Do people in general understand how incredibly rotten, rigged, and broken everything is?
Imagine buying your dream house (a figurative one only coincidentally related to the article), turning the doorknob and it comes off in your hand. You flick the light switch but no lights, and it collapses into the panel. Touch the wall, and your finger pokes through. Completely broken, disintegrated, nested with termites and other creepy crawlers. The "inspectors" told you everything was fine.
Exactly. Notice how no one in the story has clean hands, even the reporter who knew that paying below market rent in cash without a lease meant that something funny was going on. It's not that hard to avoid shady business (though in fact, I laud the reporter, and maybe even Eddie and Rosa, for squeezing a bit of blood from a stone).
Fun story; when the financial disclosures came out for the new administration, I wrote a quick script to compare Trump's LLCs to property records in NYC's ACRIS and then looked over the results by hand to see outliers. It took literally 30 minutes of my time and I found the Trumps trying to evade like $500k in taxes.
Eric Trump had used two anonymous LLCs to buy properties from his father's LLC for far below market rate. He was going to combine the units with another he already owned which actually made them more valuable than simple comps suggested. There were several opportunities to disclose the related party / family transaction but they both affirmed that it was at arm's length in the paperwork that they signed.
Propublica & The WaPo both published articles but I wasn't sure at the time so I remained anonymous publicly. Turns out that corruption doesn't matter and nobody cares that our president constantly commits financial crimes, so meh?
It’s just amusing that if I had found something similar about the president 3 years ago instead of 1 year ago, it would’ve been front page news and would’ve likely resulted in impeachment hearings. Instead.. crickets and a couple lightly read articles.
I always regarded moral relativism as a lens to judge modern culture against historical cultures and norms. It turns out that it’s much, much worse to be a ‘good’ person committing a moderately bad act as compared to a ‘bad’ person who regularly commits much worse acts. That’s a bit depressing.
Edit to clarify my point:
It was a major scandal when Tim Geithner had to pay $20k in back taxes that he owed from his time at the IMF, similarly when one of Clinton’s nominees for the AJ position withdrew when it turned out that she owed taxes on the salary she was paying her housekeeper, similarly again Spiro Agnew resigned from the office of the Vice President of the US over something like $8k in taxes on income he didn’t report (as well as some other corruption involving bribes and kickbacks). But millions of dollars of illegally shielded income depriving the treasury of hundreds of thousands of dollars in tax revenue during the campaign merits a shrug because there are so many other scandals.
Trump’s voter base would champion those actions, it’s not like it’s unknown that he’s a scumbag developer that takes every effort to cheat everyone he deals with. But the important thing is that they believe he’s on their team or one of their tribe, which allows him a lot of leeway in his behavior compared to someone on the other team or tribe, for whom even a minor indiscretion is unacceptable.
Similar mechanisms are at work when a popular athlete is caught doing something, or priests, etc. Once someone’s ego becomes invested in you, you can more easily take advantage of them and that’s an important thing to learn (and wield for yourself).
I'm not a lawyer, an accountant, or in any way a tax expert, but I'm pretty sure in the U.S. your family member would have to pay a gift tax for "fair market value" of the property. But they only have to pay this tax if they gifted more then 5.43 million in their lifetime. However, if the house is worth more then $14k they had to report it. If they did that it's not fraud, if they didn't it is, I think. Here's more info: https://www.elderlawanswers.com/giving-your-home-to-your-chi...
Yep, this is the correct answer. It's fine to sell a stranger a house for $1. It's considered a gift subject to the gift tax (if you've exceeded the lifetime limit or expect to pay estate taxes) to sell a family member or a "related party" the same property for the same price. Trump is obviously going to bequeath his children more than the estate tax limit ($11m now, the $5m was pre tax reform) and yeah it should have been reported.
The property appraises at the same price so property taxes aren't the concern, just income taxes due on the transfer.
If you read the article, the two properties were listed for sale for $245,000 and $250,000 in 1997. They are two luxury condos, literally on Central Park, in a doorman building in NYC. They were previously listed at $800k (without the ability of a unrelated party to combine them with Eric's other unit in the building). A similar unit sold for $700k in 2014.
What do you think the Fair Market Value of those condos is? More or less than the $350k that Trump sold them for? Do you think the annual real estate inflation rate in Manhattan from 1997 to 2016 is more or less than the 1.7% implied by the sale price?
Several different tax lawyers weighed in for the ProPublica piece listed above, and as well as the Washington Post piece here:
And Newsweek's treatment of the sales when it turned out Eric had applied for a permit to combine the three units to turn them into a multi-level penthouse on Central Park:
I thought the article said they were new condos?
"as the building’s developer selling the units for the first time"
It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.
I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.
