WEBVTT - How Money Laundering Works 0:00:00.280 --> 0:00:02.920 Brought to you by the reinvented two thousand twelve Camray. 0:00:03.160 --> 0:00:07.560 It's ready. Are you welcome to Stuff you should know 0:00:08.200 --> 0:00:16.279 from house Stuff Works dot Com. Hey, and welcome to 0:00:16.280 --> 0:00:20.640 the podcast. I'm Josh Clark. Wake up, Chuck Bryant, what's up, Buttercup? 0:00:20.760 --> 0:00:23.000 Chuck's payton. He's ready to get out of here. So 0:00:23.200 --> 0:00:26.599 we're gonna don't watch these rainy days. You know, rainy 0:00:26.680 --> 0:00:30.120 days on Monday. They always get you down. Karen Carpenter, 0:00:30.400 --> 0:00:33.800 what a waste? Yea said, Yeah, so this is not 0:00:33.840 --> 0:00:37.519 on anorex yet. No, it's not. Actually it's on money laundering, 0:00:37.520 --> 0:00:41.720 which we can't or you can or can't say, I 0:00:41.760 --> 0:00:43.720 think is one way to put it. Whether or not 0:00:43.840 --> 0:00:46.480 Karen Carpenter ever engaged in that, God Rest her soul. 0:00:47.080 --> 0:00:49.320 I believe that she did not do. You never know, Chuck. 0:00:49.360 --> 0:00:51.560 I'll go on record, Chuck, you ever see scar Face? 0:00:52.320 --> 0:00:54.880 Are you kidding me? So you have seen it? Oh? Yeah, 0:00:54.920 --> 0:00:58.720 many times? Edward g Robinson, James Cagney, Oh and I 0:00:58.760 --> 0:01:01.480 thought you're talking to us. I just don't like it 0:01:01.520 --> 0:01:05.200 when you gloat. Um. So you know that one scene 0:01:05.240 --> 0:01:07.440 when he's sitting there laundering the money with the guy 0:01:07.440 --> 0:01:10.200 who turns out to be the cop, and for some 0:01:10.240 --> 0:01:13.160 reason to Palma made it so like, uh, it actually 0:01:13.680 --> 0:01:17.480 simulates the eight hours that they're supposedly sitting there doing it. 0:01:18.080 --> 0:01:20.640 That was actually pretty good lesson in what not to 0:01:20.680 --> 0:01:23.800 do when you launder money, and I think the moral 0:01:23.880 --> 0:01:27.000 to it was never louander money with an undercover police officer. 0:01:27.640 --> 0:01:30.120 My favorite part of that movie is when he buries 0:01:30.120 --> 0:01:32.160 his face in the huge mountain of cocaine on his 0:01:32.240 --> 0:01:34.200 desk at the end. That is a good part. And 0:01:34.480 --> 0:01:37.080 thousands of bullets, hundreds of bullets could not even take 0:01:37.160 --> 0:01:40.280 him down at that point, but they did eventually. No, no, 0:01:41.319 --> 0:01:43.200 yeah they did. Yeah. No. I couldn't remember if he 0:01:43.240 --> 0:01:45.679 died in an explosion, but there because there are grenades 0:01:45.720 --> 0:01:50.559 in that scene. That is a good, good movie. Anyone 0:01:50.560 --> 0:01:54.080 who hasn't seen that can sign up to be derided 0:01:54.120 --> 0:01:57.120 by Chuck and I um on our blog, which we'll 0:01:57.120 --> 0:01:59.720 talk about later. But first let's talk about money laundering 0:01:59.760 --> 0:02:03.280 shock Lets. So you know, like for the most part, 0:02:03.640 --> 0:02:05.640 it's a well you would think for the most part, 0:02:05.680 --> 0:02:10.160 it's it's the realm of drug dealers, like they use 0:02:10.280 --> 0:02:14.040 cash almost exclusively. They've got to wash it. It's dirty money. 0:02:14.120 --> 0:02:18.600 They can't account for it. Um and the the text system, 0:02:18.760 --> 0:02:20.959 especially in the US, is set up in such a 0:02:21.000 --> 0:02:27.880 way that that's supposed to be obvious where which is 0:02:27.880 --> 0:02:30.240 where money laundering comes in. It's a way around this, 0:02:30.600 --> 0:02:33.400 you know, declaration of Hey, I made a bunch of 0:02:33.400 --> 0:02:36.119 money by selling heroin, which you can't really do because 0:02:36.160 --> 0:02:38.959 they bust you for selling heroin. I'm surprised the government, 0:02:38.960 --> 0:02:44.600 wouldn't you say that's great. Yeah, I mean really, honestly, 0:02:45.360 --> 0:02:47.600 what would the I r S contact the DA or 0:02:47.639 --> 0:02:49.560 would the I r S just be like, you're an 0:02:49.639 --> 0:02:52.320 upstanding citizen, you're drug dealer. Well, that's one of the 0:02:52.320 --> 0:02:54.600 big arguments for legalization of drugs is you can just 0:02:54.720 --> 0:02:56.560 tax the heck out of it and legitimize it and 0:02:56.560 --> 0:02:57.960 make a lot of money off of it. And again, 0:02:58.000 --> 0:03:00.520 remember when we were talking about how Moon's Done works. 