Tuesday, August 8, 2017

Donald Trump makes his money the old-fashioned way—he launders it

"As oligarchs secured their control over former Soviet states and learned to suppress opposition to their monopolized industries, the money they were raking in was growing by leaps and bounds. But turning that money into US assets was not keeping up. They needed a new route. Many oligarchs had already started turning to real estate as the primary means of shifting funds. Real estate laws in the United States offer unparalleled flexibility and freedom from reporting. The value of real estate is all but arbitrary, so developers could post any price they wanted on a luxury condo, mansion, or even entire building. If someone will pay $100 million for a home in Florida … then the home is worth $100 million. Even if it was listed for a third of that the day before. And shell companies hadn’t completely lost their worth. Real estate developers could collect massive over payments from offshore sources, then turn around and feed that money back into “partnerships” and other arrangements. In a very real sense, the real estate developers stepped in to take the place of banks once regulators were watching banks. They were bringing in funds for a fee. The real estate itself was almost an afterthought. The shift from shell-companies to real estate as the means of moving funds came barely in time for Donald Trump. Trump was already bleeding from a string of bad decisions that left him with with a cascade of bankruptcies and a $916 million loss on his 1995 taxes. Trump’s massive Taj Mahal casino in Atlantic City opened in 1990, but proved to be a disaster from before opening day. Within a year of its founding, Trump required an extra infusion of over $3 million from his father to keep the doors open — a jolt of ready cash delivered in the form of an illegal loan for which Trump later had to pay a fine. Even that wasn’t enough to keep the Taj Mahal from having to reorganize under Chapter 11 by July 1991. With his bid to monopolize Atlantic City failing, Trump was forced to declare bankruptcy at his two other casinos in 1992."