From what I read, part of the reason they did so much e-commerce was that they were touting the “college” as a tech incubator, comparing their funding model to Stanford’s or Cornell’s. That’s basically the cover story they use in the article.
They’d find random clowns who were members of the cult to act as “founders”, form a bunch of LLCs in which they were majority (as in 80%+) shareholders, buy struggling brick-and-mortar businesses like the bookstore or the furniture company, make 'em into disruptive/innovative tech businesses tied to the incubator, and then use them to wash the money.
The diversity of products and businesses made it easier for them to “spend” the money on a variety of legit-seeming but grossly overpriced supply and equipment expenses (apparently per the terms of loans and investments) and then pump it into real estate for the “college” and into their own pockets.
I would assume they hoped to eventually pay back the loans from monies realised from the new campus they were trying to purchase in upstate NY and who knows what other grifts that required them to buy real estate. Either that or, emulating the Con-Man-in-Chief, declare bankruptcy if the scheme collapsed and walk away with at least some of the ill-gotten gains.
One of the many interesting and weird aspects of the story is how the on-line business morphed into brick-and-mortar “big store” fronts. It’s like the laundry took on a life of its own and pushed its way into meatspace because, by the demands of global trade, all that off-brand crap merch needed to find a home in America.
Hmm, yeah, they just keep inventing new businesses and addresses to keep a several-month’s-lead ahead of any legal investigations, and to make it incredibly complicated. If you are a single sitting target, you’re easier to investigate. So yeah – ongoing illegal shit going on!
And why locate them in NYC, instead of say, Tulsa where the rents are cheaper? To me, I’m thinking this is more like multi-level marketing scams, but with physical stores…All the graduates starting these scammy businesses may well be victims…
As I mentioned above, it’s to help hide the dirty cash in with legitimate money. A bunch of cheap crap resellers doing thousands of small money orders is a lot less attention grabbing than a company selling obsolete industrial fittings doing the same numbers. That’s why in a brick & mortar case you’re talking about things like strip clubs, laundromats and gyms – things that are cash business and/or you have a believable excuse as to how your apparently empty business can have these kinds of cashflow coming in (eh, so the gym looks empty. When was the last time you took full advantage of your membership, before you just stopped showing up?). Cheap crap and marked up office supplies can look far more legit than anything obscure, because there are so many sellers that it’s hard to zero in on one to investigate. Essentially, you’re using a ton of noise to hide the signal. As for drop shipping, well, it’s easy to walk away and spin up something else when you don’t have inventory that can trace back to you.
I work in ecommerce for a well known computer company and the mish-mash of names is common in the Chinese “gray market”. Its not uncommon to have “resellers” - we’ll discount something and three or four people will buy thousands of them and they all ship to a warehouse at a port or airport. However sometimes we’ll put on sale a popular laptop but impose a cart limit and purchase cap that is email-based. In those cases the Chinese gray market kicks in and we get flooded with individual purchases to apartments all over the US, from little towns in Kansas to NYC. But all the orders have a common theme on address line 2 that doesn’t get used for the physical address - they put in some sort of code like “jjjddzzz” that prints on the label. Then we ship all the stuff to all these thousands of individual addresses and somehow I assume they get consolidated into a larger network.
Seems very clearly some money laundering cult activity. It seems like a combination of Scientology and North Korea. Scientology has all these organizations that seem to be independent but if you scratch the surface they are all connected and the people that work at them are indoctrinated into the church and wholely dependent on it. (Listen to the Oh No Ross and Carrie podcast series on Scientology to see how it works) and North Korea has those empty stores that are just there to “impress” outsiders. “See, we are a perfectly legitimate business!”
IIRC HSBC were charging 20% for totally legitimate banking services which were later found to be money laundering. I can’t find the article that specified that though.
Based on the activity that NY went after them for in re: the media outlets, it looks like they were loans that the Xtianist grifters wanted to re-direct from their intended purposes (as represented to the lender) to speculative real estate deals with some of it probably ending up in their pockets as a “commission.” Laundering in service to fraud.
My first guess there would be money laundering or some kind of secretive cash-transfer (I recall in the early days of ebay seeing someone sell some common LP for several thousand dollars as a buy-it-now and wonder about what was going on).
On the Amazon Marketplace a lot of sellers use programs to always be jockying for the best price, in some cases that means the program raises the price, I believe when only two sellers have the same item and some kind of “rarity” code kicks in, so a rare book get’s priced up to some crazy amount when the two bots are trying to get the higher price for their last copy.
Pretty sure BB also did one where it was the opposite, where the bots waged a pricing war against each other by increasing the price but i can’t find it.
Tried googling Boingboing and keywords like automated pricing, pricing algorithm, bots wage pricing war, etc. and drawing blanks beyond the one i linked to already. Oh well, i know it exists but i don’t know how to look for it
I don’t think this would fit into Scientology’s operations. Thanks to their charity status, they don’t need to launder much, except to shift money to off-shore funds. Individual Scientologists, perhaps, but I don’t think any of their whale members are in this line, also they don’t have any presence in China.
Yeah but it also makes me think they could be pumping tons of money into these businesses hoping for an eventual payoff, basically using church money as venture capital.
