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Busted a stealth wealth magnate today
Old 06-16-2016, 11:45 PM   #1
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Busted a stealth wealth magnate today

Backstory: this week I sold my father in law's old work van. You know the kind - the big white panel van popular among self employed construction workers and pedophiles (my FIL indulged in the former, not the latter). Apparently these things sell like hotcakes because I priced it $1000-3000 above the Kelley Blue Book suggested price, received many inquiries and ended up getting $300 less than my asking price without any negotiations and after disclosing some extra problems I discovered after writing the craigslist listing.

Almost all of the buyers that came to view the van were Hispanic painters with poor English skills (presumably recent immigrants). The guy that ended up buying the van fit that category. Most of the buyers also seemed broke, like they were scratching together the cash to buy the van ("maybe my primo or hermano can lend me another $500?"). So you kind of lump all these guys into a stereotype of nearly destitute, possibly undocumented alien, Grapes of Wrath dust bowl poor, fighting for financial survival against stacked odds.

My van buyer's wife, Paula, called me yesterday to ask for an appointment to view it and she had a baby screaming in the background during the whole phone conversation. I figured they needed a van ASAP so they could do bigger jobs, carry more ladders/scaffolding, etc. The guy shows up last night, makes me a cash offer for $6500 without even test driving the van, doing nothing more than cranking it up and listening to the engine for a minute. The recently illuminated check engine light didn't even deter him ("just a misfire cause by a bad spark plug in cylinder 8 most likely" I told him). Seems sketchy but maybe his old van blew up and he really really needs a van to work and make money (he was pretty dirty and looked tired from what was probably a long day working in 90+ degree temps).

I'm stunned by such a high opening offer, and my eyes immediately show how excited I am. I gather my thoughts and stammer out "$6,600?". He says "No, how about $6,500 and I fix all the stuff wrong with the van".

He pulls out a wad of cash, hands me $1000 as a deposit (9 crisp Benjamins and an old crusty one), and we shake on the $6500 price. This felt strange, not just because we're standing in my driveway at 9:30 at night and its pitch black other than the flicker of lightning from the storm blowing through.

We agree to meet at the bank today to swap cash and title and get the deal notarized. 1 pm rolls around and we're at the bank. As we sit in the lobby, I make small talk with the guy.

"Construction, huh?"
"Yes"
"Nice. What kind?"
"Painting. And drywall."
"Oh, good. Guess that pays the bills huh?"
"Yes, it is good. I have two brothers. We work together. Work is busy now."
"So you guys are growing and need a van now huh?"
"Yes. We already have 120 guys working for us. 29 crews with 29 vans. This makes 30. We are adding crews and vans as fast as we can get them."

The guy is sitting across from me wearing paint stained jeans, dirty scuffed up sneakers, and a shirt with holes in it. He proceeds to tell me how he does drywall and painting for most of the major home builders around the rapidly growing Triangle area of NC. There aren't hardly any white construction vans on Craigslist, presumably because this guy buys all the available inventory ("inelastic demand").

Just amazing that this guy owns a medium sized construction company but you would guess he was a paycheck away from eviction and the homeless shelter from looking at him. Bravo. That's how you do stealth wealth. The screaming baby in the background while on the phone was a classic touch too.

It reminded me of this thread: Hiding Your Wealth (NOT a poll) :) about stealth wealth.

On a tangent, I've finally felt the sting of revealing my net worth on my blog. This week my grandma sent me a birthday card. I get embarrassed because she always puts a $5 bill in my birthday card. She needs the money a lot more than I do. She's almost 90; $5 used to be a lot of money back during the Depression and grandma's living on a tiny SS check.

Except this time the card had no money in it. I guess age 36 is when you grow up and get cut off.
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Old 06-17-2016, 04:19 AM   #2
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A classic example of a likely Millionaire next door. Tradesmen are some hard working and well disciplined people. Bet Paula can stretch a buck farther than most too....

Farmers are the same way. Once, while getting my lawn mower deck re-welded, I was at the local farm implement store and see this old guy in coveralls roll in- points to a medium sized combine, says 3 words " I want that" and reaches in his pockets, hands over 4 rolls of cash, every bit of $20 grand per roll, in crisp Benjamin's .. for it.
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Old 06-17-2016, 05:05 AM   #3
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Makes one wonder what that farmer's cash crop is...
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Old 06-17-2016, 05:28 AM   #4
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Two observations:

1 - there are workers, and there are owners. Your buyer was an owner. This is true for all cultures - most will just work, a few will organize and move up into ownership.

