Shell companies and money laundering.
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A shell company is a legitimate business in name only. In fact, a shell company provides no actual services, nor does it produce anything. The sole purpose of a shell company is to create the illusion of legitimacy through fake invoices and balance sheets, which allows the company to accept dirty money and mask it as legitimate profits. Often, these funds are used to buy other high-priced assets such as real estate, which can then be sold and cashed out through other shell companies in another country.
Alternatively, the shell company can simply be used to purchase luxury items as a way to mask the identity of the true purchaser, who stays under the radar. Lopez Tardon, a successful Spanish drug dealer who made his fortune in Madrid, attempted this method in Miami from 2001 to 2011. Before his arrest, Tardon managed to buy up 13 high-priced condos and 17 luxury cars through a shell company. Unfortunately for him, such extravagance landed him a whopping 150 years in prison.
Shell companies can also be effective conduits for stealing money, not just hiding it. In the 1990s, Russian crime boss Semion Mogilevich, described by the FBI as the “most dangerous mobster in the world,” cheated investors out of $150 million by setting up a web of shell companies in the US and overseas. This network of companies, along with forged annual reports and shady stock market listings, tricked investors into thinking he had a reputable international business. The reality was far different: These “businesses” did no business at all. Mogilevich still roams free in Moscow, far from the FBI’s reach.
Shell companies aren’t just used by drug dealers or mobsters, by the way. China uses shell companies to borrow vast sums of money for public use. This allows the government to hide its true public debt levels as a percentage of GDP, counting it as “private debt” instead. These devious accounting tricks increase China’s estimated debt to 282 percent of GDP. Compare that to the US federal debt of just under 100 percent of GDP.
http://listverse.com/2016/01/29/10-ways-to-move-money-like-a-crime-boss/
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