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Organized Crime Will Go Through The Lane Of Least Resistance

A report from the Globe and Mail in Canada. “Dirty money is not a problem contained to casinos and the luxury car trade. It involves billions of dollars tumbling through the real estate market – an estimated $5-billion just in the real estate sector last year.”

“Bill McCarthy, a Burnaby-based real estate developer and long-time realtor, said it is an open secret in his industry that clients often try to pay deposits or even purchase a home with cash. In the end, he said, any and all professions involved in buying and selling property should report to FinTRAC because, he said, bad elements can always find willing partners.”

“‘I don’t think anything in the German report has surprised those within the real estate, legal and mortgage businesses,’ Mr. McCarthy said. ‘The scope and scale maybe, but not the details of it and that’s a problem.'”

The Wall Street Journal. “Roughly 5 billion Canadian dollars ($3.71 billion) worth of illicit funds flowed through the real-estate market last year, including in Canada’s third-largest city, Vancouver, with another estimated C$2.4 billion moving through the province’s casinos, the market for luxury cars and horse-racing tracks, according to the reports commissioned by British Columbia’s government.”

“As a G-7 country, Canada has one of the world’s most advanced economies. But the country has increasingly become a target for international crime rings, which exploit regulatory loopholes to funnel illicit funds through the country’s banking system, said Garry Clement, a former officer for the Royal Canadian Mounted Police who now works as a consultant focusing on financial crimes.”

“‘Organized crime will go through the lane of least resistance, and Canada has become that,’ he said.”

From CBC News. “Showing a flair for the dramatic, Attorney General David Eby borrowed from Game of Thrones to drive home his point while delivering Thursday’s report on money laundering in the B.C. real estate market. ‘It may be spring but winter is finally coming,’ he said. ‘The party is over.'”

“Eby said even without access to law enforcement and criminal databases, investigator Peter German and his team had no problem uncovering more than a few eye-popping examples of how proceeds of crime may be infiltrating all aspects of the B.C. real estate sector.”

“A homemaker who bought more than a dozen downtown row houses over three years for $4.1 million. Another homemaker who bought five luxury homes in three years for a total of $21 million. A Vancouver luxury car reseller, known to police, who owns three homes in Metro Vancouver worth $8.6 million. The properties have multiple mortgages held by three numbered companies and a newly incorporated mortgage investment company. Each new mortgage was found to be at a lower rate of interest than the previous mortgage.”

“A $3.5-million Gulf Island property acquired with funds allegedly embezzled from a $90-million loan fraud in India. The property is owned through a company registered in a high-risk jurisdiction using a post office box as its address. Almost 500 different properties with four to 29 mortgages each, registered and repaid in rapid succession.”

“Hundreds of individuals and numbered companies that own property with only the address of a law firm on title. Eby said this was part of a larger pool of 71,000 residential properties registered in a way that makes identifying the true owner incredibly difficult if not impossible. Titles to more than 3,000 residential properties — worth more than $3 billion —  that have ownership addresses located in high-risk financial jurisdictions. Of those properties, 473 list owners’ addresses in offshore financial centres and tax havens.”

“In the report, German highlights some of the unique occupations listed by titleholders in the land title registry, including ‘superdad,’ ‘funemployed,’ ‘wannabe ski bum’ and ‘trophy wife.’ ‘We have assumed that the four B.C. titleholders who list ‘launderer’ as their occupation are referring to clothing,’ wrote German.”

“Humour aside, Eby says the findings in the 367 page report are ‘stark evidence of the consequences of an absence of oversight … until now.’ ‘Criminal profiteers distorting a provincial economy is not inevitable,’ he said. ‘And while it may be our present, it is not our future anymore.'”

From Domain News in Australia. “The money is coming out of Box Hill, with the suburb recording one of the most dramatic shifts in house prices across Melbourne as international investors, property developers and local buyers start to look for better deals.”

“Prices soared in the neighbourhood towards the end of Melbourne’s property boom, with median house price growth peaking at an eye-watering 64.8 per cent in August 2017 compared to a year earlier, Domain data showed. Over the year to March, Box Hill’s median house price has dropped 25.7 per cent to $1,237,500.”

“During the peak, house and unit prices were being largely driven by foreign investors buying or developing properties in Box Hill, Domain senior research analyst Nicola Powell said. More than 30 per cent of Box Hill residents were born in China or Hong Kong, according to the latest census.”