2 - Mexican culture can transfer to the States and make big bucks. They keep their culture and lifestyle, they share houses and vehicles, they keep expenses low. They then send massive amounts of money back home to family. Everything is cash. They pool purchase money between family members. One week they buy something expensive for the sister, the next for the brother, the next for the father. They are really good at saving.

I'd say your painter wasn't trying to disguise his wealth. I'd say he was just a hard worker who actually still does the work himself. True, it doesn't hurt to disguise the size of his business, but why do that if you are going to offer top dollar? He just knew that those vans were hard to come by, and he needed more.

Back in the day I sold several used mobile homes. All went to hispanics. All paid cash. The mover hooked me up with most of them. They painted them wonderful colors! They are the ultimate LBYM culture.
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Old 06-17-2016, 06:01 AM   #5
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I would be willing to be not many taxes are paid out of all of the 30 crews. He paid cash. I would also believe that 30 crews may be a exaggeration, or all 30 crews are somewhat independent and only loosely in the same company.

It is a huge red flag for a business to be in paying cash. I would doubt that he has any legitimate business. Transactions for many people that evade taxes is done in cash. He and/or his family may also be on public assistance and do not report the cash.

He did not have much money, maybe it was a negotiation tactic? That is the same way it is in Mexico. You almost need exact change even in a restaurant.

Make sure the transfers the registration to his name. You may find that it never gets transferred. In MN, not only is the buyer supposed to register the vehicle, the seller is required to report the transfer.
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Old 06-17-2016, 06:16 AM   #6
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It is a huge red flag for a business to be in paying cash. I would doubt that he has any legitimate business. Transactions for many people that evade taxes is done in cash. He and/or his family may also be on public assistance and do not report the cash.
I'll take that bet, in a heartbeat, without hesitation. I know someone who does bookkeeping and taxes for small businesses. He has quite a few clients that meet that profile. They are, in his opinion, simple, honest, hard working good businesses people who pay their taxes without complaint and are grateful for their success.
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Old 06-17-2016, 06:21 AM   #7
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Easy there, Senator. Cash is the standard transaction currency with any Craigslist transaction.
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Old 06-17-2016, 06:30 AM   #8
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I'll take that bet, in a heartbeat, without hesitation. I know someone who does bookkeeping and taxes for small businesses. He has quite a few clients that meet that profile. They are, in his opinion, simple, honest, hard working good businesses people who pay their taxes without complaint and are grateful for their success.
It's too bad it can't be verified. We both think it is easy money...

No doubt, you can run a large business legally without using any banks. You can cash your income checks at Walmart, unless they are made to a business name. If they are, they need to be deposited.

You can pay your taxes in cash, your workers in cash, the business share of payroll taxes in cash, your workers compensation in cash, etc. If you actually have a bank account, and deposit and withdraw that amount of cash on a regular basis, you will likely be on a SAR (suspicious Activity report), or be reported as a cash structure-er.

I have no problem with people running a cash business, or even paying taxes or not. If you have a business, or income that you can do it with, more power to you. That is the ultimate way to protest.
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Old 06-17-2016, 06:31 AM   #9
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Easy there, Senator. Cash is the standard transaction currency with any Craigslist transaction.
+1

Also, if this is true...
Quote:
He proceeds to tell me how he does drywall and painting for most of the major home builders around the rapidly growing Triangle area of NC.
...it is doubtful he has a cash business and is evading taxes. "Major home builders" are highly unlikely to pay a subcontractor doing that much work for them in cash.
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Old 06-17-2016, 06:33 AM   #10
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Easy there, Senator. Cash is the standard transaction currency with any Craigslist transaction.
I agree, but not as likely for a business transaction for a vehicle that is $3,000 over blue book price.

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+1

Also, if this is true......it is doubtful he has a cash business and is evading taxes. "Major home builders" are highly unlikely to pay a subcontractor doing that much work for them in cash.

Agreed. They pay him a check, in his personal name, and he cashes it at Walmart or another check cashing place.

It may still be legitimate, just unusual for most businesses. Certainly not typical for businesses with 30 crews.
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Old 06-17-2016, 06:47 AM   #11
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What a great story! Good for him, Fuego!
Drywall and painting are tough businesses and very hard work. The guys that put in our drywall were ferociously intense and very fast.
Plenty of cash businesses are on the up and up.
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Old 06-17-2016, 06:52 AM   #12
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They pay him a check, in his personal name, and he cashes it at Walmart or another check cashing place.
Supposition on your part, right? Just like this statement:
Quote:
He and/or his family may also be on public assistance and do not report the cash.
He could also be a large contributor to the local United Way. Just a supposition...
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Old 06-17-2016, 06:52 AM   #13
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Plenty of cash businesses are on the up and up.
Maybe it is because I work for a mega-corp bank, and have a lot of interactions with the anti-money laundering area, the red flags pop up all over on this one.