0:03:01.440 --> 0:03:05.000 During prohibition, it kind of added this forbidden aspect to 0:03:05.000 --> 0:03:08.120 to drinking, and so of course drinking increase, right, So 0:03:08.160 --> 0:03:10.360 that makes you wonder if drug use would drop. But 0:03:10.440 --> 0:03:12.960 that's neither here nor there. It isn't. But what I 0:03:13.000 --> 0:03:15.440 was saying was is you would think it's mainly drug 0:03:15.480 --> 0:03:19.680 traffickers engaged in money laundering is because a million dollars 0:03:19.680 --> 0:03:27.720 in cocaine estimated at twenty ki lows, right, um or 0:03:27.880 --> 0:03:32.120 twenty key lows for our metric friends, Yeah, um and uh, 0:03:32.160 --> 0:03:34.440 a million dollars in cash weighs two hundred and fifty 0:03:34.480 --> 0:03:37.480 six pounds, So it's kind of tricky, right. The thing is, 0:03:37.480 --> 0:03:39.840 though it doesn't it turns out it's not just drug 0:03:39.880 --> 0:03:44.640 dealers who are laundering this heavy, heavy cash because the 0:03:44.840 --> 0:03:47.400 UN estimates this is a two thousand five estimates. The 0:03:47.560 --> 0:03:51.040 latest I can find that the global drug trade is 0:03:51.160 --> 0:03:55.280 valued at about three billion dollars annually. It is a 0:03:55.320 --> 0:04:00.400 lot of dope, but it's estimated that the value of 0:04:00.440 --> 0:04:03.560 all of the money that's laundered every year globally is 0:04:03.560 --> 0:04:08.000 somewhere between five hundred billion and one trillion. So clearly 0:04:09.080 --> 0:04:12.440 the entirety of the drug trade three times over couldn't 0:04:12.440 --> 0:04:15.200 account for the high end estimate now of of all 0:04:15.200 --> 0:04:19.080 the money that's being laundered in the world every year. Terrorists, terrorists, 0:04:19.080 --> 0:04:23.640 big white collar guys, um, basically anybody who's come across 0:04:23.760 --> 0:04:25.960 a substantial amount of money that you can't just walk 0:04:26.000 --> 0:04:27.840 around within your pockets and you don't want to pay 0:04:27.880 --> 0:04:32.800 taxes on right, you you launder the money, right, So 0:04:32.839 --> 0:04:34.680 how how do you do this? Oh? And also I 0:04:34.720 --> 0:04:37.280 should probably say the vast majority of the cash that's 0:04:37.279 --> 0:04:39.560 getting washed is the U. S. Dollar for two reasons. 0:04:40.320 --> 0:04:43.880 Number one, it's pretty much the de facto international currency. 0:04:44.200 --> 0:04:47.159 We learned about that in our audiobook, right, I'm sorry, 0:04:47.160 --> 0:04:51.400 our spoken word album um. And Uh. Also because the 0:04:51.440 --> 0:04:54.400 US is some of the strictest banking transparency laws in 0:04:54.400 --> 0:04:57.760 the world. So if you have some dollars and you 0:04:57.760 --> 0:04:59.920 want to get it back into the US, you've gotta 0:05:00.040 --> 0:05:02.200 wash it first, Right, So how do you do that? 0:05:02.560 --> 0:05:06.000 Let's talk about the three steps Chuck. Number one is 0:05:06.040 --> 0:05:10.880 called placement three steps the money long. Placement basically means 0:05:10.920 --> 0:05:16.080 that the launderer UH inserts dirty money into a legitimate 0:05:16.279 --> 0:05:18.520 um financial institution, Like so they'll put their money in 0:05:18.520 --> 0:05:21.920 a bank, but it's dirty money. This is the point. 0:05:22.000 --> 0:05:24.880 This is the riskiest stage. This is like the water 0:05:25.320 --> 0:05:28.520 making that tense, hollow sound is it's filling up in 0:05:28.560 --> 0:05:30.960 the drum of the washing machine. Right. And it's risky 0:05:31.000 --> 0:05:34.000 because cash, large amounts of cash are always a red 0:05:34.000 --> 0:05:36.720 flag UH these days, and in fact, in the US, 0:05:36.800 --> 0:05:39.240 I believe the limit is a ten thousand dollar deposit. 