“Many Chinese developers have been attracted to Box Hill because of its bigger house blocks and developable land that, until recently, offered a way to profit. Local developer the Deague Group settled its Whitehorse Towers skyscraper in the main shopping strip 18 months ago. After arriving early in the neighbourhood’s growth spurt, chief executive Will Deague has seen prices for development sites shoot up.”

“The price he paid for a site five years ago worked out to about $18,000 for every apartment he could build on it. Now, some vendors are asking $100,000. He is skeptical that all the proposed apartment blocks will be built.”

“‘There’s been a huge uplift for land owners out there,’ he said. ‘You’ve got some offshore developers who have probably entered Box Hill a little bit late, paid a little bit much for the land. And it’s harder to get sales in the current market so they’re struggling to get them off the ground.'”

“A broader drop in foreign investment was affecting prices in suburbs like Box Hill, said Dave Platter, spokesman for Chinese listings portal Juwai. Like local buyers, Chinese buyers were waiting for further drops before buying property or starting new development. The overall decline in prices would help offset the extra taxes foreign investors were being slugged, he said.”

“‘There’s still demand but not where it was before,’ Mr Platter said.”

This Post Has 38 Comments
  1. Around 7 to 10 years ago, the few people who dared to mention foreign money laundering in BC were shouted down by mobs of REIC slimeballs, shouting “racists!” Well no more. And time after time, when individuals were identified, they were almost all criminals/Chinese mafia/drug dealers. One guy even cut an acquaintance up in 100 pieces. And often these criminal gangs have ties to, or are part of Chinese police.

    1. Is this behaviour typical in Vancouver real estate investing circles?

      Vancouver Sun Homepage
      Local News
      Man charged with murdering West Vancouver millionaire says he stored victim’s arm in freezer
      Keith Fraser
      Updated: May 8, 2017

      A man charged with murdering a West Vancouver man and chopping up his body had to be interviewed a second time by police after the victim’s right arm could not be located, court heard Monday.

      Li Zhao, 56, has pleaded not guilty to the May 2015 second-degree murder of Gang Yuan, 42, and not guilty to interfering with the victim’s body.

      In a confession to police, Zhao said that after a fight with Yuan, a millionaire who was a business partner of the accused, he shot the victim and then cut up his body using a power saw and a hunting knife.

        1. at least he didn’t eat him
          I’m watching Train to Busan right now. Really good, if you like zombie movies.

          1. Chinbabwe et al. sorry for replying to my own comment, wasn’t sure where it would land.
            Have you seen “The Battery”? Also “Fido”. Also different, very enjoyable.

          2. “Really good, if you like zombie movies.”

            My wife loved zombie movies (I didn’t) and that damn show on Sunday nights. She would get all bummed out when the season ended,

          3. She would get all bummed out when the season ended
            Me, too (even though the show is not as good as it used to be.) I really don’t like how they break the season in half these days.

          1. The Silence of the Lambs
            Also good movie, thought it was great, but disturbing in that it is more “real life” than fantasy like zombie movies – so not my favorite, creeps me out.

  2. ‘The price he paid for a site five years ago worked out to about $18,000 for every apartment he could build on it. Now, some vendors are asking $100,000’

    And prices were sky high 5 years ago. Yeah, no bubble there…

  3. ‘Organized crime will go through the lane of least resistance, …’

    Would that be real estate investing?

  4. Report Suggests $5B Laundered Through BC Real Estate Last Year

    Steve Saretsky
    Published on May 11, 2019

    “Steve Saretsky
    Published on May 11, 2019

    “The Peter German report on money laundering suggests $5B was laundered into real estate in 2018. That year there was $55B in residential real estate sales volumes, so in other words if it all went into residential real estate that would equate to 9% of total volumes.”

    “I’m sure that number would have been much higher in 2015/2016 during the peak years of Chinese capital flight. Of course there are numerous factors behind the meteoric rise in home prices, including cheap credit. However, these numbers certainly shed some light on the issue.”

    At 2:45

    “taking a million dollar loss. Who does that?”

    From the comments:

    “But Steve, there were calls about money laundering three years ago, and Christy Clarke told us it was not an a factor. Then Bob Rennie told us we were racist for bringing up the conversation.”