> I thought the article said they were new condos? "as the building’s developer selling the units for the first time"
The building was completed 20 years ago, Trump owned them since 1997 and is selling them now for the first time. To his son. For much less than they're worth.
> It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.
Yes it is. The other considerations (Eric's ability to combine them with a unit he owns on a higher floor to create a huge penthouse) actually make the units more valuable, not less. That's why fair market value is the bar, not some vague standard. The fact that they were publicly listed for $800k before being sold for 65% less to someone who would have a higher value is certainly damning.
> I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.
Assuming the documents are digitized, would probably be pretty easy to put together a neural network that pegs "interesting" documents for review. Not that it should be used as an authoritative judgement, but it sounds like so much stuff gets through the system just because there aren't enough eyes to check everything for the obvious markers.
I didn't find it all that sad. Some people got to live in a house paying below market rate for a long time. Some dude pulled one over on some dumb banks and managed to extract a lot of money from their shareholders. Some fraudulent documents got filed, but the victims of the fraud are the owners of those failed financial institutions. I guess, if any part of it is sad, that is, since ultimately that's people's pensions and retirement funds. But that's a kind of faceless and diffuse group of entities to really feel sorry for.
It shouldn't be too hard to put a face to the victims: take a look around you. This kind of disparate fraud impacts all of the non-beneficiaries. That includes me, you, your aunt and uncle, etc. etc.
In fact, I pointed out the exact effect you mentioned: that this fraud caused diffuse losses. It's well documented that most humans have trouble feeling empathy in the face of statistical harms, so in that sense I'm just a normal person. It has nothing to do with creativity or understanding. I am comfortable with my emotional stance on this article.
Also worth noting that, broadly speaking, the same general class of folks harmed by this practice were also helped by other "bank errors" in their favor. (By that, I mean the wealthy. People who can afford to be shareholders in banks.) So it's doubly hard to feel bad, since, by and large, the wealthy have never been doing better.
Your second paragraph: you relate "general class of folks harmed by this practice" (ie everyone) with "the wealthy" ...? Can you explain that, I'm a bit confused.
Yes. Almost anyone who has enough capital to consider owning MBSen (or interest in entities that transitively own MBSen) would be in the top 20%ile of wealth, at least. And in terms of exposure, naturally, as you have more wealth, you're more exposed to wealth destruction. So the big losers were mostly members of the top 1%.
But it is my contention that the top 1% are doing quite well. You do not need to feel bad that a handful of their bets paid off poorly, any more than you should feel bad upon hearing that the eventual winner of a poker tournament lost a hand at the first table.
There is no evidence of who lost money, and it very well could have been taxpayers through the various bailouts. There is also a significant societal loss when trust is no long assumed in transactions. In the US, you are fortunate that you can trust the money you get is not counterfeit, the documents you sign are legal and have force in court, the court’s officers are not bribeable, etc.
But if you start chipping away at this trust, it’s 10x harder to earn it back, and in my opinion, once it reaches a tipping point, enough people figure out its every man for himself and gaming the system snowballs irreversibly.
Then you have a system like many poor countries, where you have no idea when you could be dragged into court and bled dry because someone disputes your claims and you don’t have the political (bribes/connections) clout to defend yourself.
It's the same thing. Warren Buffett got a great deal, Blackstone got great deals, anyone with cash at the time got better returns (equity) than taxpayers. Why shouldn't the taxpayers have been similarly rewarded?
Man, when people get inured to out and out corruption in America, and not some third world country, you know its bad.
The most likely answer though is not a lack of creativity - because its very hard to imagine the harm caused by these, relatively, arcane legal instruments.
There is a harpers article linked in the story, it should be illustrative of the clear harm being done to normal people, and how corporations made a calamitous end run around legal procedure - the same issue which is happening today (the "two-fer" paragraph).
If you need faces, realize that people were foreclosed on when they should not have been, those deeds were NEVER legally owned by the banks because the banks and their intermediaries didn't follow up on the paper work.
Yet those people got evicted, and banks claimed ownership.
An economy is largely predicated on working systems of assessment and legal redressal, more so for First World economies.
And this happens because, as you said, its hard to imagine the harm being caused.
> people were foreclosed on when they should not have been
That's not what happened here, though; the homeowner managed to avoid foreclosure despite not servicing the mortgage, precisely because the banks messed up the paperwork.
There are victims in the overall saga: people who were missold mortgages that they were never going to be able to service, at rates higher than they were entitled to, who lost their savings as a result. But they don't feature in this story.
Right, this is NOT that story, and I am not saying it is.
But that story has been written, as have pages upon pages of what happened.
Reading through it all and being well informed will likely be the realm of a few people, the best we can hope for is to be directed to other resources.