0:05:39.600 --> 0:05:41.960 It's not just the US that holds that standard, but 0:05:42.000 --> 0:05:47.360 definitely sure. Yeah, the International Task Force, well, they're required 0:05:47.400 --> 0:05:51.719 to report anything ten thousand or I believe it's anything 0:05:51.760 --> 0:05:54.200 totally in ten thousand within like a five day period, 0:05:54.200 --> 0:05:56.520 Is that right? I think one day, one day. Okay, 0:05:56.560 --> 0:05:59.160 you're right, but yes, still the golden number if you're 0:05:59.200 --> 0:06:02.200 laundering money is to stay below tan grand in a day, right, 0:06:02.200 --> 0:06:04.960 in deposits. So once you've got that done and your 0:06:05.080 --> 0:06:07.599 dirty money is in a bank, lots of it, you 0:06:07.640 --> 0:06:10.279 move on to step two, which is called layering, and 0:06:10.360 --> 0:06:15.040 that means you start to send this money out via transactions. Right, 0:06:15.080 --> 0:06:19.200 we're talking bank to bank transfers, wiring money, um, investing 0:06:19.200 --> 0:06:21.760 in some high value items like you can go buying 0:06:21.839 --> 0:06:24.799 yacht or something like that. And you're basically just trying 0:06:24.839 --> 0:06:27.440 to send the money out and spread it around to 0:06:27.480 --> 0:06:29.600 all different sorts of places. This is why I consider 0:06:29.680 --> 0:06:32.440 the rent cycle the rent cycle. Yes, yeah, it's so 0:06:32.600 --> 0:06:35.919 it's being agitated and and um yeah, so this is 0:06:35.960 --> 0:06:39.480 and that's the most complex. This is part of laundering 0:06:39.480 --> 0:06:42.560 money as well, because you're taking one lump sum and 0:06:42.600 --> 0:06:45.440 then dividing it into as many things as you possibly can, 0:06:45.720 --> 0:06:48.240 which makes it hard to trace, which is really essentially 0:06:48.240 --> 0:06:50.360 the whole point to money launderings. You want to make 0:06:50.400 --> 0:06:53.280 it really hard to trace back to you. So then 0:06:53.320 --> 0:06:57.400 we come, Josh Josh E to integration, which is phase three, 0:06:58.000 --> 0:07:00.160 and this is when the money comes back and the 0:07:00.200 --> 0:07:05.800 mainstream economy um looking like legitimate transactions. You divest from 0:07:05.800 --> 0:07:10.800 those legitimate businesses you invested in, you sell that yacht um, 0:07:10.960 --> 0:07:14.640 or you transfer money from these kind of shady banks 0:07:15.480 --> 0:07:19.360 or or or banks in in countries of shady systems, 0:07:19.360 --> 0:07:22.120 which we talk about in a minute, into you know, 0:07:22.240 --> 0:07:25.120 US banks again or something. And at that point, as 0:07:25.320 --> 0:07:29.240 Joe Pesci would say, the money is laundered, yes, and 0:07:29.280 --> 0:07:31.600 that that was too I think I call it. That's 0:07:31.640 --> 0:07:34.760 sad that you know that I'm ashamed of you right now. 0:07:35.400 --> 0:07:36.760 The next thing, you know, you're gonna tell me you 0:07:36.760 --> 0:07:39.920 watch The Closer. I know I've never seen that show, 0:07:40.240 --> 0:07:44.600 but I'm a big alright, so so good, this is nice. 0:07:44.760 --> 0:07:48.400 I was at one point until The Closer. Let's get 0:07:48.640 --> 0:07:53.400 offer so um, you know, since there's so many different 0:07:53.440 --> 0:07:59.040 countries out there, that have banking secrecy UM protection. Basically, 0:07:59.680 --> 0:08:02.840 there's so many places where you can go buy a 0:08:02.960 --> 0:08:05.240 yacht and they're not going that. They don't have to 0:08:05.320 --> 0:08:08.320 buy laws say where'd you get this money? Um, And 0:08:08.440 --> 0:08:11.119 businesses don't have to say, hey, where'd you get this money? 