitude more money, you’d better be doing an order of magnitude more business.
Kind of. I was a manager at a teen nightclub (no booze) that was owned by a bookie. The only bookkeeping I did was to count the till from the legitimate sales at the end of the night. I eventually figured out that something shady was going on in the office at the other end of the building, where the owner (who I don’t think I ever actually met) was Not To Be Disturbed…EVER, but that was right around the time - probably not coincidentally - that $75 from my till went missing and I was invited to find a job elsewhere.
There was quite likely some money laundering going on as well, but I honestly don’t know. I was 18 and quite naive.
The problem is - at a certain point, the other bar may trigger an investigation - how come they sell so much but their receipts from the (legitimate) liquor supplier don’t reflect it? The supplier may tip off the cops (“I think he’s buying stolen liquor…”) or someone will hear the boss bragging about a too-cheap source. The more people who are involved in this crooked scheme one way or another, the more “loose ends” like no empties to match the sales, etc. - the more likely you will be discovered.
The whole point is to convert money from illegal activity to legitimate income. You can’t really buy a Ferrari for cash - when the car dealer deposits $150,000 cash, he has to fill out a form telling the bank where he got it. You can’t write a cheque if the money is not legitimately deposited in the bank. The problem is even worse when you buy that $2M mansion.
The problem is - and this is why money laundering is easier than other crime tracking - if you want to live a millionaire lifestyle, you need to have legitimate income. Legit means paying taxes on it. If the feds notice you, they can start investigating. Paid cash for gas or groceries? no problem. Paid cash or money orders for your mortgage? Your car payment? Your trip to Vegas? Your $500/night hotel suite? Your gardener, your maid, your limo service? At a certain point they will notice.
What do you propose doing with dozens of money orders for $2900 each? You bank will file a suspicious activity report if you deposit 10 of these every month, or if they notice the same parade of people buying the same thing month after month.
Using a business as a front requires you to buy a legitimate front and run it like a legit business, just monkey with daily receipts to ensure the illicit money trickles in consistently. The more cash the business deals with, the better. That’s why the mobs love bars, pizza joints, vending machines, etc.
For a small time operator - the old route was to deposit overseas (“Wolf of Wall Street”) where the feds could not get details, and then transfer the money home. However, almost every country overseas is cooperating to stamp out money laundering, which is usually an attribute of organized drug smuggling. So regular large cash deposits are usually a flag overseas too. Taking money out of the country over $10,000 cash without declaring it is also a crime.
Plus, you then have to explain to the feds where this money is coming from when you transfer it back - and one requirement is that if you have “investments” overseas, you must declare any holdings valued over $100,000. So if you claim you are withdrawing from your late Uncle’s estate, well, you should have declared the inheritance way back when, and there better be that $100M you claim to be withdrawing from. Plus any foreign banks with Americans as customers must declare their holdings or risk forfeiting a big fine and any chance of participating in financial transactions with American institutions.
So you still need to create a fake complete business that is somehow collecting cash and paying you a salary.
Full service accounting/payroll firms can make alot of things very simple. My business deals in a not insignificant fraction of cash. Much like the scene from breaking bad I can easily blend an extra couple hundred a day into my business without even drawing a sidelong glance, with a little patience, that number could creep into the $1000/day range.
The larger the business, the easier it is to fudge in larger amounts of money. A fancy nightclub can very easily blend tens of thousands of dollars a day in peripheral items like bottle service, private VIP booths/rooms, and $500 bottles of champagne.
All modern cash registers time-stamp their receipts, and keep electronic copies of them in a database. The bar owner also needs to be careful to disperse his fake sales throughout the day so there does not appear a flood of consecutive sales bunched together near the end of the day (let alone after hours :eek:) That would be a red flag fer sure.
People seem really hung up on the “pour the booze down the drain” aspect. What if, at the end of drug dealing, the big boss just says to his goons, “congrats on that awesome drug traffic, here’s a thousand dollars each to have a great night out, so long as you spend it at this bar I own and only drink top-shelf stuff”.
He’ll see (80% of) that money again as legitimate profits from his business with a complete paper trail and inventory/sales matching up, and none of the staff of the bar even have to be in on it. All pouring the booze down the drain does is reduce the incidence of alcohol poisoning among his henchmen.