Money Laundering - Huh?

[matt819]

There was another post just now about a report that the trump organization is planning a $200 million cash investment to build a village from scratch next to one of his golf courses. Of course, the first question that comes to mind is where the money's coming from, and Russia is usually in the response.

I went to the Twitter feed of the guy who broke the story, and there was a comment that made the following observations:

The people of Aberdeen dislike Trump
His golf course there is a flop
This sounds like a money pit on purpose
What is Trump hiding and covering up?

I hate to be dense, but how does this all work?

Ok, so Russians give him millions in cash to build a golf course in Scotland. He builds it, and it loses money. How does this launder cash. So, let's say, $100 million in dirty cash in. Dirty as in, what, stolen? Drug money? Looted from somewhere? Where?

He uses that $100 million and builds a golf course, which costs, let's just say, $75 million. Actual money. The books show the full $100 million. How does that "spent" $25 million show up somewhere as legitimate money? And then the golf course loses money. Actual income lower than actual expenses. Someone/some money has to cover those losses. So how is that $75 million turn into legitimate money.

Same questions with this bogus village. $200 million to build houses. Cash. He sells those houses to Russians for, what, $400 million? $1 billion? And no one actually lives there. Again, how is the $200 million laundered in the process? And, since we seem to be talking about billions in laundered money when it comes to the Russians, why bother with something like $200 million. But even at that amount, how do you get the actual $200 from where it's been looted/stolen/sullied to a place where it can be used to build houses in Scotland.

Keep in mind that I've watched Ozark on TV. And I had a hard time following the money there also.

Will someone please spell this out for the money laundering impaired?

[Girard442]

1. If the Russians are dumping big $$$ into a Trump project now...

...I really doubt that the payback will be in terms of money.

[Bernardo de La Paz]

5. Right. Plus there are many ways

... too many for me to think of, but I don't have training or study in the field. But ...

* Sell early shares to attract other money, then buy back shares at inflated price.
* Consulting fees for this and that.
* Supplies and contracting from mob bosses. A lot has to have Scottish names on it, but some might be fronts. Locals have not benefited much. Who does "security"?
* Fake tournaments with prize money?
* Bundles of cash/gold out the door to visiting Russians?
* Russian food into restaurant at inflated prices?
* Meals, turf fees, cart rentals, drinks, etc to Russians at low prices? Bottles under the table, etc.

I dunno.

[snowybirdie]

2. Plus

the course is in one of the coldest, wettest places on earth! Close to the Arctic Circle with a short summer season! Makes no sense.

[Bernardo de La Paz]

3. Scotland invented golf. tRump's mother was born in Scotland. . . . nt

[snowybirdie]

4. Yes

But another huge investment in that area isn't economically feasible, and he's such a terrific businessman isn't he?

[pnwmom]

6. The money has been looted from the Russian government or from other illicit sources.

They can't just put it in a conventional western bank because of reporting regulations. But they can invest it in real estate, because there are few regulations. No one checks to make sure real estate money is coming from a legit source.

Suppose they invest 100M, and the investment doesn't do well, and they lose 20M. Before, all $100M was illicit money -- not investable in banks or financial firms. Now they have $80 million in a real estate investment. They can sell that investment and put that $80 million in any bank or other investment because it's been laundered.

[genxlib]

8. I believe this is the correct answer

Bad cash becomes a legit hard asset. That asset can be held for a long term place to park the cash or it can be sold to become good clean cash. Even at a loss, it is worth it.

This has been going on for years with condominiums in New York and elsewhere. But there is only so much cash you can move at a few million per unit.

[Sanity Claws]

7. If he is building it, then he can put things in there that the Russians want

I am not up on the latest technology but there is probably something that could be installed that would be of strategic interest to the Russians.