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28-Year-Old Businessman Accused of Stealing $1 Billion From Moldova
An anonymous reader writes: You could be excused for not knowing much about Moldova — the small, Eastern European country has a population of around 3 million and occupies about 13,000 square miles of territory. Its GDP is just over $6 billion — which makes accusations that 28-year-old Ilan Shor stole close to a billion dollars from the country's banks quite interesting. A recent report (PDF) says Shor led a group that bought controlling stakes in three Moldovan banks and then passed transactions between them to increase their liquidity. The banks then issued massive loans to companies owned or related to Shor. $767 million disappeared from the banks, and the country's central bank thinks that total will rise to $1 billion. It was forced to bail out the banks to keep the economy from crashing. Widespread corruption led to many records of Shor's actions being "lost" or outright deleted. He's now charged and placed under house arrest while the investigation continues.
You can't just do this without insider help. And by insiders, I mean government officials.
Wouldn't happen here. In Soviet America; Bank robs you!
TARP had an 8.2% ROI in 6 years, not too shabby.
As far as Eastern European country bank heists go, this guy is an amateur. The way professionals do it is by first controlling the government and the media. Then you steal the money (say some 7-8 billion) by funneling them through a chain of hollow companies to offshore accounts. Finally you set one of your partners with whom you have unsettled depth as the fall guy, while you yourself use your political connection to become the head of the local equivalent of the FBI:
Bulgaria's CorpBank: A Tangled Web Of Fraud
I had remembered that there was a small, Eastern European country that has a population of around 3 million and occupies about 13,000 square miles of territory. But I couldn't remember its name up until now - only that it rhymed with a part of the female anatomy.
Actually... compared to other Eastern European countries which all had this happen to them repeatedly, Moldova ROCKS! You know why? They caught him, while he was still in the country and they have a good chance at recovering some of those funds. That is a huge victory compared to the usual standard in such cases in Eastern Europe. GO MOLDOVA!
Freaking Moldova can put a banker in jail, why can't we?
"There are lies, there are damn lies, and there are statistics"
It is immaterial to the perpetrator of the fleecing here whether the government bails out the banks or not. The perpetrator has already taken the money via having it loaned, so whether the bank goes bankrupt or not doesn't matter to them, but it does matter to the government.
Banks are in an interesting position since they have control over assets that can far exceed the bank's actual value. Of course, legally the bank cannot just take these assets since they are storing deposits on behalf of customers, but they can lend out this money (minus a % they have to keep in hand at all times per regulation).
So a scheme could work like so:
- Buy a controlling interest in a bank, one where the purchase cost is a small fraction of the deposits the bank manages.
- Make transactions (selling debt, taking loans, etc) to allow the bank to have as much cash on hand as possible.
- Lend out all of this cash to companies you control, with no collateral on the loans.
- Have those companies pay the money to other companies you control for services etc.
- The first set of companies now all default on their loans, and there is no collateral to pursue.
- Bank goes bankrupt (or gets bailed out), doesn't matter to you either way.
- Roll around in your money, which is now off-shore so it can't be seized.
The key to happiness is managing your expectations.
Yep, the socialists are totally into the idea of taking money from a bunch of poor people and giving it to one rich guy. You have their philosophy all figured out.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"