BaT Conspirarcy Theories

In some of the automotive facebook groups and in local car groups I've heard some wild; but, plausible theories that Bring A Trailer is a great way to launder money, artificially drive up the value of certain makes/models to the benefit of some collectors/sellers, and so on. 

I find it hard to bite in on some of these theories; however, they are not outside the realm of possibilities. There are some cars where you're just like "someone really paid that much for that?!?!" I can imagine eBay motors could be used in a very similar fashion even though it's not as popular of a site to visit as BaT in the auto culture of 2020. 

Things like this always pique my curiosity because it's wild to see where some people's thoughts take them. 

I am a firm believer in the power of a fair auction to set a fair price for something. But BAT does have some eyepoppers that seem to defy common sense.

The art world has been accused for a long time of providing  a method of laundering money.  I can't see why BaT would be any different. 

eBay is already used to launder money. 

And the artificial inflation of certain automobiles at auction goes back past the '80s which is when I first started hearing about it.

Shill bidding is a very real thing, and while I have no experience with it on BaT, it has been used since auctions first began.

We might as well toss Copart auctions into the fray as well. They also seem like a great way to launder money.  

Yeah, I suspect you can say the same about any higher cost auctions.

Heck, I figure most "collector" markets are heavily driven by what other collectors want their stuff to be worth.  Sort of a weird pyramid scheme. (and apparently wanting to be able to launder money between like minded people in the largest amounts possible)

Talked to an artist that was doing a mural as a way for someone to try and buy their way into the country club that his dad was on the board of. A bunch of his art has been used to launder weed money in northern California. He talked to some of the buyers and they admitted to him that they just threw it in a closet. Apparently they had to keep it around so they could prove something to authorities if needed. I can't believe you'd launder money through cars unless you actually liked them. 

Back when ebay was new i had a "friend" ask me to shill bid his firebird to the reserve.  After he refused to sell it to me the day he bought it for 2x what he paid doing no work.  And he got a trans am hood and drywall screwed a shaker scoop to the v6 air cleaner, and poured bondo into the door and let it ooze out all the holes and sprayed it silver and purple.  I declined to assist with his bullE36 M3.  We're not friends anymore.  
 

anyway I'll look to sell the Alpine on BaT when the time comes because they've sold worse ones for more than i paid.  

So...someone explain to me how paying too much for a Radwood special cleans up your filthy lucre?

In reply to Patrick (Forum Supporter) :

Check out cars and bids...

ultraclyde (Forum Supporter) said:

So...someone explain to me how paying too much for a Radwood special cleans up your filthy lucre?

AIUI it works like this.  Say you and a couple buddies have made $100K in some less-than-legal way.  You buy a $20K car with legit funds, do a little work to it, post it on BAT.  Your two buddies bid against each other, hitting $120K.  They pay you with the dirty money, BAT takes their share, you pay some taxes on it, and now you have $60K in "laundered" money plus the original $20K.

I don't really think it's an illegal money laundering hotspot, but perhaps a legal one......

To clarify, I think most of the cars that sell for big bucks are dealers on both sides of the equation, and they don't really care what the selling price is.  As a hypothetical: A clean 4th gen supra sits on some dealers lot for $80K for years as a show piece, he tries to sell it unsuccessfully to some sucker private party, and people tell him he's crazy.  He then puts it on BAT and it sells for $100K to the next dealer who wants to do the same thing, who promptly lists it for $120K on his lot, and the cycle repeats.  The car never "sells" and goes into circulation as a car that gets used, it just gets passed from dealer to dealer.  (See also LFA, first gen NSX's lately, Hemi muscle cars, etc).  Paying money at auction is no big deal, he takes the tax writeoff/depreciation, and eventually recoups his money selling to another dealer. 

That would also track with most normal people I know that list something on BAT get slapped with a ridiculously low reserve.  Maybe the car goes way over and its no big deal, but I know several people that had bad experiences on the pre-sale negotiation.  I think the big volume dealers that list dozens of cars with the site likely get more leverage on setting their own reserves and getting the red carpet treatment.

Those are my conspiracy theories, anyway.  :)

codrus (Forum Supporter) said:

ultraclyde (Forum Supporter) said:

So...someone explain to me how paying too much for a Radwood special cleans up your filthy lucre?

AIUI it works like this.  Say you and a couple buddies have made $100K in some less-than-legal way.  You buy a $20K car with legit funds, do a little work to it, post it on BAT.  Your two buddies bid against each other, hitting $120K.  They pay you with the dirty money, BAT takes their share, you pay some taxes on it, and now you have $60K in "laundered" money plus the original $20K.

 

Is the intent to make cash untraceable by serial number, or is that not it at all?

I'd never make a white collar criminal because I'm too dumb to understand how this kind of stuff works.

I though the music industry was the hot money laundering venture.  Looking at you Suge Night!  

The high-end auction market--whether for art, vintage watches or classic Ferraris--serves as an easy vehicle for the rich to move their wealth outside of their home country to get around restrictions and taxes.  For example, China restricts its citizens from taking much money out of the country.  However, a wealthy Chinese citizen can make a huge overseas purchase, take a low-interest loan against it's value from an overseas bank, then spend those funds however they like outside of China.  So when you see headlines for a record breaking price at auction, you may just be seeing an example of a billionaire who wants to move that much money out of country and who found a lender that would give them a comparably sized loan against that specific asset.

BaT is small potatoes; I presume there are far easier ways to launder money. Shill bidding is very real, though, but that's always a risk with every auction.  Buyer beware, right?

codrus (Forum Supporter) said:

ultraclyde (Forum Supporter) said:

So...someone explain to me how paying too much for a Radwood special cleans up your filthy lucre?