Adverse possession wouldn't wipe out a properly recorded lein. Of course, it doesn't seem that the lein was properly recorded. You could maybe sue the leinholder to provide proper documentation or abandon the lein, but you run the risk of the leinholder finding enough documentation to convince a judge, and making the lein valid and enforceable, instead of vaguely maybe not an issue.
Or, maybe you just pay someone to "find" the documents, and hope the leinholder doesn't notice or doesn't care. This case seems murky enough that even a potential recovery of $1M might not be worth it for the leinholder.
Some states allow a civil suit against all known creditors, lien-holders, or anyone else that may have an interest in the property, forcing them to show proof of their interest, then the judge makes a declarative judgment stating who owns the property, and the obligations the owner may have to the other parties.
Statutes enabling such suits are custom-tailored for removing clouds. If the lenders don't have their paperwork in order, the judge can sever the mortgage from the note, turning it into an unsecured debt.
I live in a town that's a haven for hiding illicit funds in luxury homes (cryptocurrency fraud). There is a vacancy rate of about 5% - housing costs are up greater than 5% as the vacant homes' impact has a compounding effect.
I bring this up because it highlights an underlying trend shared between the article and my anecdote: fraud conducted in supply/demand markets hurts buyers and generally legal participants.
Even if your deal is 100% legal and proper, the supply/demand dynamics have been altered by those committing the fraud and you're getting screwed.
Understatement! 5% vacancy is a signal of “housing crisis” as currently experienced in many American cities. People carping about tiny vacancy rates has become some kind of NIMBY meme: we don’t need to build new homes because look at the minute fraction of existing homes that are vacant!
I live in a city that is in crazy high demand. Prices climb 10% a year. Demand is huge. There are two vacant homes on my block. (And another one two blocks away) But not because no one wants to live there. But because of stupid practices by the banks that have left these homes in a limbo state where someone left, and it’s not on the market at all. It’s just vacant. This is so stupid. People need housing. I wish the city would just take over the homes and let people live in them. And that’s just the three homes I’m aware of. There’s probably tons more.
They set a transition length in the css so your browser is just obeying the style sheet. Doubt there is any way to override this without a browser extension.
I disagree that millions of people "lost their homes" in the crash of 2008, as the author states in the introduction. Each word in that is not quite right.
With a No Income, No Job, No Assets loan where the buyer was paying a teaser rate, or in some cases interest only (or less than interest only with negative amortization) the occupant was paying less than they would have had to pay in rent. When the property was foreclosed on, they often remained in the property for a year or more until there was a hearing. Nobody ever paid income tax on the imputed income from the free rent (the unpaid mortgage) during the foreclosure period.
And when the loan was called in, nobody was ever made to pay income tax on the forgiven debt, even though the law requires that they do. The government didn't go after people because it would be an unpopular move.
Most if not all of the people unable to pay their no-verification mortgages actually did quite well. They lived in a big house for a couple of years for less than the cost of rent.
The people who lost were the foolish investors who invested in these terrible loans, the people whose pension funds invested in then, and most of all the True Taxpayers (those 5% of people who may more in taxes than they take in services and entitlements) who paid for all of this and are still paying.
The outline.com is almost a very readable site. But then I zoomed in slightly to make the text actually legible, and it fell apart. I could no longer scroll, and eventually some random ads appeared and blocked all access.
We really should have locked up every single banker on Wall Street after 2007. The meme of private property has caused so much harm in the world. We have messes like this house sitting, rotting, festering, on society. We should excise the cancer of capitalism before it has fully matastisized and killed us all.
Replaced by what exactly? A free market is the natural way to allocate scarce resources. It is easy to say "allocate to those in need first" but who decides? Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism.
There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
> A free market is the natural way to allocate scarce resources
Capitalism didn't invent the market, trade predates agriculture. And there's hardly anything natural about a system where every individual is incentivized to screw over others.
>It is easy to say "allocate to those in need first" but who decides
There's _literally_ centuries of thought put into how to allocate resources outside of capitalism. I can't explain them in sufficient detail in a HN comments section, but you can start with the Conquest of Bread.
>Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism.
Success by what measure? And defined by who? Because capitalism's measures of "success" are often flawed and often more evident of its failings than its success.
And if you're going off of metrics like life expectancy, Cuba has the USA (and many other capitalist countries) beat.
And alternative systems have largely been successful, especially when you consider how actively capitalist forces sabotaged them. The USSR pre and post Stalin was extremely prosperous and the fall of the USSR has only left piles of human missery. Don't forget the US actively prevented the Communist Party from winning elections in former Soviet Bloc countries.
>There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
Those who can produce profit make money. That is often not cheaper (when you account for externalities) or better quality.
I thought it was obvious: Every individual organism in the natural ecological system, often has a strong incentive to screw over the others.
