IN THE WAKE OF BANKRUPTCY: DETROIT, AND MORTGAGE FRAUD?July 24, 2013
In the wake of the Detroit bankruptcy, old financial demons may be rising again, or in this instance, perhaps the only thing rising is my "suspicion meter," and the needle is in the red zone. Poor Detroit! It used to symbolize American manufacturing and industry. Now it is bankrupt. And in the middle of all of this, a story emerges about government-built houses being demolished.
Consider this one:
I hope you caught the significant paragraph:
"But Koresky says the inspector confirmed that the homes had to come down by order of the state. Not because of mold. Not because of bad soil. Not because of chemical contamination. But, according to news reports, because of alleged mismanagement of funds and poor planning. It turned out that not many people wanted to spend $150,000 on a 1,100-square-foot home in a distressed community. Then at least one of the financiers behind the project in Highland Park -- an incorporated city essentially surrounded by Detroit -- was charged with conspiracy and money laundering in connection with real estate deals in Ohio. And the state official running Highland Park's financial affairs also ran into legal trouble."
Money laundering in a housing scheme that was destined to fail? Say it isn't so!
Detroit at least had the benefit of actual homes being built - apparently poorly and sloppily, well get back to that. In some cases of government mortgage fraud, there simply were no homes, no buildings, no nothing. Just vacant lots. So what happened to all that money? The black budget happened...
Which is what I ultimately suspect happened here, though there's no evidence to indicate it. Throw up a few poorly constructed houses, pay off local inspectors "not to notice", and voila, you make yourself look good for whatever community you're pretending to "help," while the real money is laundered through the project, the black budget gets more, and a few friends are paid off along the way.
Then, we read at the end of the article, this:
"'Essentially, you and I are paying for the demolition with taxes,' said Koresky in his phone interview with AOL Real Estate. 'Parts of the homes at least could have been donated. Given to Habitat for Humanity. Big money was just being thrown away.'"
Maybe. But it's always necessary, when in on a scam, to destroy the evidence that might raise inconvenient questions, like too many houses prone to flooding, poor materials, and so on. And that's what I think may be going on here.
See you on the flip side.