AIUI it works like this.  Say you and a couple buddies have made $100K in some less-than-legal way.  You buy a $20K car with legit funds, do a little work to it, post it on BAT.  Your two buddies bid against each other, hitting $120K.  They pay you with the dirty money, BAT takes their share, you pay some taxes on it, and now you have $60K in "laundered" money plus the original $20K.

 

Unless you can pay cash on bring a trailer, that won't work. There will be a long and convoluted string of cash deposits to get that money into the "buyers" accounts, unless they're already legally rich from other means.

Real quick way to get the IRS looking at you is lots of high value cash deposits, all banks are required to reports deposits over $10k, most willingly file reports over $5k, and doing $120k let's say, as small deposits would just be a nightmare. 

In reply to RevRico :

that's right. to launder you have to get the money into a bank account, and multiple big cash deposits need explanations. That's why cash-based businesses are big, because it's much easier to 'explain' that your strip club or music venue or bar or casino is having a great year than it is to say "I happen to have $100k in 20 dollar bills and want to buy a lambo".

Got it. Requires purchasing and selling parties to be in cahoots, that was the piece I was missing.

The point of money laundering is to hide the illegal origin of a large sum of cash. If you suddenly deposit $500,000 in the bank or buy the equivalent house while working as a wrench at an oil change place...Someone in the criminal branch of the IRS will come see you.  The overall plan is to construct some legit-looking income stream that justifies having the money, but also one where the buyer having the money is also not suspicious. I gather that was why bars were always the easy answer years ago. A profitable bar can make a TON of money, all in small transactions that were (in the past) largely untraceable. As electronic transactions and even things like cash register receipts for a drink have become common, this becomes harder. 

At least this is how I've come to understand it watching lots of Miami Vice reruns.

Pete Gossett (Forum Supporter) said:

codrus (Forum Supporter) said:

ultraclyde (Forum Supporter) said:

So...someone explain to me how paying too much for a Radwood special cleans up your filthy lucre?

AIUI it works like this.  Say you and a couple buddies have made $100K in some less-than-legal way.  You buy a $20K car with legit funds, do a little work to it, post it on BAT.  Your two buddies bid against each other, hitting $120K.  They pay you with the dirty money, BAT takes their share, you pay some taxes on it, and now you have $60K in "laundered" money plus the original $20K.

 

Is the intent to make cash untraceable by serial number, or is that not it at all?

That would be the way to do it in 1960.  At this point, it's rarely cash anymore.  Money is traceable via bank transfers, etc.  If I were in the IRS database as someone who makes $35k a year, and suddenly I deposited $100k in the bank, it might raise a red flag and the FBI could trace where it came from.  If it comes from a questionable place (offshore account, fake company, overseas terrorist organization) it wouldn't be good for business.

Instead you use the money to make a legal transaction before you make it digital.  Buy real estate, place bets at a casino, etc.  It is much harder to place a cold hard provenance on a nebulous purchase than it is to trace a bank transfer, especially because it happens before the digital footprint.  Let's say you owned a Ferrari and wanted to sell it.  Mr. Launderer wants to buy it with cash he got selling Meth.  You sell it to him on paper for $20k but he gives you 100k.  Then he sells it on BaT for $120k.  You get some dirty money and a kickback of an extra $10k for your trouble, the launderer walks away with clean money for a legal transaction.  The transaction happens before any digital footprint, and by the time anything digital happens, its all legal.

At least that's how I understand it from watching Blacklist and Ozark.

The eye-popping transactions are the exception, rather than the rule, and always seem to be truly exceptional cars.  Is $58,500 too much for an Integra Type-R?  It's too much for me but good luck finding the next showroom perfect, one owner ITR.

Really nice cars seem to trade for a slight premium to sell-it-locally prices, but nothing outlandish.  A friend of a friend just sold his 48k mile E46 M3 'vert for $26k on BaT.  Low 20s would have been his number when he was advertising it locally.

In reply to nderwater :

Chinese like cash. There was a court case in Vancouver a couple years ago between two mainland Chinese where it transpired that a multi million dollar mansion had been purchased with cash brought out of China in duffle bags on successive trips.

Curtis73 (Forum Supporter) said:

Instead you use the money to make a legal transaction before you make it digital.  Buy real estate, place bets at a casino, etc.  It is much harder to place a cold hard provenance on a nebulous purchase than it is to trace a bank transfer, especially because it happens before the digital footprint.  Let's say you owned a Ferrari and wanted to sell it.  Mr. Launderer wants to buy it with cash he got selling Meth.  You sell it to him on paper for $20k but he gives you 100k.  Then he sells it on BaT for $120k.  You get some dirty money and a kickback of an extra $10k for your trouble, the launderer walks away with clean money for a legal transaction.  The transaction happens before any digital footprint, and by the time anything digital happens, its all legal.

Yeah, but now I'm stuck with $100k of cash.  It's not really laundered, it's just become my problem.  Unless I own a cash-based business, I'm just as stuck.

Think of how it worked on the Ozarks show.  They owned a cash based business so they could be expected to make big, regular cash deposits.  IIRC, they also had people whose job was to show up with lots of cash and lose it playing the tables so the books looked right (maybe that was only when they were being actively investigated - I forget).

There is a show on Amazon, set in France, about a guy who laundered money through transfer of high dollar art work.  He ended up dead on the first episode and the rest of the series is about how his wife, who had no idea of the nefarious activity, found out and got even with everybody for killing her husband.    Oh, and nudity to fill holes in the plot.  

mfennell said:

 

Yeah, but now I'm stuck with $100k of cash.  It's not really laundered, it's just become my problem.  Unless I own a cash-based business, I'm just as stuck.

But you have a legal source for that money, the sale of a car. 

Yes, you still need to deposit the cash, but when the IRS asks where the money came from, you say "car" instead of "meth".