Money Laundering on Auction Sites

[ozarquebus]

 OK, so you have a wheelbarrow full of ill-gotten gains in the form of $20 dollar bills and you happen to like old motorcycles. What do you do? Buy a restored old motorcycle at a fair price. Give your friend 20,000 dollars in dirty cash. Sell the Motorcycle on BaT for $20,000 to him. Deposit cash and declare it as income from selling bike. Presto! clean money.
 Of course, as others have mentioned, Rolex watches or old stamps are easier to transport, but there is so much dirty money out there that all avenues and all high value collectables are being used as 'vehicles' for the dirty transactions.
 I discovered it on ebay when I tried to sell a bunch of stamps from the 19th century. I could not see why my stamps, which appeared identical to stamps bringing thousands of dollars, were only bringing a buck or two if anything at all. I started researching stamp collecting and applied all the methods of evaluation, such as centering, desirable postmarks, perfection of perforations, number of perfs, brilliance of ink, etc etc etc... Fundamentally there was no difference between my stamps and many of the high priced ones I was observing.
 Then I explored the details available about the auction. Most of the suspicious looking stamp auctions were "buy it now" and offered by sellers with single digit numbers or even zero sales and buyers were also first timers or nearly so. Yet a single stamp of apparently low value would sell for thousands with one bid for the "Buy it now" price with many days left to go yet in the auction. What seller in their first transaction can sell a stamp to a first time buyer on ebay for ie $5000 Buy It Now with no other bidders within a couple of hours of start?
 I think the same thing is happening with high profile vehicle auction sites. While the actual fixed auctions may not be the norm, it artificially inflates the real value and other people are paying high prices thinking that the market is actually supporting these prices.
 The auction site will make no effort to eliminate shill bids or disqualify illicit dealings. They make lots of money in fees from it. Likewise, stupid money for things may have brought Mecum and other big auction houses under scrutiny and forced the bad guys to safer play areas such as BaT. IRS and other concerned agencies are completely overwhelmed by the volume of these transactions of which each would require extensive investigation and could  even prove to be international in scope.
 The practice has been well established in the art world since the invention of art and taxation and with so much liquidity and free cash in the system these days, the sky is not even the limit.
 

[HDGoose]

People do not realize what efforts some folks will go to for illicit gains.

[tommy2cyl]

Interesting post. Will look forward to other comments forthcoming. 

[Tom]

 

[oldbike54]

 Fairly common practice in the on site car auction world . Hell , how many used car lots don't seem to actually sell cars , although that business is greatly diminished with the advent of online sales .

 Dusty

 

[moto-uno]

  ^ That remark smacks of a near by city , Surrey , B.C . Used car lots are numerous beyond words and having worked in that city
for a few years , it's also amazing how the same stock would be there for years .  Peter

[Shorty]

Back home every town had a little ole shoe repair shop or antique store that was run by people with last names ending in vowels,  . No one shopped there, but they never go out of business. I guess it costs a FORTUNE to fix a pair of Santonis...

[Scud]

A viable and entertaining conspiracy theory. Thanks for sharing.

[LowRyter]

Fairly common practice in the on site car auction world . Hell , how many used car lots don't seem to actually sell cars , although that business is greatly diminished with the advent of online sales .

 Dusty

used car lots and casinos

[Kiwi_Roy]

Very interesting theory.
II really don't know what to think about that.
I read your post over several times.

[moto]

Very interesting, and quite plausible as you describe it. If your interpretation is right, it should be possible to observe two distinct populations of auctions. This would require getting a sample of all the auctions on one particular kind of item, such as your stamps. I think law enforcement should be interested in doing that.

[reidy]

I guess the beauty about this setup is the odd person that has money to burn and is happy to spend what it takes to get the bike of their childhood. There are always a few out around.

The thing is that with art, old bikes, stamps and such, it is an emotional value so it is hard to price. I would not give ten bucks for the Mona Lisa at a garage sale, but apparently it is "worth" much more.

Steve 

[Bulldog9]

FUHGETABOUTIT.....

[rocker59]

FUHGETABOUTIT.....

 

[Turin]

I don't know if using an online auction that creates a digital record is the best avenue to launder your ill gotten gains.

Restaurants and bars are a great way to launder money. There isn't any way to track waste / overhead from the outside.

[oldbike54]

I don't know if using an online auction that creates a digital record is the best avenue to launder your ill gotten gains.

Restaurants and bars are a great way to launder money. There isn't any way to track waste / overhead from the outside.

 Actually bars are watched closely , and restaurants are also . State sales tax commissions make sure of that . Our state tax guy basically did our books for us 

 Dusty

[John Croucher]

I laundry money. Convert water, gas and electricity into paper money.  I own a coin laundry.

I recently saw my Sport 1100 for sale in California.  Seller said it was sold.  A few weeks ago some posted the same bike on MGnoc F.B. site as the new owner and they had bought it from the person I sold it to in Chicago.  The California ad was fake.

[Rough Edge racing]

Actually bars are watched closely , and restaurants are also . State sales tax commissions make sure of that . Our state tax guy basically did our books for us 

 Dusty

Sales tax laws are a license to steal. State tax guys should wear a ski mask...

[oldbike54]

Sales tax laws are a license to steal. State tax guys should wear a ski mask...

 Meh , nothing compared to used car dealers .

 Dusty

[Turin]

Quote from: Turin on June 05, 2021, 07:46:28 PM
I don't know if using an online auction that creates a digital record is the best avenue to launder your ill gotten gains.

