The Real Lord of War XIII

We were discussing last time regarding the strange notion that many arms dealers are caught and prosecuted not because of their arms dealing which, although illegal under many U.S. laws and international laws, can be difficult to prosecute because of political machinations and the intricacies of international law.  However, money laundering, because it is a direct violation of U.S. criminal law, tax law and immigration law (to name a few) is often much easier to prosecute and convict.

     As a result, therefore, arms dealers are placed in the ultimate "Catch 22" situation (look it up).  Illegal arms dealers cannot make their money legally and, therefore, cannot have their monies be traced.  Illegal arms dealers, like Viktor But and the fictional Yuri Orlov, must resort to money laundering which places them in a dangerous position.  It is one of the ironies of their profession that the arms in which they traffic are less dangerous to the arms dealers than the monies they earn from such arms dealing.

   Strange world, indeed.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

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----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War XII

As we already know, the final stage of money laundering is the integration phase, when the monies are introduced into the financial system having been "cleaned" and therefore above scrutiny (or allegedly above such scrutiny).

     For arms dealers, like any money launderers, this is the most important phase.  Let's look again at the movie "Lord of War" where the fictionalize character of Viktor But (Yuri Orlov) enjoys a high lifestyle of deluxe penthouses, private jets and limosines.   The only way he can maintain this lifestyle is through the constant sales of arms and flow of money.  Unlike regular businessmen, however, Orlov has to go through the additional stages of money laundering to get the funds he needs.  Ultimately, this is how he is caught.

     This is one of the strange episodes when working with arms dealers.  Often, the dealers are caught not because of their arms dealings, but because of sloppy money laundering which leads to federal and international prosecution.  Yet another reason that money laundering can be as great as a threat as the arms dealing itself.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War XI

We were talking about arms dealers being paid in diamonds and other precious stones to avoid the problem of having to deal with getting "paid" and having to report the income (which, of course, would immediately reveal the issue of arms dealing in the first place).  This leads, of course, to the obvious issue of just how problematic money laundering operations can be on a larger scale, namely that the illegal trafficking of arms (or other illicit materials) can lead to the sale of illegal diamonds.

      Not to cite another film here, since we are already referencing "Lord of War," but the film "Blood Diamond" comes to mind as we discuss this issue.  In "Blood Diamond," the illegal trafficking of diamonds from Sierra Leone during that country's horrific civil war helped to keep the rival militias and armies well armed so they could continue their conflict well after most other conflicts would have died out from lack of money.  But, because of arms dealers who were more than happy to be paid in diamonds and could not care less from where the diamonds came from, a mutually assisted continual circle of death came about as the arms dealers and illegal diamonds merchants fed off each other.

     Money laundering, therefore, and illegal arms dealing go hand-in-hand, like most criminal enterprises.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War X

So, we have been learning about why it is necessary for arms dealers to launder money.  We know that many arms dealers (although But may not have been one among them) who would do the first step of laundering (placement) by purchasing diamonds or other minerals/gems to avoid placing his monies in the world's banking system (which would have been a dead giveaway that something was up).

     The second stage that would have been used by But or another arms dealer is the layering process. Since the arms dealer is getting paid in gems, he would have to sell the gems to get the actual money to integrate it (third step) into the world's financial system.  This is not very difficult.  Arms dealers would have a veritable army (no pun intended) of dealers that would be able to sell the gems for them, record the transactions, and begin the process of taking the proceeds from the sales and "layering" the proceeds into bank accounts, stocks, bonds, safe deposit boxes, CD's, and other financial tools and packages.

     What is important for the arms dealers is that the sale of the gems must be recorded and legitimized because this is the crucial step of getting their monies (earnings from the sales of arms) into the world's financial system so that they can have access to the money later.  Of course, this would involve the payment of taxes and other royalties, but it is a small price to pay to legitimize their illegal activities.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War IX

One of my alert readers pointed out that I am not keeping track of the Roman numerals I use to subdivide my chapters in this blog.  Looking back, I see he is right.  So, in the future, I will use the good old-fashioned Arabic numerals in the future.  Serves me right for trying to use a numeric system that has been out of date for hundreds of years.

     We talked about Viktor But getting paid in diamonds or some other form of gem or precious stone as payment for his arms shipments.  This enables him to get paid in a form of "currency" that is untraceable.

     This next example does not involve But since there is no evidence that he did this.  However, the idea of trading arms for oil has been done in the past and will likely be done int he future.  Like getting paid in diamonds, it has the advantage of not being traced and being something which can be easily dumped on the world market in return for currency.  Unfortunately, the diversion of oil also has the side effect of driving up prices of oil as insurance companies and governments are forced to pay for waste.

    Once again, this is another example of how money laundering affects the world at large.  The side effects of money laundering are felt far beyond local markets.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War VIII

OK - let's get back to Viktor and his ill-gotten arms deals.

     By the way, before we move ahead, I have received some email from readers who ask about my spelling of Viktor But's surname.  As I mentioned in a previous post, it is pronounced "boot" as in the shoe.  The standard English transliteration of his surname from the Cyrillic is usually "Bout."  However, for the sake of convenience, I prefer "But" although the 'u' is to be pronounced as a long 'u' and not a short one.  There is seldom any agreement (except among academics) for transliteration from Cyrillic characters to Latin characters, and this is just another example.  So, for the purposes of this blog, we will continue to call him Viktor But.

     Viktor, in his arms dealing, has to be careful about how and where he places his money.  There is no possibility that governments will overlook millions of dollars (if not billions) being placed directly in bank accounts.  This will attract too much attention.  And so, Viktor But, like so many before him, has to launder his money.

     The first step to laundering is to PLACE the money.  Although it is not known for certain (at least, not by me), the explanations given in the movie "Lord of War" where the fictitious character of Yuri Orlov is paid in "blood diamonds" probably has some accuracy to it.  Remember, one of the easiest ways to place money when laundering it is to buy high value goods such as artwork, planes, real property, gold or diamonds.  These instruments can be exchanged for cash and resold and the proceeds placed in the world's banking system.  If Viktor is being paid in diamonds to begin with (at least for some of his transactions), this removes one of the steps to placement.

More tomorrow.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk

The Real Lord of War VIII

Welcome to 2012!  I hope everyone had a great New Year and all my readers (and everyone for that matter) have my wishes for a great and prosperous New Year!

     Well, let's get back to Viktor Bug - arms dealer extraordinaire.

     But is suspected of selling arms to Liberia during the civil war in that country.  The Liberian civil war, fought in the 1980's and 90's was a particularly nasty war in which hundreds of thousands of civilians were killed or wounded (ironic since the country was founded as a haven for freed American slaves and the capital, Monrovia, is named after former President James Monroe).

     But was allegedly getting paid by multiple factions for his supply of weapons.  He would get paid in American dollars or, sometimes, diamonds or other gems.  When But would get paid in American dollars, it would make sense that But would have to go through the normal processes of money laundering.  Remember from our previous discussions on money laundering, there are three stages to a successful laundering operation: (1) placement; (2) layering; (3) integration. The money has to be placed (such as in financial institutions or to buy high value goods with the cash.  Then, the money has to be layered (financial operations to separate the money from the source) and finally, integration (where the money is fully integrated with the economic system.

NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR IS IT INTENDED TO BE LEGAL ADVICE.  IF THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.

Have a great and fraud-free day.

http://www.tauskvega.com

----------à>>>>>>>>>>>>>>>gene tausk