This is inherent in a universe where there is a limited amount of matter and energy, inhabited by organisms who can grow in population without limit.
Once all the matter and energy are occupied by organisms, the only way an organism can increase its population is by screwing over other organisms for their matter/energy. This is the rule of nature, but not just "trees and animals"-type nature. It's encoded into the very laws of physics which say the universe is limited, but organisms can replicate without limit.
This was also the rule of humanity up until the Industrial Revolution. It's just that a lot of people have forgotten it since then.
And much of those things are part of, and often actively caused by, capitalism, including war and starvation.
The legal battle over some obscure bit of private property is not the worst bit of capitalism, I didn't say it was. But it's an absurdly obvious example of how capitalism is a failed system.
Edit: it looks like you've been using this site primarily for that. That's an abuse of HN and actually something we ban accounts for. Please review the guidelines and use HN as intended from now on.
So he stayed for years in a below market house then received a nice wad of cash for the key. All courtesy of the US taxpayer who ended up on the hook for the massive Wall Street bankruptcies that made walking away from a $1 million dollar property a thing.
It reads like he was quite ready to undercut Rosa and Adrian and take up payments with the original lender, only that he was unable to untangle the mess, and Adrian beat him to the punch by essentially forging some documents.
Apologies, but I can't let this go: "Adrian sold another property around this time, a big house in Flatbush with a driveway and a copula for $100,000 to another LLC."
Pretty sure that house had a cupola[0], not a copula[1].
If you ever bought real estate in the U.S. you probably paid title insurance. This is insurance that covers the value of the loan in the case faulty or fradulent documents are found making the chain of ownership invalid.
It costs like 1/2 of a percent of the property value.
That is how YOU pay because of shenanigans like in this article.
How do you prove the absence of some competing claim?
Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty.
(Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
Among other things, this is what the common law principle of "Adverse Possession"[0] covers: The owner of a property has a minimal duty to enforce their claim on it, otherwise the claim is forfeited. If someone showed up at your house with documents that showed that a title transfer from a century ago was invalid and they were the rightful owner of your land, you could tell them to piss off just because they hadn't tried to enforce the claim previously.
Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules.
I would suggest looking into buying a small piece of land on the edge of town and request a title search (get a list of previous owners). There you will see the mess that currently exists. We can create the most efficient process in the world with great technology, but it will take a long time before we can have confidence that all of the past records are recorded. If your title company fails to notice a deed from 1912...
That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
Yes, it would be, and that's what they have everywhere else.
Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.
You are wrong in so many ways it's not even worth going into. Please do some research before commenting on topics in which you clearly have no experience.
>Why don't we have a proof of custody (chain of ownership)
In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse.
The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?)
Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1])
You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs".
In the UK the banks and property agencies are moving away from title deeds in a process called 'dematerialisation'
My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.
Paper, if recognised legally means you have the responsibility to hold and present it as proof. You could keep the paper in a safety deposit. You can make certified copies.
If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!
Digital + govt agencies... high likelihood of screw ups. I still think blockchain makes sense here. Distributed verifiable record that doesn't depend on any single entity to do things right or be honest. That is a perfect fit for bc.
What kind of proof of custody do you think is impossible to fabricate? The fact that title insurance is quite cheap is demonstration that the form of proof we are already using is already very hard to effectively fabricate. There is a huge incentive to fabricate false claims on property, so if it were easy, people would be doing it more often.
When I bought the current house I live in read the title insurance policy I was offered as well as that of the seller. Turns out both policies offered protection in perpetuity. Which means there's no need for me to buy the insurance; if someone challenges my title I can always sue the seller's insurance (even decades later after the seller has died) and make them take care of it. So obviously I didn't want to buy the insurance as I was already insured!
Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them.
I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.
This builds on the Persons with Significant Control rules for UK companies. In theory the rules for companies registered with Companies House require that they disclose human individuals who ultimately exercise significant control. For a public company there won't be anybody like that (individual shareholders aren't allowed to own enough of a public company to trigger "significant control"), but for private companies there's often just one or two real humans behind it, even if they own or control it via a trust fund with shares in an off-shore corporation that has special rights in a different off-shore corporation.
In practice Persons with Significant Control is not adequately enforced. Lawyers routinely write in things that aren't people in the PSCs field (e.g foreign company names) for a company and there haven't been any negative consequences for that.
I believe a willing government can and should enforce these rules by concluding that if, in fact, this company has assets but it's controlled by non-human entities, well then the government will seize its assets and add them to the treasury. No humans will be deprived of any assets by doing this so that's fine. When invariably an actual human squawks that their stuff is being taken we've found the actual Persons with Significant Control, they're welcome to pay some token fee, say, £100 000 for the wasted time and effort, and fix their records or we'll keep their stuff.