Or maybe because I used to deal with many people in my low-income and section 8 landlord days that had many sources of 'tax free' income, that I jump to conclusions.

I applaud people that can do it and take home more. That is the natural way of business. Major US firms do it too, except they call it an inversion.
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Old 06-17-2016, 06:56 AM   #14
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It's too bad it can't be verified. We both think it is easy money...
Easy money? Just the opposite. Very hard working people.

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No doubt, you can run a large business legally without using any banks. You can cash your income checks at Walmart, unless they are made to a business name. If they are, they need to be deposited.

You can pay your taxes in cash, your workers in cash, the business share of payroll taxes in cash, your workers compensation in cash, etc. If you actually have a bank account, and deposit and withdraw that amount of cash on a regular basis, you will likely be on a SAR (suspicious Activity report), or be reported as a cash structure-er.

I have no problem with people running a cash business, or even paying taxes or not. If you have a business, or income that you can do it with, more power to you. That is the ultimate way to protest.
No, you can't run a large business on cash. Even medium and small businesses need financial services. Self employed individuals, on the other hand, can deal with cash much more easily, if that is their choice, but it certainly is not Fuego's example in the OP.
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Old 06-17-2016, 07:01 AM   #15
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Maybe it is because I work for a mega-corp bank, and have a lot of interactions with the anti-money laundering area, the red flags pop up all over on this one.

Or maybe because I used to deal with many people in my low-income and section 8 landlord days that had many sources of 'tax free' income, that I jump to conclusions.
Senator, I think you have hit on something - your line of work causes you to be suspicious. I can think of no other logical reason you would jump to the conclusion this guy is evading taxes because he payed cash for a $6K Craigslist transaction.

I'm old enough to recall when folks here in the US were innocent until proven guilty. But then that's in a court of law, not the Court of E-R.org.
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Old 06-17-2016, 07:05 AM   #16
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Easy money? Just the opposite. Very hard working people.
yes, the bet would be easy money. We both think so.


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No, you can't run a large business on cash. Even medium and small businesses need financial services. Self employed individuals, on the other hand, can deal with cash much more easily, if that is their choice, but it certainly is not Fuego's example in the OP.
There are no laws, as far as I know, that say you cannot run a business on cash. Even Walmart could be a cash business if they wanted to be. I would say a business with 129 'employees' is at least a medium sized business. They likely would pay by cashiers check, or get a receipt signed with a name and possibly even a SSN.

This person has 129 'employees', or likely sub-contractors, to the sub-contractors. They buy a vehicle for $3000 over the blue book price, which is based on other comparable sales. No questions asked. Of course, we are just going by what he says. It may be an exaggeration, or a flat out lie.

Maybe he is a criminal that needs a van that is still registered to someone else. He will use it until the registration runs out, then discard it. Here in MN, the 'old' registration goes with the new owner until it runs out and gets renewed by the new owner.

Once again, it could be legitimate. There are a lot of red flags.
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Old 06-17-2016, 07:07 AM   #17
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Senator, I think you have hit on something - your line of work causes you to be suspicious. I can think of no other logical reason you would jump to the conclusion this guy is evading taxes because he payed cash for a $6K Craigslist transaction.

I'm old enough to recall when folks here in the US were innocent until proven guilty. But then that's in a court of law, not the Court of E-R.org.
It's more to do with a 129 employee business, paying $3,000 over blue book, for a vehicle in cash, with no questions asked.
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Old 06-17-2016, 07:10 AM   #18
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There are a lot of red flags.
Once again, I don't see how paying cash for a Craigslist transaction is a red flag. And I see nothing in FUEGO's post that indicates the guy has a cash business and is evading taxes - that's something you came up with, right?
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Old 06-17-2016, 07:11 AM   #19
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Old 06-17-2016, 07:15 AM   #20
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yes, the bet would be easy money. We both think so.
No, you may, but I don't. Just to be clear, based on my experience, the situation as described by Fuego in the OP is possible, Fuego has established credibility so it is highly likely. There is no reason to assume that there is tax evasion or any unlawful activity. That is a presumption and entirely external to the thread.
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