0:08:11.320 --> 0:08:13.960 If you're investing in them. That it seems like it 0:08:13.960 --> 0:08:16.960 would be impossible to catch. It's it's hard to catch too. 0:08:17.040 --> 0:08:18.960 It is, well, Josh is certainly not from a lack 0:08:19.000 --> 0:08:21.320 of looking, because there are a lot of places that 0:08:21.560 --> 0:08:25.360 try to find money launderers, like the Department of Justice, 0:08:25.560 --> 0:08:29.280 State Department, FBI, I R S, d e A. They've 0:08:29.320 --> 0:08:34.000 all got money laundering departments or money laundering. They're not 0:08:34.120 --> 0:08:37.920 laundering money obviously, no, they're they're looking for money launders. 0:08:38.520 --> 0:08:41.839 So um, yeah, the I R S can find you, 0:08:42.000 --> 0:08:43.880 and I imagine if you're a money launder, they can 0:08:43.920 --> 0:08:47.320 find you to write. And there's also since we're talking 0:08:47.320 --> 0:08:49.680 about those are the United States based organizations. It gets 0:08:49.679 --> 0:08:53.760 global too because it's it usually involves global transactions. That's 0:08:53.840 --> 0:08:55.760 kind of the key to the whole thing. So there's 0:08:55.760 --> 0:08:59.319 something called the Financial Action Task Force on Money Laundering, 0:08:59.360 --> 0:09:01.719 the f a T That was the other organization. I 0:09:01.760 --> 0:09:06.480 was saying that has that ten tho dollar reporting required. Well, 0:09:06.520 --> 0:09:09.040 that's fantastic. The UN gets involved to our buddies at 0:09:09.040 --> 0:09:12.480 the u N. Yeah, the World Monetary Fund, So that's 0:09:12.520 --> 0:09:16.040 who's looking out for International Monetary Fund. I'm sorry about 0:09:16.040 --> 0:09:19.080 that one, right. So do you want to talk about 0:09:19.160 --> 0:09:22.480 the some of these methods, Josh, Like the Paco exchange, Yeah, 0:09:22.520 --> 0:09:25.640 that's pretty cool, hit it? Okay, so, um that is 0:09:25.760 --> 0:09:29.200 the black market Colombian payso exchange system. And this is 0:09:29.240 --> 0:09:33.160 like the the the world standard um and actually it 0:09:33.240 --> 0:09:36.360 is centered in Colombia. What happens is is like say 0:09:36.480 --> 0:09:38.840 you are a drug trafficker and you have a bunch 0:09:38.840 --> 0:09:41.840 of dirty money. Chuck, say it. I am a drug 0:09:41.880 --> 0:09:44.319 trafficker and I have a load of dirty money. Well 0:09:44.360 --> 0:09:46.680 I just happened friend to be a paso broker, and 0:09:46.720 --> 0:09:48.360 I can clean that money for you. And you want 0:09:48.360 --> 0:09:49.880 to hear how I'm gonna do it. Well, what do 0:09:49.880 --> 0:09:52.240 you mean by clean, Josh? I'm gonna make it so 0:09:52.280 --> 0:09:56.040 that it's legitimate again. Okay, So what's going to happen 0:09:56.120 --> 0:09:59.040 is you're going to give me your dirty money. Okay, 0:09:59.280 --> 0:10:02.760 I'm going to give it to a Colombian importer who's 0:10:02.800 --> 0:10:06.880 going to buy a bunch of American made goods, and 0:10:07.280 --> 0:10:09.040 we're gonna buy him on the black market because we 0:10:09.040 --> 0:10:11.520 don't want to pay any taxes on any of this. Right, 0:10:12.040 --> 0:10:14.720 So the importer goes in orders a bunch of stuff, 0:10:14.880 --> 0:10:20.120 gets it under the radar, UM, imported to Colombia, sells 0:10:20.160 --> 0:10:24.840 it for paces, takes the paces, the the the Colombian 0:10:24.840 --> 0:10:27.040 importer is going to give me the pasos, take a 0:10:27.040 --> 0:10:29.280 little bit for himself, any profit he can make off 0:10:29.320 --> 0:10:31.439 of it. He's gonna pay me back the equivalent of 0:10:31.480 --> 0:10:33.719 the U. S. Dollars I gave him in pasos. I'm 0:10:33.720 --> 0:10:35.839 gonna skim a little off top and bot a boom 0:10:35.840 --> 0:10:38.200 bout a. Being my friend, you have just converted your 0:10:38.320 --> 0:10:42.439 dirty U. S. Dollars to clean Colombian pasos. Thanks than 0:10:42.600 --> 0:10:44.720 go forth, do whatever you like. We've got a deal. 0:10:45.080 --> 0:10:48.520 Thank you, thank you for It's basically it is UH 0:10:48.600 --> 0:10:50.800 and actually sadly it is very easy and it was 0:10:50.840 --> 0:10:53.520 fine under the radar, like we said, for many many years, 0:10:53.559 --> 0:10:58.160 and apparently the Colombian government UH and the American government 0:10:58.200 --> 0:11:00.960 we're trying to figure out, um what was going on 0:11:01.040 --> 0:11:04.160 with all of these illegal u S imports and came 0:11:04.160 --> 0:11:06.440 to figure out also, oh yeah, well Columbia also has 0:11:06.440 --> 0:11:10.319 a huge money loan doing problem and they're known understand it, 0:11:10.440 --> 0:11:14.640 ye right, Yeah, so that's the old black market Columbia 0:11:14.679 --> 0:11:18.440 pays so exchange two steps shuffle, very nice and apparently 0:11:18.480 --> 0:11:20.679 that's just a one stop shopping deal. If you want 0:11:20.679 --> 0:11:22.760 to laund your money, that's the place to go. But 0:11:22.800 --> 0:11:24.640 there's also another one, and I know this one's your 0:11:24.679 --> 0:11:29.960 favorite because of the name smurfing. Uh, structuring deposits is 0:11:30.280 --> 0:11:33.160 uh the formal name, but they call it smurfing. And 0:11:33.200 --> 0:11:35.559 basically this entails when you break up large amounts of 0:11:35.559 --> 0:11:40.600 money into smaller um less suspicious amounts. So in the 0:11:40.679 --> 0:11:43.880 US that's got to be below ten tho dollars um because, 0:11:43.920 --> 0:11:45.640 like we said, that's when banks have to report you. 0:11:46.440 --> 0:11:49.960 And uh, it's the money is deposited. The smaller amounts 0:11:49.960 --> 0:11:53.199 are deposited into one or more banks by people called smurfs, 0:11:53.200 --> 0:11:55.800 that's what they call them. Yeah, for no apparent reason. 0:11:56.080 --> 0:11:59.080 So smurf that unless pay O, the creator of the Smurfs, 0:11:59.080 --> 0:12:01.640 was caught doing this, maybe that's where it was, Maybe 0:12:01.679 --> 0:12:04.760 that's where it originated. It sounds like a smurfing good 0:12:04.800 --> 0:12:07.920 idea to me. Have you ever seen the smurf carpet 0:12:07.920 --> 0:12:12.880 bomb ad? No? I think it was for um UNICEF. 0:12:13.160 --> 0:12:15.400 It was a UNICEF ad and they played it in 0:12:15.720 --> 0:12:19.360 Belgium and basically it was an anti war public service 0:12:19.400 --> 0:12:22.000 announcement and they used the Smurfs and the Smurf's villages 0:12:22.080 --> 0:12:24.679 just carpet bombed and they're all like killed, and they 0:12:24.960 --> 0:12:28.520 showed the aftermath and burning smurfs are walking around. It's 0:12:28.559 --> 0:12:31.839 really something you should look it up. Jeez. Uh. So 0:12:31.880 --> 0:12:35.000 that's disturbing onto overseas banks, which is always big. You 0:12:35.000 --> 0:12:38.240 always hear about offshore accounts and you know, growing up 0:12:38.320 --> 0:12:40.600 you hear this from watching chips and stuff like that 0:12:40.640 --> 0:12:42.800 in my era, and you hear about offshore accounts and 0:12:42.800 --> 0:12:45.280 always pictures some like bank floating in the ocean. You know, 0:12:45.800 --> 0:12:48.880 that's not what's going on there. But they're basically countries 0:12:48.960 --> 0:12:51.400 have really lax or not lax, but they just have 0:12:51.480 --> 0:12:55.360 secrecy laws and allow anonymous banking to take place. Yeah, 0:12:55.720 --> 0:13:00.439 like bah rain Um is one that's not in the Caribbean, Hamas, 0:13:00.559 --> 0:13:04.520 the Caymans, Caymans, Hams, Caymans, Hong Kong shore. Uh, there's 0:13:04.520 --> 0:13:08.319 a place called Macau off the coast of China underground 0:13:08.400 --> 0:13:10.760 alternative banking, which kind of cracks me up. I don't 0:13:10.760 --> 0:13:13.080 know that I would invest in an alternative bank. This 0:13:13.120 --> 0:13:15.720 seems kind of like tribal in nature. Yeah, exactly, like 0:13:15.760 --> 0:13:19.120 it's existed long before any banking regulations. Very popular in 0:13:19.160 --> 0:13:23.520 Asia and now than Pakistan, the Hawalla system in Pakistan 0:13:23.559 --> 0:13:26.360 and India and the five Chin system in China. Yeah, 0:13:26.800 --> 0:13:28.800 so basically it's a it's a trust system. There's no 0:13:28.840 --> 0:13:31.920 paper trail, no paper, which is key because you want 0:13:31.720 --> 0:13:34.120 to lounder money, you don't want paper. That's all point. 