Are deeds in the US still physical documents? They used to be in the UK, but not for a few decades (they are now electronic records held by the Land Registry).
We have a similar system here in The Netherlands - the documents are stored electronically by the Land Registry (i.e. a semi-government organisation).
From my discussions with people who work there I understand that our countries are a few decades ahead of most other countries, including those on the other side of the Atlantic.
Yes, the US still uses physical deeds. The exact rules vary by state but as with lots of other things that are broken in the US, some people get very rich off this being broken and they're determined to keep it broken.
Note that the UK has several registries, since it is very old and the registries cover the historical countries which make up the UK. "The Land Registry" is actually just a land registry for England and Wales, and dates back to 1862. For most of that history the situation has been that registration was entirely voluntary, but registrations trump other paperwork. So if you have a Land Registry entry which says you own this field, but I have a piece of paper that says I own it, tough, you own the field. These days most land will have been registered, transfers for money that aren't registered are now void in England, if you pay me $5M for the paper deed for a farm in Cornwall, but don't register in the process that's a waste of the $5M since I still own the farm afterwards. This ensures you pay the taxes ("stamp duty") owed on land purchases, if you don't pay you can't register, and if you don't register you don't actually own the land.
The US doesn't have deeds. Instead, there are 51 different state policies. And many of those states don't have a state-wide policy, but instead operate county-by-county. So SOME of those support electronic records while others don't.
That would be truly remarkable, given that there are only 50 states (the District of Columbia is not a state). I don't know if each U.S. federal polity is governed by different title rules, but it wouldn't surprise me, since areas such as American Samoa, Puerto Rico & Washington, D.C. have radically different histories: American Samoa was ceded by her native rulers; Puerto Rico was conquered from Spain & the District of Columbia was ceded by Maryland, ultimately from land granted by a royal English charter.
I think it's important to note because the United States are more complex than commonly understood.
If you REALLY want to be picky, there are 48 states, 2 commonwealths, and the District of Columbia, not to mention a wide variety of territories and other regions.
But that's just naming. My point is that these policies are set at the "state" level (even for things that aren't states) or sometimes lower than that.
I love stuff like this, I always assumed everyone lived normal lives and played by the rules but there is so much that is the wild west still.
In my friends building the largest penthouse's tenants were paying $6k/mo then the Chinese (mainland) owner disappeared - hasn't been seen for a few years now. Someone bought the tax lien so I guess they will get a huge condo for some token amount. (No mortgage)
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[ 4.7 ms ] story [ 175 ms ] threadImagine buying your dream house (a figurative one only coincidentally related to the article), turning the doorknob and it comes off in your hand. You flick the light switch but no lights, and it collapses into the panel. Touch the wall, and your finger pokes through. Completely broken, disintegrated, nested with termites and other creepy crawlers. The "inspectors" told you everything was fine.
That is our world, and this life.
Eric Trump had used two anonymous LLCs to buy properties from his father's LLC for far below market rate. He was going to combine the units with another he already owned which actually made them more valuable than simple comps suggested. There were several opportunities to disclose the related party / family transaction but they both affirmed that it was at arm's length in the paperwork that they signed.
Propublica & The WaPo both published articles but I wasn't sure at the time so I remained anonymous publicly. Turns out that corruption doesn't matter and nobody cares that our president constantly commits financial crimes, so meh?
The propublica article: https://www.propublica.org/article/heres-how-trump-transferr...
I always regarded moral relativism as a lens to judge modern culture against historical cultures and norms. It turns out that it’s much, much worse to be a ‘good’ person committing a moderately bad act as compared to a ‘bad’ person who regularly commits much worse acts. That’s a bit depressing.
Edit to clarify my point:
It was a major scandal when Tim Geithner had to pay $20k in back taxes that he owed from his time at the IMF, similarly when one of Clinton’s nominees for the AJ position withdrew when it turned out that she owed taxes on the salary she was paying her housekeeper, similarly again Spiro Agnew resigned from the office of the Vice President of the US over something like $8k in taxes on income he didn’t report (as well as some other corruption involving bribes and kickbacks). But millions of dollars of illegally shielded income depriving the treasury of hundreds of thousands of dollars in tax revenue during the campaign merits a shrug because there are so many other scandals.
Similar mechanisms are at work when a popular athlete is caught doing something, or priests, etc. Once someone’s ego becomes invested in you, you can more easily take advantage of them and that’s an important thing to learn (and wield for yourself).
Google “Trump empty jewlery box” ;)
I had a family member sell me property for $1 (it was a gift). That alone isn’t fraud.
And in terms of taxes, usually far below market prices and taxed at an appraised value so the govt still gets their dollars.
The property appraises at the same price so property taxes aren't the concern, just income taxes due on the transfer.
