In the fall of 2014, Moyers & Company scrutinized the changing skyline along New York City’s Central Park South and discovered that the developers of the new soaring luxury towers, with apartments selling in the range of $30 to $90 million, were taking advantage of tax breaks meant to encourage the development of affordable housing.
We also learned that some of the international buyers of these high-rise condominiums chose to hide their identities behind the screen of shell companies called LLCs (limited liability companies). They paid in cash and rarely visited their properties — in effect, they were purchasing “safe-deposit-boxes in the sky.”
The use of shell companies to buy real estate is legal but, as a top Treasury official told The New York Times, they believe that many of these deals are being used to hide and launder dirty money. In fact, in a series of reports last year, the Times found that, despite being under investigation in their own countries, many buyers had no difficulty putting their sketchy fortunes into lavish dwellings, like those at the Time Warner Center, for safekeeping.
This week the government announced that it will begin a pilot program to uncover the identities of secretive millionaires and billionaires buying up residential property in Manhattan and Florida’s Miami-Dade County. The program will require title insurance companies to find out the identities of the actual owners and submit their names to the Treasury Department, which in turn will build a database for law enforcement.
Will it work? Michelle Korsmo, the head of the American Land Title Association, told NPR that she supports the effort, but if a “major drug kingpin is buying a mansion through a string of shell companies all over the world, that might be a bit much for a title insurance company to figure out.”