0:13:34.160 --> 0:13:37.120 It's pretty it's very much like the offshore accounts, Like 0:13:37.160 --> 0:13:42.160 these are secret accounts. You they won't reveal your identity. Um, 0:13:42.720 --> 0:13:45.920 there's no paper trail that's public in any way, shape 0:13:45.960 --> 0:13:48.680 or form. So these are really good places to use 0:13:48.720 --> 0:13:51.080 if you plan on laundering any money, right, not that 0:13:51.080 --> 0:13:53.400 we would encourage that, because it's illegal, You get busted, 0:13:53.440 --> 0:13:55.000 you go to jail. No, although if you look at 0:13:55.040 --> 0:13:58.480 if you put together some of these seemingly random podcasts 0:13:58.480 --> 0:14:02.680 we've done, you could make move Chine sell it lounder money. 0:14:02.880 --> 0:14:08.520 Londer money and exactly early on and then get out. 0:14:09.360 --> 0:14:13.280 So there you go, and here we are not making 0:14:14.040 --> 0:14:15.960 take your own advice, right. And then Josh, there are 0:14:16.000 --> 0:14:18.120 shell companies. Of course, when you have like a fake company, 0:14:18.160 --> 0:14:21.120 you'll set up that really doesn't sell or manufacture anything. 0:14:21.160 --> 0:14:23.880 What's the difference between a shell company and a front company? 0:14:24.400 --> 0:14:26.160 Is there a difference? There's a difference. You want to know? 0:14:26.320 --> 0:14:27.600 Then why don't you talk? I was just trying to 0:14:27.640 --> 0:14:30.240 set you up. But the shell company is set up, 0:14:30.520 --> 0:14:33.000 it doesn't really do anything. It's only it only really 0:14:33.000 --> 0:14:37.640 exists on paper, um, and it's express purposes the longer money. 0:14:37.640 --> 0:14:40.680 A front company is real company, right, but it's meant 0:14:40.680 --> 0:14:42.880 to longer money too. But you could say it's a store. 0:14:42.920 --> 0:14:44.880 You could actually go into the store and buy something, 0:14:45.760 --> 0:14:48.720 but it really the purposes to longer money. And that 0:14:48.800 --> 0:14:51.760 actually leads us to one of the problems with money laundering. 0:14:51.760 --> 0:14:54.440 I mean, you ask, why why would I care if 0:14:54.440 --> 0:14:57.120 people are laundering money, you know, aside aside from the 0:14:57.120 --> 0:14:59.720 obvious one like I hate drug dealers, you know, and 0:14:59.720 --> 0:15:02.360 and don't want them laundering the money, or I hate terrorists. 0:15:02.360 --> 0:15:06.600 Clearly everybody hates terrorists. Yeah, but but for this reason, 0:15:06.760 --> 0:15:10.560 the last part with the front company, it affects local 0:15:10.560 --> 0:15:14.640 economies and that small businesses can't compete with the front 0:15:14.680 --> 0:15:16.760 company because they're not trying to turn a profit off 0:15:16.800 --> 0:15:18.800 their product, so they can sell it like add or 0:15:18.840 --> 0:15:21.720 below cost if they want and drive other companies out 0:15:21.720 --> 0:15:23.800 of business. Well that seems a little flashy to me. 0:15:23.840 --> 0:15:25.960 If you're a front company, sure, I would think you 0:15:26.080 --> 0:15:28.960 just kind of want to stay even keel the whole time. Right, Yeah, 0:15:29.000 --> 0:15:32.400 But greed, brother, it's true. Same with the ponse it's 0:15:32.680 --> 0:15:35.120 greed takes a hold and then you're screwed. Same with 0:15:35.120 --> 0:15:38.240 the what it's a Ponzi scheme, but on a much 0:15:38.280 --> 0:15:40.680 a much larger level, there's other bigger problems, like it 0:15:40.760 --> 0:15:44.520 can affect whole financial sectors or economies if enough money 0:15:44.640 --> 0:15:47.160 is is laundered through. Well. One of the reasons why 0:15:47.240 --> 0:15:48.800 is a lot of these countries that these things are 0:15:48.840 --> 0:15:51.880 running through were small countries and they don't have like 0:15:51.920 --> 0:15:54.960 the big, huge economy United States does. So someone's laundering 0:15:55.560 --> 0:15:59.280 you know, seventy five million dollars through a tiny little country. 