If you read the article, the two properties were listed for sale for $245,000 and $250,000 in 1997. They are two luxury condos, literally on Central Park, in a doorman building in NYC. They were previously listed at $800k (without the ability of a unrelated party to combine them with Eric's other unit in the building). A similar unit sold for $700k in 2014.
What do you think the Fair Market Value of those condos is? More or less than the $350k that Trump sold them for? Do you think the annual real estate inflation rate in Manhattan from 1997 to 2016 is more or less than the 1.7% implied by the sale price?
Several different tax lawyers weighed in for the ProPublica piece listed above, and as well as the Washington Post piece here:
https://www.washingtonpost.com/outlook/this-trump-real-estat...
And Newsweek's treatment of the sales when it turned out Eric had applied for a permit to combine the three units to turn them into a multi-level penthouse on Central Park:
https://www.newsweek.com/eric-trump-making-penthouse-real-es...
Would you honestly be surprised if Trump was engaging in low-grade real estate tax fraud to benefit his family?
It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.
I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.
The building was completed 20 years ago, Trump owned them since 1997 and is selling them now for the first time. To his son. For much less than they're worth.
> It is not unusual for real estate to sell well below list prices. Further, we don't know what other factors may have played into the price, as many real estate deals involve considerations other than price.
Yes it is. The other considerations (Eric's ability to combine them with a unit he owns on a higher floor to create a huge penthouse) actually make the units more valuable, not less. That's why fair market value is the bar, not some vague standard. The fact that they were publicly listed for $800k before being sold for 65% less to someone who would have a higher value is certainly damning.
> I have no idea whether or not fraud was involved, but there is no smoking gun here as you suggest.
Several prominent tax lawyers disagree. Why on earth would you give him the benefit of the doubt on this? His entire real estate empire was built on low-grade tax fraud: https://www.newsweek.com/trump-tax-scam-maralago-golf-756188
I agree it was fascinating, though.
It shouldn't be too hard to put a face to the victims: take a look around you. This kind of disparate fraud impacts all of the non-beneficiaries. That includes me, you, your aunt and uncle, etc. etc.
Also worth noting that, broadly speaking, the same general class of folks harmed by this practice were also helped by other "bank errors" in their favor. (By that, I mean the wealthy. People who can afford to be shareholders in banks.) So it's doubly hard to feel bad, since, by and large, the wealthy have never been doing better.
Your second paragraph: you relate "general class of folks harmed by this practice" (ie everyone) with "the wealthy" ...? Can you explain that, I'm a bit confused.
But it is my contention that the top 1% are doing quite well. You do not need to feel bad that a handful of their bets paid off poorly, any more than you should feel bad upon hearing that the eventual winner of a poker tournament lost a hand at the first table.
But if you start chipping away at this trust, it’s 10x harder to earn it back, and in my opinion, once it reaches a tipping point, enough people figure out its every man for himself and gaming the system snowballs irreversibly.
Then you have a system like many poor countries, where you have no idea when you could be dragged into court and bled dry because someone disputes your claims and you don’t have the political (bribes/connections) clout to defend yourself.
The taxpayers did not lose money in the bailouts . . . they didn't get acceptable risk-adjusted returns, but they didn't lose money.
The most likely answer though is not a lack of creativity - because its very hard to imagine the harm caused by these, relatively, arcane legal instruments.
There is a harpers article linked in the story, it should be illustrative of the clear harm being done to normal people, and how corporations made a calamitous end run around legal procedure - the same issue which is happening today (the "two-fer" paragraph).
If you need faces, realize that people were foreclosed on when they should not have been, those deeds were NEVER legally owned by the banks because the banks and their intermediaries didn't follow up on the paper work.
Yet those people got evicted, and banks claimed ownership.
An economy is largely predicated on working systems of assessment and legal redressal, more so for First World economies.
And this happens because, as you said, its hard to imagine the harm being caused.
That's not what happened here, though; the homeowner managed to avoid foreclosure despite not servicing the mortgage, precisely because the banks messed up the paperwork.
There are victims in the overall saga: people who were missold mortgages that they were never going to be able to service, at rates higher than they were entitled to, who lost their savings as a result. But they don't feature in this story.
But that story has been written, as have pages upon pages of what happened.
Reading through it all and being well informed will likely be the realm of a few people, the best we can hope for is to be directed to other resources.
You don't need to be wealthy to have a financial interest in the financial sector. You need only to have a retirement plan.
Or, maybe you just pay someone to "find" the documents, and hope the leinholder doesn't notice or doesn't care. This case seems murky enough that even a potential recovery of $1M might not be worth it for the leinholder.
The reason being that that posession is not “adverse” in the sense that the person was living there with permission in exchange for rent.
Adverse possession, generally, comes into play with property line disputes, and sometimes with genuine long term squatter situations.
