White Paper- pomegranate

1a. There are so many mattress stores, but never anyone inside, proving it to be one big money laundering scam, there is no way there is such high demand for mattresses.

1b. There have been many cases of money laundering in the U.S. in recent years. The idea that mattress stores are a big money laundering scam cannot be left unnoticed. Mattresses are only bought 3-4 times in our entire lives, so there cannot be that much demand.

2.

What Is Money Laundering?  https://legaldictionary.net/money-laundering/

                Money Laundering is the act of disguising the source or true nature of money obtained through illegal means. Criminals try to disguise the identity, original ownership, and destination of money they collect through illegal action. Much money laundering is done through “drug trafficking” or illegal gambling. When this happens, the money is considered “dirty.” This simply means that it seems suspicious if it directly deposited into a bank or any other “financial institution.” In simpler words, the money must become “clean” to not be considered money laundering. With that being said, the money has to go through various “legitimate businesses” before depositing it. Money laundering is specifically used to hide illegally collected money. In the United States alone, it is estimated that, “at least $300 billion is laundered each year.” More than 81,000 people are convicted for some level of money laundering. The steps to money laundering are actually quite simple. First, you must try and collect the money, obviously. You have to put the money through different transactions without putting it in a bank, and return it to an accepting source so that the money seems legitimate. Ways most criminals avoid it is if you have large amounts of money, and you don’t want it to be detected, you deposit it in small amounts so it is not suspicious when a large amount of money is deposited into your account.

Why Are There So Many Mattress Stores in America?  https://www.psychologytoday.com/us/blog/the-science-behind-behavior/201509/why-are-there-so-many-mattress-stores-in-america

                A student that went from Europe to Houston claimed that there were more mattress stores than Starbucks stores. In Houston alone, there were 135 Starbucks stores, so if there were more than 135 Starbucks stores in Houston, just imagine the number of mattress stores. The student was left to question why there were so many mattress stores. Was it the people, the quality of the mattresses, or something entirely different? Most of a person’s life is spent in their bed, so when picking a mattress once every decade, it is a long, thought out process. When just moving into a new house, chances are likely that you will buy a new bed with your new house. When you raise a family, there is more mattresses you have to purchase. The ongoing question, however, is often are you realistically going to buy a new mattress? In my opinion, there is no way that there could be this much demand on mattresses. There are a lot of mattress stores, yes, but we must also keep in mind that there are too many stores that along with many other furniture, sell mattresses as well, even retail stores. How could so many stores be open for something we only buy maybe 3 or 4 times within our entire lives.


DSH: Did you follow up on this clue that there could be good stuff in the Planet Money podcast?:

Mattress


 

The Top Money Laundering Cases in Recent Times https://www.allsectech.com/the-top-money-laundering-cases-in-recent-times/

                There have been many recent cases of money laundering that have been detected in the U.S. Some of the most recent, big name banks that have been involved in some cases. HSBC, in total, laundered a total of about $8 billion. They offered banking to clients in Saudi Arabia even though there were known terrorist links. They cut off certain links to discontinue any transaction to North Korea or Iran. BSSC laundered a total of $23 billion when they secretly changed their name on the black market for a way to increase their income. The bank had to close without finishing the investigation, but they still owed a pretty big fine. One of the biggest global banks, Standard Chartered laundered a total of $265 billion, this is due to “lack of oversight and lack of checks in place.” Lastly, in 2010, and this was one of the biggest launders of the time, Wachovia laundered a total of $390 million by drug cartels in Mexico through the bank branches. If banks are laundering this much money and it obviously takes a while for them to get caught, what about all the other non-chain businesses, imagine those and how much money they could be laundering and they’re getting away with it.

Why Are There So Many Mattress Stores? https://www.chicagotribune.com/business/ct-chicago-mattress-stores-0717-biz-20160715-story.html

                Melissa Marik was going through her town when she spotted a mattress store, “Mattress Firm”, and a few blocks down, there was yet another. What is the reason? She states that she doesn’t see many people, if any, inside. I, too, feel as though there are so many stores for so little customers. The general manager of one of the stores did agree that there may be too many of these chain stores, and still we ask the question, for what reason? In the Houston area, there is said to be a store for every 50,000 people. After making calculations, there should be only 200. With that being said, there is a total of 235 stores in the Houston area. Even still, 200 is still a lot of stores to buy a product that is only bought, realistically, “once in a decade.” In 2015, Mattress Firm built a total revenue of about $11.5 million. Where is all of this money going? Could they really make all of those sales if they could go days without actually even having customers? It really makes you question where all of this money is coming from, and how it’s being made.

Anti-Money Laundering https://www.investopedia.com/terms/a/aml.asp

                In short terms, anti-money laundering is the act of preventing the generation of money through illegal activity. However, to my understanding, anti-money laundering is performed using illegal actions. This is so you can see if there are any illegal transactions, and prevent them. Basically, you could say that anyone who is part of the anti-money laundering team is ultimately a snitch. Anti- money laundering goes over and prevents the acts of: market manipulation, trade of illegal goods, corruption of public funds, and tax evasion. One of the most common ways to money launder is to open a cash-based business owned by a criminal organization. To obey “AML” laws, the banks must report if there is a transaction of $10,000 or more. This can lower the number of embezzlement cases. One of the AML organizations is Financial Action Task Force (FATF). In 1989, the group was created and set standards to efficiently and effectively stop money laundering and promote these standards.

3. Topics for smaller papers

– The number of mattress stores compared to overall sales

– The opening and running of FATF

– Money laundering cases in the U.S.

– Recent cases in money laundering in terms of banks

4. Progress of my paper:

                Truthfully, I have not done much to prepare to write my paper, if anything. This is the most I have done and the furthest I have gotten, but I should probably get looking into it a bit more because this is going to be due before I know it and I do not want to save this for the last minute.

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1 Response to White Paper- pomegranate

  1. davidbdale says:

    I see that you’re just getting started, Pomegranate, which is temporarily OK as long as you recognize the urgency to get a move on.

    I did a Google Scholar search for you and will post a screencap of the top of the page showing the terminology and the number of results.

    GOOGLE SEARCH SCREENCAP

    There’s not much on Mattress Stores at Google Scholar (you won’t find much academic source material for such a specific retail segment), but there’s plenty of scholarly work on money laundering and retail stores. Several angles not directly related to mattresses might be worth pursuing. For example, if retail stores doing certain kinds of business are more likely to be laundering, then a Categorical Argument to determine whether or not mattress stores belong to that category would be worthwhile.

    Maybe when you follow some leads to “money laundering,” “bankruptcy fraud,” or E-money as a solution to laundering, you’ll alter your hypothesis in a direction that will be just as interesting and easier to support with evidence. Here are some links I collected:

    http://scholar.harvard.edu/files/rogoff/files/the_sinister_side_of_cash.pdf

    http://sfera.logica-bg.com/izmami/bankrfraud.pdf

    https://link.springer.com/chapter/10.1007/978-3-319-65684-7_4

    https://www.emeraldinsight.com/doi/abs/10.1108/IJLMA-06-2014-0042

    I’ve said before and it deserves repeating that the process of researching for a paper like this one is NOT to dismay if you can’t find evidence to prove your hypothesis, but to remain open to surprise and enlightenment, follow the research where it leads, and report on whatever you discover CAN be proved by the evidence.

    Responding to my Feedback is always a good idea. So is asking for more at any time.

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