Sat, May

Can Money Launderers Sustain the Corrupt Densification of LA?


THE VIEW FROM HERE - We should not overlook humans’ ingenuity for corruption.  As the 1935 California Supreme Court case American Philatelic Soc. v. Claibourne 3 Cal.2d 689 noted, in order to protect the public from fraud and deceit, the law must “deal with the innumerable 'new schemes which the fertility of man's invention would contrive’. For decades, the California courts expanded protection of citizens.  Today, however, protecting the public is an anachronism when the city and the courts have become crimogenic institutions, systematically transferring the productive gains of the average residents upwards to the 1%, i.e., Wall Street.  For most Angelenos, corruptionism has come in the form of Garcetti’s insane Manhattanization.  Garcettism brought about the two main themes of last year’s city elections: the homeless crisis and government corruption. Both ills are increasing as more people depart from LA. 

The Homeless Crisis and the Corruptionism Rested on Big Lie #1 

Virtually everyone accepted the false claim that a city had a housing shortage, despite having between 93,000 and 115,000 vacant units. The number of vacancies has allegedly risen to over 200,000 since LA is losing population.  As every CityWatch reader should now know, in January 2014, Judge Allan Goodman ruled that the city intentionally used fatally flawed data and wishful thinking to the extent it subverted the law.  Nothing has changed, except Judge Goodman is no longer a judge.  The city’s persistent Lies and Myths have made Los Angeles into a financial desert for Millennials and Gen Z’ers. 

A Day of Reckoning 

The laws of economics have caught up.  Making housing ever more expensive while making people constantly poorer is not a sustainable economic model.  Millennials and Family Gen Z’ers hate density because they want a detached home with a decent yard, fruit trees gardens, and room of the dog and children.  They cannot remain in LA and have that life style. If they stay, they will be renters forever and never build equity. As the city intensifies its war on the car in order to cram more and more density into the Basin, there will be Zone Pricing so that only the wealthy can afford to drive into DTLA, but will it be so crime ridden that they do not dare?  

Wall Street’s Dilemma 

Wall Street financed the buying up of large sections of Los Angeles years ago knowing that it owned city hall. For years, the politicos myopically denied that LA would lose population. Has there ever been a bubble which Wall Street did not think would never burst? Even now, the delusion exists that all those ex-pat Angelenos will give up their good jobs and nice homes in other states and other countries in order to return to squalor.  The Homeless Crisis costs far more than the city can ever finance.  April 24, 2023, The True Costs of Homeless Interventions, by Tim Campbell, The only remaining buyers are (1) poverty pimps to construct Affordable units at $800K to $1M each, or (2) money launderers.   

For How Long Can Money Launderers Sustain the Construction Mania? 

Oligarchs and the narco-drug traders launder their profits through otherwise legitimate businesses. Restaurants were infamous as they were cash businesses. As credit cards came to predominate, an income trail was created, making it harder to launder cash.  Real estate became a favorite. An offshore corporation would buy real estate and when the owner sold, his income appeared to be profit from a honest transaction.  Then, some smart cookie realized that “renting” apartments or condos while waiting to sell was a great opportunity to launder huge sums of cash.  The oligarchs and the narco-drug trafficker rent properties to fictitious tenants. (They definitely do not want anyone living in their units.) While one cannot have a restaurant with no customers, no one knows or cares that no one lives in the apartments or condos.  The money launderers’ attorneys set up a situation where the launderer gets regular rent checks from non-existent people.  Wells Fargo never knows whether the tenants exist. In fact, an enterprising launderer can rent out the same unit over and over with different banks for his deposits.  It’s all a paper game devised by attorneys. 

Since Millennials and Gen Z’ers do not want apartments, especially apartments which cost more than their salary, will money launderers buy up the projects which are being stuffed into Los Angeles?  Will money launderers come up with more innumerable “new schemes which the fertility of man's invention would contrive”?  With a crimogenic judiciary, what do the money launderers have to fear? 

Query: Suppose a money launderer’s operations become totally fictitious.  He has no apartments and no condos. Everything becomes a paper fraud. Who will go out and see if the oligarch’s units actually exist?  Why does he need an actual building?  If the launderer owns nothing, then he pays no property taxes. When the launderers foresee a crash, it might be wise not to tie up cash in the expense of owning and maintaining brick and mortar apartments and condos.  If launderers’ fertile imaginations perfect this nightmare scenario, it will be devastating to Hugo Soto-Martinez’s cramming more construction into East Hollywood April 21, 2023 Los Angeles Daily News, LA City Council Seeks ‘A More Inclusive, Sustainable Hollywood’ in Community Plan. When money launderers ceased to invest, who will buy or rent in these modern day tenements? 

Because Los Angeles Is Built on Lies and Myths, Predicting the Future Is Difficult 

One scenario may follow Mexico City where kidnapping for ransom has become a major industry.  Follow-home robberies are bringing crime deeper into previously safe neighbors. Who dares take the subway with constant stabbings and where a deranged lunatic bites off the finger of a police officer?  It’s hard to see how LA can manage to be economically viable when developers’ last and best option is to rely on oligarch and narco-drug traffickers.  In fact, it’s hard to see how the money launderers will continue investing in squalor and crime.

(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor.  The opinions expressed by Richard Abrams are not necessarily those of CityWatchLA.  You may email him at [email protected].)

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