    Yup, Bob “the biggest asshole in Canada” Rennie.

    1. It’s almost exclusively coming from China, and a lot of it has to do with the Fentanyl trade. The real question is why are we not hearing anything substantial from either the Canadian govt. or the US govt.? The world’s economy has essentially turned into a lawless wasteland of fraud and illicit activity.

      1. The real question is why are we not hearing anything substantial from either the Canadian govt. or the US govt.?

        Your childlike innocence is endearing, my friend. Both governments turn a blind eye to dirty money flows that enrich their globalist patrons. When HSBC and Wachovia were caught laundering billions for the Sinaloa drug cartel a few years ago, they paid fines equivalent to less than 2% of their illicit profits, and of course no bank officers were ever criminally charged. That’ll teach those scofflaws….

  5. I’m visiting friends in Yaletown on Homer street
    Their 1,200 sf condo that was purchased for $429,000 CAN in 2004 has a tax valuation on $1,750,000.
    They see nothing wrong and that “everyone wants to live in Vancouver”
    I find property owners in Vancouver are smug with their succe$$.
    It won’t end well

    1. Let me guess – they’ve been living off the equity? From what I understand, that’s what A LOT of Canadians have been doing for the past decade or more.

      1. Over the past few years on trips to Hawaii I have ran into more and more vacationing Canadians. One woman told me she retired early because her home value increase allowed her to with the help of a reverse mortgage.

        1. thats smart –

          At least they did not refinance the mortgage and then buy a condo with the proceeds. And lose everything

    2. Their 1,200 sf condo that was purchased for $429,000 CAN in 2004 has a tax valuation on $1,750,000. They see nothing wrong and that “everyone wants to live in Vancouver.”

      Ever watch that movie, Coherence?

  6. The Sh!tcoin noise is as high as when it hit $20,000 a few years back. I wish all of these cryptos would get shut down. There’s no regulation and it’s overt money laundering with absolutely zero inquisition by governments.

    “Tim Draper, one of the most bullish investors and figures in cryptocurrency, has updated his bold $250,000 price prediction for Bitcoin to occur by 2023. ”

    1. From the article:

      “We are talking […] about five percent market share to get to $250,000. That seems like a drop in a bucket and all we need to really do is make it so that Bitcoin can be used to buy Starbucks coffee, and all of a sudden the world just opens up and then they say ‘I’ve got this choice.’ […] Do I want a currency that I can take from country to country […] or do I want one that sticks me in one country or one geographic area and I can’t use it anywhere else?”

      How does that square with this?

      “On average Bitcoin processes about 7 transactions per second, which makes it pretty slow compared to Ethereum (15) and Ripple (the fastest major cryptocurrency, at 1,500 per second). Visa does 24,000 transactions per second.”

      So, 7 transactions per second vs. 24,000 for Visa, and this supposedly brilliant venture capitalist thinks it is going to take over? Are you fawking kidding me?

    2. PS – I like to bring up this crypto crap because I think it ties right in with all of these bubbles, whether it be housing, the stock markets, art or otherwise. It is indicative of the fraud society we are living in.

      Which reminds me…what ever happened to that investigation into the suspected fraud and manipulation by “Tether?”

      1. Seems it’s not only still ongoing, but there are new investigations. Hmmm….

        “Tether, the leading stablecoin, recently unpegged from the US Dollar after news that the New York State Attorney General is investigating iFinex Inc., which operates Bitfinex and owns Tether Ltd.”

        “Questionable Dollar Reserves

        Tether Ltd. used to claim that each USDT token was backed 1:1 ratio by US Dollars in reserve. Its website publicly stated:

        “Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USDT is always equivalent to 1 USD.”

        But on Mar. 14, 2019, the claim was replaced by:

        “Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.””

        1. I read Matt Levine’s parsing of the Tether and Bitfinex saga and how that all played out. He does a good job of parsing it all and walking through the details of what really is going on. In a nutshell it looks like Crypto Capital has absconded with money or it was seized by someone and so one of the counterparties basically has a worthless note. It’s all pretty hard to follow, but looks like the money that was supposed to “back” tether has been replaced with an IOU which is basically gone.

      1. Interesting twist. I recall when Ben Bernanke was very open minded to the crypto craze a few years ago.

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