Restaurants and bars are a great way to launder money. There isn't any way to track waste / overhead from the outside.

 Actually bars are watched closely , and restaurants are also . State sales tax commissions make sure of that . Our state tax guy basically did our books for us 

 Dusty

I spent 20 years in the industry, and spent the better part of the 90's managing night clubs. I don't know your situation. I've seen crap you'd expect to find in a bad cop movie.
At one point I ended up hiring the state CPA that was investigating us.

[Ncdan]

This type of criminal activity is frequent in nature and like the “little shoe shop business” , is near impossible to prove all the elements of the crime. Therefore these “business “ which has little to no customer base, are always in business. Over the years I’ve investigated hundreds of cases that I knew, as well as most everyone else,  that criminal activity was rampant and going on right under everyone’s nose, again what you know and  what you can prove in a court of law is two different things. This is the very reason the term “take the law in your own hands” is a very real and practiced activity. Is it right or wrong, we’ll I guess that depends on who you ask but don’t ask me, I won’t say either way🤔😉
The ole term “crime don’t pay” is most definitely false.

[Rough Edge racing]

 You can walk away from a sales person.....

[oldbike54]

I spent 20 years in the industry, and spent the better part of the 90's managing night clubs. I don't know your situation. I've seen crap you'd expect to find in a bad cop movie.
At one point I ended up hiring the state CPA that was investigating us.

 Sounds like a state problem . In Arkansas and Oklahoma the state agencies are more than capable of monitoring restaurants and bars . If an establishment orders $1000.00 worth of raw product it had better show an equivalent amount of retail sales . That's where the state sales tax rep comes into play , if we ordered product equal to say 4,000 customers in one month , and the orders each month stayed roughly the same , the sales tax commission made the judgement that we were serving 4,000 customers a month . Start trying to claim huge waste and things got interesting . Mostly the agencies in those two states to regulate the restaurant and bar business tried to work with the owners and managers , but start pulling too much noneense they would shut you down .

 Dusty

[John Croucher]

Sounds like a state problem . In Arkansas and Oklahoma the state agencies are more than capable of monitoring restaurants and bars . If an establishment orders $1000.00 worth of raw product it had better show an equivalent amount of retail sales . That's where the state sales tax rep comes into play , if we ordered product equal to say 4,000 customers in one month , and the orders each month stayed roughly the same , the sales tax commission made the judgement that we were serving 4,000 customers a month . Start trying to claim huge waste and things got interesting . Mostly the agencies in those two states to regulate the restaurant and bar business tried to work with the owners and managers , but start pulling too much noneense they would shut you down .

 Dusty

Same math works in My Money Laundering Business/Coin Laundry. Number of washers x number of cycles x gallons of water per cycle x days in a month equals my water bill.  If I am using a significant less water than wash cycles, there is extra cash flow.  Not really a very accurate way to estimate, I can turn on the water and run it down the sewer.  All utilities combined are pretty much relative to each other though as usage of equipment changes.  In My accounting software I can track utility expenses and see where My cost are.  They electric and gas change with the weather.  Water is the biggest factor, It is more of an indicator of equipment usage. 

It's a stupid business and I am glad I got into it.  Quite by accident.  I had a side gig doing vending machines.  Ask the owner one day to sell the place to me so I would not have to run around servicing equipment around the 3 States.  15 Minutes later, I owned the place.  22 years working a hour a day as a janitor, maintenance man, marriage counselor, baby sitter and friend to long time customers.   

[Moparnut72]

In Reno, the Mustang Ranch's, legal brothel, owner went to prison for cheating on his taxes. The IRS counted bed sheets and determined that they were servicing, pun intended, more clients than what the revenue worked out be. The IRS seized the business and actually ran it for awhile. Probably made a shit pot more money than they ever got from the taxes and penalties.     
kk

[Tom]

These guys are legit.  Pretty close down the road west from the Nevada State Rally site.  They're across the street from the BunnyRanch Business shopping center.  "Free hotdogs!" in bright neon at night.      A good read.

https://vitalvegas.com/25-stimulating-facts-moonlite-bunnyranch-navadas-famous-brothel/

[Turin]

In my experience, it depends on how far you go, and how much attention you bring on yourself. Then still, you can get away with shenanigans for a good while.

https://www.wheresmamba.com/post/2018/10/08/sammy-gravano-arizona

Being in the industry in the early '90s, there was always talk about certain places. This one had a reputation for good food and at one point I applied there.
Later there were whispers about funny stuff going on financially.  Fancy cars and clothes Vs. how well the business did. Go figure !

 

[MGrego]

OK, so you have a wheelbarrow full of ill-gotten gains in the form of $20 dollar bills and you happen to like old motorcycles. What do you do? Buy a restored old motorcycle at a fair price. Give your friend 20,000 dollars in dirty cash. Sell the Motorcycle on BaT for $20,000 to him. Deposit cash and declare it as income from selling bike. Presto! clean money.

Nope.  For 2 reasons.

1.  Any time you take a cash payment of over $10,000, you are required by the IRS to report it and who paid it to you.

2. The bank will not take the $20,000 cash deposit without reporting YOU to the IRS.  You can only make cash deposits less than $10,0000.

Don't ask me how I know.

[ozarquebus]

MGrego,
I guess that blows my whole paranoid theory, unless the IRS accepts the paypal address as buyer's identity.

[Tom]

Cash, yes.  Checks no because they can be tracked.