Investigation sheds light on secret money in Miami’s luxe condo market
Several foreign nationals linked to financial crimes have been revealed as local buyers
April 04, 2016 02:45PM
South Beach (Credit: James Willamor)
For years, South Florida’s luxury real estate market has been a playground for anonymous buyers who snapped up properties at some of the region’s priciest addresses.
But a new investigation, based off a veritable treasure trove of data leaked from a Panamian law firm, has revealed the kind of shadowy players fueling the Miami condo boom.
The investigation, launched by the International Consortium of Investigative Journalists, analyzed 11.5 million documents dubbed the “Panama Papers,” which were leaked from a Panamanian law firm named Mossack Fonseca that specializes in setting up foreign shell companies for the world’s rich and powerful. It’s an unprecedented investigation by 100 news organizations throughout the world, including the Miami Herald.
What the investigation found was that a number of high-profile foreign nationals have been purchasing pricey real estate in Miami through shell companies, many of whom have either been convicted of or linked to financial crimes in their home countries.
One of those implicated: Paulo Octávio Alves Pereira, a Brazilian politician under indictment for corruption in Brazil, according to the Miami Herald. He paid just under $3 million for a unit at the flashy St. Regis Bal Harbour, which boasts lavish amenities like 24-hour room service for its residents.
Octávio got rich off developing shopping centers in his home country, according to the Herald, and even stepped in as governor of Brasilia after his old boss was arrested for alleged bribery. But he quickly resigned after also being accused of taking bribes.
Altogether, 19 foreign nationals were named in the report as buyers in Miami-Dade County, and eight have been linked to some sort of crime in their home countries.
That’s barely a sliver of the local luxury market, but the reports give credence to growing worry over the sanctity of money that’s been feeding Miami’s condo boom.
The investigation comes just months after a division of the U.S. Treasury Department launched an anti-money laundering program targeting the same types of shadow-buyers in Miami and Manhattan’s luxury residential markets.
The agency’s goal was to uncover the true owners behind shell companies that pay all-cash for million-dollar properties, in hopes of curtailing foreign nationals for stashing their illegal cash on U.S. soil through real estate purchases.
But the treasury department has its work cut out for it. The Herald, citing data from the Miami Association of Realtors, reported that foreign nationals bought $6.1 billion worth of homes in South Florida last year. And of all the region’s home sales, more than half were paid for in cash. [Miami Herald] — Sean Stewart-Muniz
Source: The Real Deal