Questions About How They Could Have Afforded So Much Valuable Real Estate

A weekend topic starting with Crain’s New York Business. “The alleged masterminds behind a $4 billion international fraud, the investigation of which revealed how easily illicit money from around the world can find its way into major New York City real estate deals, were charged by federal prosecutors on Thursday.”

“The U.S. District Court in the Eastern District of New York indicted the Malaysian playboy financier Jho Low and banker Roger Ng for conspiring in a scheme to embezzle and launder money from a Malaysian state fund.”

“Full of international intrigue from Abu Dhabi to Hollywood, the scandal drew attention in the city for Low’s ostentatious purchases made with the illicit funds, including a $200 million investment in the Park Lane Hotel, and his acquisition of several high-priced apartments in Manhattan, such as a unit at the Time Warner Center.”

“Those assets were seized by the Justice Department as it investigated the massive theft, which was alleged to have been done with the cooperation of Malaysia’s former Prime Minister Najib Razak. Razak was arrested and charged in Kuala Lumpur over the summer.”

The Miami Herald. “After arresting four people — including the owner of a Miami-area realty firm — authorities in Argentina appear to have unraveled the mystery of a $65 million property empire that included luxury condos in South Florida and New York City, as they pursue a major corruption case against ex-president Cristina Fernández de Kirchner.”

“The four people arrested by federal police in Argentina last month are Elizabeth Ortiz Municoy, an Argentine national who runs an international realty business that until recently operated a branch in Surfside; Sergio Todisco, Municoy’s ex-husband and a clothing manufacturer; Carolina Pochetti, the widow of a former top aide to the Kirchner family; and Carlos Cortez, a businessman who travels between Argentina and South Florida.”

“Prosecutors accuse them of investing illicit money on behalf of the Kirchner aide, Héctor Daniel Muñoz, outside the country using a web of shell companies. The money was allegedly delivered to her homes in bags by a driver who kept meticulous notes of his deliveries. The driver is cooperating with prosecutors and has handed over notebooks listing his deliveries. (Lawyers for the Kirchner family have said the charges are politically motivated.)”

“One person listed in the notebooks as accepting bags of cash on behalf of the Kirchners, Muñoz, who for many years worked as the personal secretary of the now-deceased Néstor Kirchner, the late husband of Fernández de Kirchner and also a former president. Muñoz, whom his old boss affectionately called gordito, or ‘fatty,’ died in 2016.”

“But before that, prosecutors believe he used some of that money to invest tens of millions of dollars in properties in the United States, including expensive homes in Miami and Manhattan and commercial properties such as pharmacies and bank branches around South Florida. The properties — among them a CVS pharmacy building in Little Havana — were purchased by Florida companies registered to Todisco and Municoy, leading to questions about how the couple could have afforded so much valuable real estate.”

“Muñoz’s connection to the properties was uncovered when a leak of secret corporate documents called the Panama Papers revealed that he and his wife owned a British Virgins Island company registered in Todisco’s name.”

“The Florida and New York properties were later sold for nearly $73 million, and part of the money was reintroduced into the banking system and transferred to other U.S. states, as well as to Mexico, Hong Kong and Andorra, according to a report by a special financial crimes unit that was cited in press reports.”

From Mortgage Professional America. “A Massachusetts man has admitted to his role in decade-long mortgage fraud conspiracy that resulted in $4.3 million in losses to lenders over at least two dozen loan transactions.”

“Joseph Bates III pleaded guilty before US Senior District Court Judge Douglas Woodlock to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud.”

“Bates was alleged to have defrauded banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers who were recruited to purchase properties primarily in Salem. Bates and his co-conspirators ran the scheme from 2006 through 2015.”

“The co-conspirators usually bought multi-family buildings with two-to-four units and then converted into condominiums. They then recruited other borrowers to purchase the individual condominium units and financing the purchases through fraudulent mortgage loans.”

“In many instances, the borrowers defaulted on their payments because they did not have the financial ability to repay the loans, resulting in foreclosures.”

“Bates faces a maximum sentence 30 years in prison, five years of supervised release, and a fine of $1 million for each of the charges of bank fraud and wire fraud affecting a financial institution. He faces up to five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater, for the charge of conspiracy. A sentencing date has not yet been scheduled.”