0:15:59.440 --> 0:16:02.080 It's all vaults. You know, that's gonna affect the economy 0:16:02.080 --> 0:16:04.320 in that country. Yeah, Plus no one pays taxes on it, 0:16:04.400 --> 0:16:06.560 so you and I end up making up, well, not you, 0:16:06.600 --> 0:16:08.920 because apparently you don't pay taxes, but I do now, 0:16:08.960 --> 0:16:12.840 pal Okay, I just didn't in the mid early decade. 0:16:13.400 --> 0:16:15.640 Yeah uh so, yeah, we end up making up for 0:16:15.680 --> 0:16:18.800 that taxpayers do by having to pay higher taxes. Right. 0:16:18.840 --> 0:16:20.880 But I think ultimately the reason why the d o J, 0:16:21.120 --> 0:16:23.160 the FBI, the I R S, and the d e 0:16:23.280 --> 0:16:26.400 A are all involved in trying to catch money Launders 0:16:26.440 --> 0:16:29.000 because the government ain't making any money off of it. Exactly, 0:16:29.040 --> 0:16:31.120 you know what I mean. I mean we're talking if 0:16:31.160 --> 0:16:34.800 we're if it's a trillion dollars, you know what's thirty 0:16:35.200 --> 0:16:37.840 of that billion? I gotta tell you, the U S 0:16:37.840 --> 0:16:39.840 could use that three billion right now if you can 0:16:39.880 --> 0:16:41.400 get you that much of a chunk of it, right 0:16:41.960 --> 0:16:44.600 and we'd go give it to some institution that's collapsing 0:16:44.800 --> 0:16:49.600 exactly exactly. Yeah, that's that's robbing Peter to pay Paul. 0:16:50.400 --> 0:16:53.120 Oh wait, that was from the Ponzi scheme when wasn't it. Yeah, 0:16:53.160 --> 0:16:56.800 but that's still a nice term. Okay, thanks a lot, um, So, Chuck, 0:16:56.840 --> 0:16:59.920 you want to talk about a couple of famous um 0:17:00.000 --> 0:17:03.080 any laundering busts. I would love to talk about Crazy Eddie. Okay, good, 0:17:03.080 --> 0:17:05.560 because I want to talk about Franklin GIRARDA. Didn't that great? 0:17:05.600 --> 0:17:08.320 When it works out like that, it's different Crazy Eddie. 0:17:08.359 --> 0:17:10.040 And I remember this guy when I lived in New 0:17:10.119 --> 0:17:13.240 Jersey seeing the Crazy Eddies TV commercial. Oh yeah, he 0:17:13.240 --> 0:17:15.040 was one of those guys that it's exactly how you 0:17:15.080 --> 0:17:18.959 would think Crazy Eddies. Uh. This is in the nineteen eighties, 0:17:19.040 --> 0:17:23.040 Eddie and Tar Crazy Eddie's Electronics. He skimmed millions of 0:17:23.119 --> 0:17:27.280 dollars uh from his own company to hide it from 0:17:27.280 --> 0:17:29.760 the I R S. So he was doing this, he 0:17:29.800 --> 0:17:33.360 had some co conspirators and eventually he thought, you know what, 0:17:33.840 --> 0:17:36.439 I should send this money back into my own company. 0:17:36.560 --> 0:17:39.399 Disguised his revenue right because he was going to launch 0:17:39.400 --> 0:17:43.760 an initial public offering, so I'll inflate my soon to 0:17:43.800 --> 0:17:49.000 be stock quote And he did substantially right bucks or something. Yeah, 0:17:49.160 --> 0:17:52.879 but that's false money. So it was over inflated and 0:17:53.080 --> 0:17:56.560 the result for him was bad news. He laundered more 0:17:56.560 --> 0:18:00.520 than eight million bucks and was busted and flew to 0:18:00.680 --> 0:18:04.119 Israel and they found him in nine they extradited him 0:18:04.160 --> 0:18:06.760 back to US. To stand trial and he went to 0:18:07.119 --> 0:18:10.560 the Who's Scott for eight years? Yeah, which isn't that bad. 0:18:10.600 --> 0:18:12.679 I imagine he probably had a lot of money staffed 0:18:12.680 --> 0:18:14.480 away waiting for I know, I was kind of surprised 0:18:14.520 --> 0:18:16.399 most of these prison sentences in here, like six to 0:18:16.480 --> 0:18:17.760 eight years. I think it would be a little more 0:18:17.800 --> 0:18:19.840 than that. That's why I think the Bernard made Off 0:18:20.080 --> 0:18:22.240 sentence is gonna be so cute, just gonna get like 0:18:22.280 --> 0:18:25.640 a hundred plus years. Yeah. So, um, can I talk 0:18:25.680 --> 0:18:29.840 about my guy now, Franklin Girardo. Uh and you want 0:18:29.880 --> 0:18:31.639 to put an R toward the end of it, but 0:18:31.680 --> 0:18:35.280 it's not. It's Gerrado Grado. Um. So he was actually 0:18:35.359 --> 0:18:39.960 an economist. Um. And apparently economists are really