January 29, 2012

Government mimics Mafia scheme

For a decade or two around 1990, organized crime made boatloads of money with a simple scheme: Someone would open a business in a strip-mall, and a couple of months later they'd apply for and receive a big loan to buy a bunch of inventory.

Then they'd either steal the inventory or sell everything in the store at a discount--obviously losing money. Finally they'd sell all the store fixtures and disappear, leaving an empty (leased) building. The bank that loaned the "business" the money was left with no collateral or assets to offset the loss.

When the mafia did it, it was called a “ bust-out.”

When the federal Department of Energy does it it's called "market conditions."

(h/t Toadold at Belmont Club.)

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home