In William Friedkin’s excellent crime film, To Live and Die in L.A., (vastly superior to the Gerald Petievich novel) Rick Masters makes millions from printing counterfeit cash. And, everyone wants Rick’s paper. Even at .20¢ on the dollar, Masters has made enough (real) money to afford a Ferrari lifestyle.
But how? Friedkin’s detailed treatise on counterfeiting runs lean on how Rick Masters gets to spend his hard-earned money? How did he buy that Ferrari and the ultra-modern house? How does he purchase the incredibly expensive equipment he uses (multiple locations, multiple pieces of equipment) to print his money?
Not as easy as it looks
In response to the huge amounts of cash that organized crime groups made from the nascent drug trade in the 1950s and 60s, congress passed the Bank Secrecy Act in 1970. Among multiple provisions to prevent banks from being used (or participating in) criminal activity, the Currency Transfer Report (CTR) became one of the most powerful tools to combat money laundering.
Cash purchases or banking transfers of $10,000 or more require a CTR form be filed with the IRS. From those reports, the IRS could further investigate the purchaser or account holder to determine the origin of money.
However it was the outrageous excesses of the 1980s, (and HUGE amounts of money in non-white hands) when the CTR really became a weapon for law-enforcement and taxation purposes. Drug smugglers, prostitution rings, and even stolen-goods brokers (fences) were swept up in CTR nets.
So, no more dirty money, right?
“Money never sleeps.” Gordon Gekko, Wall Street
The earliest recorded instances of money laundering predates the common era, (over 2000 years ago). Chinese judicial documents describe merchants, (engaged in smuggling and black-marketeering) using rice stalls, fish stands, and wine shops to launder ill-gotten profits and thereby shielding wealth and income from tax collectors.
From Han Dynasty, China to 18th Century American distillers to 20th Century drug cartels to 21st Century international cyber criminals, money laundering remains a vital step in the crime cycle.
“I take the seed from Columbia and Mexico and I just plant up a hollar down Copperhead Road” Steve Earle, Copperhead Road
For 150 years Appalachian Mountain people, laundered and sheltered money made from the illegal production and sale of untaxed whiskey through land speculation. Land title transfers are recorded with the county clerk. As long as the property tax was paid, no one questioned how the land was paid for, (land was regularly traded for livestock, to settle debts, bequeathed as dowries, etc.). And, yes, the land was also sold for legitimate cash.
Even after the inception of the first income tax in 1861, farming, timber production, et al represented legal, clean income for whiskey runners even as they became marijuana runners and meth cooks in the 1980s.
“When I sell liquor it’s bootlegging. When my buyers serve it from a silver tray on Lakeshore Drive it’s called hospitality.” Al Capone
Like the hill people, Al Capone dealt in untaxed liquor. Also like the moonshiners, Capone used real estate to launder his early gains. Then, with his brother Ralph, Capone parlayed commercial real estate and farm holdings into dairy and soft-drink bottling. In fact it was Ralph Capone who originated expiration dates on milk bottles.
Why launder the money at all? Why not just avoid banks and spend cash?
In 1987, I read a newspaper article about a 12-year-old kid who tried to buy a Porsche right off the showroom floor. He had over $50K in cash. But the car dealership would have to deposit that cash in their bank. The bank wants to know where that cash came from for their CTE. Instead the dealership called the police.
"How much money? We spent $2000 each month on rubber bands," Roberto Escobar, The Accountant's Story
In fraud examiner training, they tell you that all you can do with an all-cash income is pay rent, make payments on used cars, and buy groceries. Most landlords will not accept cash so that means if you want to pay rent without a bank account, you have to buy a money order. The money order limit is $1000.
Then there is the problem of where to put your ill-gotten gains if you don’t have a nice secure bank. Pablo Escobar’s accountant and brother Roberto wrote of losing tens-of-millions of dollars to rot when the cash was buried in moist Columbian soil.
Cocaine cowboy Jon Roberts spoke of going to stash spots only to find that “associates” had already been there and ripped him off.
“For guys like me, Las Vegas washes away your sins…It does for us what Lourdes does for humpbacks and cripples.” Ace Rothstein, Casino
David Cay Johnson’s EXCELLENT book, Temples of Chance, details the rise of the gambling industry in the states as well as much of the crime behind the casinos. In ToC, Akio Kashiwagi is described as a “whale,” often betting anywhere from $50K to $200K on a single hand of cards. A self-described real estate investor with a Tokyo office, Kashiwagi could produce no documented holdings for auditors. No purchases, no sales.
After Kashiwagi lost $10mm (of someone’s money?) he was found murdered. He had been stabbed over 100 times. Someone seemed deeply upset with Kashiwagi, for some reason.
In David Mackenzie’s masterpiece film, Hell or High Water, small-time bank robbers Toby and Tanner Howard run their stolen loot through small-time, Native American casinos. Dirty/stolen cash goes in, a clean check (and tax form W-2G) comes out.
“Gotta detail shop to cover up them duckets that I make,” UGK, Pocket Full of Stones
James Foley’s film, At Close Range, depicts the real-life Johnson crime family. Brad, (Christopher Walken) buys a car, drives it down the street and sells it to another car dealer for nearly the same amount. While nowhere on earth does money laundering, (or car sales) work like that, the principle is sound. You can still buy cars at auction for cash, many under $10,000. You can set up a car lot and sell those used cars. Will you make a profit? Unless you're exceedingly stupid, yes. More importantly, you have clean paper and declarable income.
“The Internet opens a whole new way to communicate with your friends and find and share information of all types.” Bill Gates
Online gambling is valued at $40bb/annually. In the U.S. you can buy a prepaid debit card, game for a minute or two, and cash out (depending on the amount) with clean cash and a IRS form 1099-Misc. You may pay more than the 15%-20% in traditional money laundering but it’s not like it’s your money.
In Elliot Lawrence’s television series, Claws, a nail shop owner structures deposits from her nail shop (and other businesses) for a Dixie Mafia pill mill.
“Necessity is the mother of invention.” Unknown
Hopefully, this gives you some ideas. Really though there are only two rules to remember when writing money laundering. First: no method is fool-proof. Second: criminals find a way.
The photo at the top, Wall Street promotional poster is the property of 20th Century Fox. Its use here, for educational/instrution purposes is covered under the Fair Use Doctrine.
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