good people 0:18:39.960 --> 0:18:42.879 to get to to longer money for you because they 0:18:42.920 --> 0:18:44.880 know exactly what they're doing. You just need to get 0:18:45.000 --> 0:18:48.280 a crooked economist pretty much. And from what I understand, 0:18:48.280 --> 0:18:50.720 this guy was it. Um. There was a Colombian drug 0:18:50.800 --> 0:18:55.639 kingpin named Jose Santa Cruz Londono and uh he had 0:18:56.280 --> 0:19:02.080 Gerrado basically placed the drug money into Colombian banks, right, 0:19:02.200 --> 0:19:05.240 which we've already seen Columbia not that big on the 0:19:05.280 --> 0:19:08.960 banking regulation. Laws, right, and then from there he started 0:19:09.000 --> 0:19:12.960 making wire transfers and deposits to a hundred different accounts 0:19:12.960 --> 0:19:14.840 that have been set up some and made up names, 0:19:14.880 --> 0:19:18.520 some in family members names. Um in sixty eight banks 0:19:18.520 --> 0:19:21.959 in nine European countries, right, and he was doing this 0:19:22.000 --> 0:19:24.320 really well for a while. Um. I think he managed 0:19:24.359 --> 0:19:29.200 to launder thirty six million bucks. Um, but he was smurfing. Actually, 0:19:30.440 --> 0:19:33.160 do you mean something else there or you mean smurfing? 0:19:33.400 --> 0:19:35.800 He was smurfing as far as money laundering goes. I thought, 0:19:35.800 --> 0:19:39.120 you're just using smurflight? Does your mind the getter there? Um? 0:19:39.320 --> 0:19:41.960 He was. He was probably doing that too because you know, 0:19:42.040 --> 0:19:45.440 he's laundering millions of dollars. So all the smurfy wanted 0:19:46.720 --> 0:19:50.440 um the uh the he just threw me off there, 0:19:50.520 --> 0:19:53.320 chucks sorry um so, but he was smurfing in that. 0:19:53.640 --> 0:19:56.720 Like none of his deposits top ten thousand dollars, right, 0:19:57.160 --> 0:20:00.840 So imagine how active this guy was, and he had 0:20:00.880 --> 0:20:03.000 a lot of money to deal with. He got busted 0:20:03.040 --> 0:20:05.879 basically in two ways. Um. A red flag was raised 0:20:05.880 --> 0:20:09.520 when a bank in Monico collapsed, and UH an audit 0:20:09.560 --> 0:20:11.959 revealed that that he had a bunch of accounts that 0:20:12.000 --> 0:20:13.960 didn't have his name on it, but could be traced 0:20:14.000 --> 0:20:17.600 back to him, which is fairly unusual. And then really 0:20:17.640 --> 0:20:20.480 what when he was actually arrested? This is great. His 0:20:20.720 --> 0:20:25.000 neighbor called the cops to file a noise complaint because 0:20:25.160 --> 0:20:28.840 Gerardo was running his money County machine all night. The 0:20:28.920 --> 0:20:31.520 cops show up and this guy surrounded by millions of 0:20:31.560 --> 0:20:33.720 dollars in cash. I love those machines you see m 0:20:33.720 --> 0:20:36.520 in the movies. Yeah so cool? Right, yeah, they are 0:20:36.600 --> 0:20:38.639 pretty cool. I've never had enough money to put him. 0:20:38.640 --> 0:20:43.320 Mine would go yeah, it would be over. Yeah, you 0:20:43.359 --> 0:20:47.320 have fifteen dollars lucky. Um so yeah, that that's how 0:20:47.440 --> 0:20:49.800 Gerardo got busted. He got seven and a half years, 0:20:49.960 --> 0:20:53.560 and he's in Harvard. Man, we should note. Yeah, so 0:20:53.600 --> 0:20:57.520 it's not all just untoward. Uh That's why I purposely 0:20:57.600 --> 0:21:02.040 left off the Harvard educated economists, because I mean, I think, 0:21:02.760 --> 0:21:05.560 look at made off. He's an intelligent guy, as crooked 0:21:05.560 --> 0:21:08.320 as they come. It's called white collar, dude. It surely 0:21:08.440 --> 0:21:12.040 is for a reason. Um, So I guess do you 0:21:12.080 --> 0:21:16.119 want to just quickly go over operation Juno? Uh? Yeah, 0:21:16.600 --> 0:21:18.119 do you you know what I'm talking about? Because you 0:21:18.119 --> 0:21:20.000 know it happened right here in Atlanta. This is the 0:21:20.000 --> 0:21:22.040 headquarters for it. That was a part of it. What 0:21:22.119 --> 0:21:25.000 do you really know? But this was in Atlanta and 0:21:25.040 --> 0:21:26.679