‘Dirty Money’ Impacting South Florida Real Estate Market

Terri Sanchez dreams of owning her own place in her hometown of Miami. But the single mom and teacher, who works extra jobs to make ends meet, says that goal seems out of reach.

“No, it’s impossible now,” says Sanchez.

She says part of the problem is all the cash in the market.

“I made a few offers. They were all turned down over cash offers,” says Sanchez.

She’s not alone. Forty-five percent of home sales in Miami-Dade in 2017 were cash deals, according to real estate research firm ATTOM Data Solutions.

But real estate agents like Alicia Cervera de la Madrid, a member of the Miami Association of Realtors, love this cash market.

“It’s a more stable market and it’s a healthier market. So that’s a good thing,” says Cervera.

But some of the cash raises the suspicion of John Tobon, deputy special agent with Homeland Security Investigations.

"A lot of that money comes from illicit sources,” says Tobon.

And he says the dirty money makes everyone pay higher housing prices.

“The initial response to all of this influx of money is, ‘Oh this is great,’ but I think we are starting to see why this is bad,” says Tobon. “It is bad because unless you can come up with $600 or $700 thousand cash, you cannot buy or legitimately compete for a home in the greater part of Miami-Dade, Broward and Palm Beach.”

Nobody knows how many properties have been bought with dirty money but Tobon says there’s a lot of money available from black markets around the world such as Russia, Colombia, and Venezuela.

“The amount of money--its hundreds of billions,” says Tobon.

The US Department of Treasury says Venezuela’s vice president is an example of the problem. Tareck El Aissami is accused of being a drug kingpin and using Venezuelan businessman Samark Lopez Bello as a front man to launder drug revenues. The Venezuelan government denies it.

The US government blocked a handful of million-dollar properties in Miami for alleged links to Lopez Bello, who denied the allegations posting on his website that the sanctions appear to be “politically motivated.”

To combat dirty money the Treasury Department now requires title companies in South Florida and other hot real estate markets to share more information on buyers who make transactions of $1 million or more.

Those buyers can stay private using a perfectly legal process of making the purchase through a limited liability company or LLC.

Separating good buyers from bad ones isn’t easy as many people use LLCs to buy properties.

The NBC 6 Investigators reviewed local property records and found that in 2017 in Miami-Dade, at least 11,690 residential properties in Miami-Dade were purchased by or transferred to an LLC. That number has almost doubled in last five years.

“Those sales require the collection of additional information to help us identify who is behind the beneficial ownership of those LLCs involved in those transactions,” says Tobon.

The Treasury found nationally nearly one in three of the $1 million plus purchases involved a person or company that had been the subject of a previous suspicious activity report. Although that doesn’t necessarily mean the deal was dirty.

“I believe that most of the money that’s coming into the country is clean money,” says Cervera.

She believes too much regulation could hurt good buyers and do little to curb the problem.

“So if you put a light on a spot on a specific geographic area, the bad guys will move to another area. It’s pretty simple because what they’re trying to do is launder bad money,” says Cervera.

Terri Sanchez realizes her battle against other buyers won’t be easy either—and it just may mean giving up the teaching career she loves for a better paying job.

“It’s a constant battle,” says Sanchez. “It’s coming to a point where I have to think about my future.

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