A core and often overlooked element however is that a license or permission to use the property means you aren’t possessing it “adversely”.
Statutes enabling such suits are custom-tailored for removing clouds. If the lenders don't have their paperwork in order, the judge can sever the mortgage from the note, turning it into an unsecured debt.
I bring this up because it highlights an underlying trend shared between the article and my anecdote: fraud conducted in supply/demand markets hurts buyers and generally legal participants.
Even if your deal is 100% legal and proper, the supply/demand dynamics have been altered by those committing the fraud and you're getting screwed.
I have javascript completely turned off. Is there something else that governs this behavior? Because I want to block it too.
ui-path-scroll .post__article{-webkit-transition:height 1s;transition:height 1s}
They set a transition length in the css so your browser is just obeying the style sheet. Doubt there is any way to override this without a browser extension.
With a No Income, No Job, No Assets loan where the buyer was paying a teaser rate, or in some cases interest only (or less than interest only with negative amortization) the occupant was paying less than they would have had to pay in rent. When the property was foreclosed on, they often remained in the property for a year or more until there was a hearing. Nobody ever paid income tax on the imputed income from the free rent (the unpaid mortgage) during the foreclosure period.
And when the loan was called in, nobody was ever made to pay income tax on the forgiven debt, even though the law requires that they do. The government didn't go after people because it would be an unpopular move.
Most if not all of the people unable to pay their no-verification mortgages actually did quite well. They lived in a big house for a couple of years for less than the cost of rent.
The people who lost were the foolish investors who invested in these terrible loans, the people whose pension funds invested in then, and most of all the True Taxpayers (those 5% of people who may more in taxes than they take in services and entitlements) who paid for all of this and are still paying.
It even features keyboard scrolling (in Safari on macOS) which theoutline.com doesn't do.
There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
Capitalism didn't invent the market, trade predates agriculture. And there's hardly anything natural about a system where every individual is incentivized to screw over others.
>It is easy to say "allocate to those in need first" but who decides
There's _literally_ centuries of thought put into how to allocate resources outside of capitalism. I can't explain them in sufficient detail in a HN comments section, but you can start with the Conquest of Bread.
>Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism.
Success by what measure? And defined by who? Because capitalism's measures of "success" are often flawed and often more evident of its failings than its success.
And if you're going off of metrics like life expectancy, Cuba has the USA (and many other capitalist countries) beat.
And alternative systems have largely been successful, especially when you consider how actively capitalist forces sabotaged them. The USSR pre and post Stalin was extremely prosperous and the fall of the USSR has only left piles of human missery. Don't forget the US actively prevented the Communist Party from winning elections in former Soviet Bloc countries.
>There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
Those who can produce profit make money. That is often not cheaper (when you account for externalities) or better quality.
Watch a nature documentary some time. One with predators, or diseases, or parasites.
> Watch a nature documentary some time. One with predators, or diseases, or parasites.
Isn't predation typically cross-species? What exactly is your point here?
I thought it was obvious: Every individual organism in the natural ecological system, often has a strong incentive to screw over the others.
This is inherent in a universe where there is a limited amount of matter and energy, inhabited by organisms who can grow in population without limit.
Once all the matter and energy are occupied by organisms, the only way an organism can increase its population is by screwing over other organisms for their matter/energy. This is the rule of nature, but not just "trees and animals"-type nature. It's encoded into the very laws of physics which say the universe is limited, but organisms can replicate without limit.
This was also the rule of humanity up until the Industrial Revolution. It's just that a lot of people have forgotten it since then.
If imperfect utilization of resources is is a cancer, what words do you reserve for war, genocide, or starvation?
Many many many things worse in this world than a confusing legal battle over an old home. No systems are perfect, but free markets sure are pragmatic!
The legal battle over some obscure bit of private property is not the worst bit of capitalism, I didn't say it was. But it's an absurdly obvious example of how capitalism is a failed system.
https://news.ycombinator.com/newsguidelines.html
Edit: it looks like you've been using this site primarily for that. That's an abuse of HN and actually something we ban accounts for. Please review the guidelines and use HN as intended from now on.
In stark contrast, one should walk into an econ forum, and see how people discuss the economy.
Its about jobs, or labor figures, and compliance and regulation are things which just "work", or are to be avoided due to additional costs.
I've come to the conclusion that
1) Economics is currently only as usfeul as the soundbite it generates
2) Economists are people with excellent working compasses, when people are looking for where they lost their keys
It reads like he was quite ready to undercut Rosa and Adrian and take up payments with the original lender, only that he was unable to untangle the mess, and Adrian beat him to the punch by essentially forging some documents.
Pretty sure that house had a cupola[0], not a copula[1].
