The recent Panama Papers leak has triggered controversy around the world as various offshore transactions and tax haven of the most powerful people were revealed. Along with this, different anomalies in various sectors were uncovered, and a recent report claims that Miami's luxury real estate boom was brought about by money laundering through condos in the state.
Miami Herald alleges that based on the Panama Papers, it was found out that the secret offshore money helped fuel Miami's luxury real estate market. Co.Design, which cited the report, said that Miami condos are used in money laundering, which in turn boosted the luxury real estate in the state.
Miami Herald's Nicholas Nehamas said that international buyers put up shell companies to purchase high-end properties in South Florida. The report discovered 19 foreign nationals that created offshore companies to buy Miami properties. Eight of those were reportedly found to be "linked to bribery, corruption, embezzlement, tax evasion or other misdeeds in their home countries."
"Money from people linked to wrongdoing abroad is helping to power the gleaming condo towers rising on South Florida's waterfront and pushing home prices far beyond what most locals can afford," Nehamas wrote.
Among the Miami luxury properties named in the report are St. Regis in Bal Harbour, Nine at Mary Brickell Village, Eden House and more. According to Nehamas, former Brazilian politician Paulo Octavio Alves Pereira, who was reportedly removed from office because of corruption, secretly paid $3 million for a condo back in 2011.
"Pereira's lawyer enlisted the Panama company Mossack Fonseca to create a shell company in the British Virgin Islands. That company then created another company in Miami to actually buy the condo. The system allowed Pereira to stay anonymous and reap financial benefits from the deal," Co.Design wrote, explaining how the transaction progressed.
The Panama Papers leak follows the US government's crackdown in money laundering through real estate properties in Miami. However, for analyst Jack McCabe, it's impossible to uncover all the properties purchased through "dirty money."
"But I think many people believe it could be a sizable portion of the new condominium market in Miami," McCabe said. "Even though developers and real-estate professionals suspect many of these units are bought with illegal funds, they realize their projects may not be successful without that support."