[0] https://en.wikipedia.org/wiki/Cupola [1] https://en.wikipedia.org/wiki/Copula
It costs like 1/2 of a percent of the property value.
That is how YOU pay because of shenanigans like in this article.
Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty.
(Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules.
[0] https://en.wikipedia.org/wiki/Adverse_possession
That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
Basically because the relevant governments are too incompetent to organize that, and/or are lobbied by title insurance companies to perpetuate the status quo.
However, mistakes or fraud can happen. Surveys can be wrong and not noticed. Someone can steal someone’s identity.
In the USA and most developed countries, we already do have a "proof of a chain of ownership". And, we've had it for hundreds of years. For example, the title deeds and transfer of title documents saved at the county courthouse.
The issue is whether the so-called "proof" is : authentic or forged, and/or conflicting with other prior claims. (E.g, is the title transfer document faked? Are the signatures from the real owners? Was the previous person who transferred the title the actual rightful owner?)
Ultimately, "proof" of ownership is a social consensus that sorts out the claims and converges on agreement of who owns what. (I made a previous comment about this.[1])
You might notice that "proof" is recursive: if we "prove" that the "proof" was valid, how do we know that proof is valid? Well, things like "title insurance" and/or a court case with a judge/jury to render a final judgement is the process to break that infinite cycle of "proof of proofs".
[1] https://news.ycombinator.com/item?id=14553867
My deeds, dating back to 1949, no longer exist. They were shredded by Nationwide. I have a certified copy but they are considered of academic interest and 'proof of ownership' is now recorded by a database row. Which is terrifying, as a simple clerical error or a system failure could ruin so many lives.
If proof is electronic, you have no recourse if computer error causes a dispute, since you do not hold any proof yourself to present as evidence!
Well, very long faces all around the table. Title insurances pretty much have a monopoly in California -- they do most of the title transfers (which they charge for) and refuse to do so if you don't buy insurance from them.
I read up on it and technically I can transfer title without them, and should have no trouble finding a lawyer to help me...but all the folks involved live locally and it doesn't pay to piss them off (I later bought more property around town). So...I paid.
(Article says "UK" but the UK has two separate property law regimes and title registries, so they may not include Scotland)
https://www.gov.scot/Publications/2018/06/2736/355007
Finding out who actually owns anything has been recognised by many people as being a problem for a while:
http://www.andywightman.com/archives/category/who-owns-scotl...
Scotland has very old and very weird landownership laws.
In practice Persons with Significant Control is not adequately enforced. Lawyers routinely write in things that aren't people in the PSCs field (e.g foreign company names) for a company and there haven't been any negative consequences for that.
I believe a willing government can and should enforce these rules by concluding that if, in fact, this company has assets but it's controlled by non-human entities, well then the government will seize its assets and add them to the treasury. No humans will be deprived of any assets by doing this so that's fine. When invariably an actual human squawks that their stuff is being taken we've found the actual Persons with Significant Control, they're welcome to pay some token fee, say, £100 000 for the wasted time and effort, and fix their records or we'll keep their stuff.
From my discussions with people who work there I understand that our countries are a few decades ahead of most other countries, including those on the other side of the Atlantic.
Note that the UK has several registries, since it is very old and the registries cover the historical countries which make up the UK. "The Land Registry" is actually just a land registry for England and Wales, and dates back to 1862. For most of that history the situation has been that registration was entirely voluntary, but registrations trump other paperwork. So if you have a Land Registry entry which says you own this field, but I have a piece of paper that says I own it, tough, you own the field. These days most land will have been registered, transfers for money that aren't registered are now void in England, if you pay me $5M for the paper deed for a farm in Cornwall, but don't register in the process that's a waste of the $5M since I still own the farm afterwards. This ensures you pay the taxes ("stamp duty") owed on land purchases, if you don't pay you can't register, and if you don't register you don't actually own the land.
[ Edited: Fixed unclear example ]
That would be truly remarkable, given that there are only 50 states (the District of Columbia is not a state). I don't know if each U.S. federal polity is governed by different title rules, but it wouldn't surprise me, since areas such as American Samoa, Puerto Rico & Washington, D.C. have radically different histories: American Samoa was ceded by her native rulers; Puerto Rico was conquered from Spain & the District of Columbia was ceded by Maryland, ultimately from land granted by a royal English charter.
I think it's important to note because the United States are more complex than commonly understood.
Many people refer to Australia as "the 52nd state".
But that's just naming. My point is that these policies are set at the "state" level (even for things that aren't states) or sometimes lower than that.
In my friends building the largest penthouse's tenants were paying $6k/mo then the Chinese (mainland) owner disappeared - hasn't been seen for a few years now. Someone bought the tax lien so I guess they will get a huge condo for some token amount. (No mortgage)