This is showing some of the relationships between users in the system. You take a user that you know is dodgy, and then start looking at what they have in common with other users.
Also, slightly offtopic—I open sourced the graph visualisation part: http://github.com/dhotson/springy
Its a bit scary, in that it will force such conspiracies to become more complex (its an arms race after all), and it highlights a 'good' use of an analysis technique which the evil doers can use against their enemies, but still.
I'd say rather that it will push smaller players out of this kind of corrupt business. If you can't sell the business to your uncle without someone making the connection, you have to have a wider circle of trusted conspirators. If you're the mafia, that may not be a problem. If you're just a crooked family, you might just go out of business.
I can see how real estate owners and mortgage companies have relationships with each other. (A lot of small owners have investments from family and friends and use a single mortgage financing company with experience closing tough initial investment deals)
What I don't understand is how the social network analysis led to a conviction. What does the connection mean? Can someone else explain it?
Normally, you could sell the property to a stranger... but then you wouldn't be able to benefit from it anymore. This way it "stays in the family."
I really don't see how the social network proves wrong doing.
I'm actually worried that an overzealous prosecutor and advocacy group prosecuted people who were not guilty.
Obviously I don't know all the details so maybe they should be convicted, but they weren't provided, so it is hard for me to evaluate.
AFAIK, the one-time govt. fees to record a property transfer is relatively small.
This in the US. http://www.arjanihomes.com/custom-tax_guide.htm-CONTENT_TAX_... says ~$3k for a 1M house.
What sort of numbers did you have in mind?
If you like this kind of sleuthing and analysis, you'll enjoy http://sharesleuth.com/ - Which is a Mark Cuban pet project that investigates shady listed companies in search for shortable targets.
It's considered a deceptive and fraudulent practice to have a final liquidation sale when the firm is not really going out of business.
See, for example, the form required in TX (a state not known for heavy regulation compared to say, CA):
§ 17.82. Prohibited Conduct
(a) A person may not conduct a sale advertised with the phrase "going out of business," "closing out," "shutting doors forever," or "bankruptcy sale"; the word "foreclosure" or "bankruptcy"; or a similar phrase or word indicating that an enterprise is ceasing business unless the business is closing all of its operations in a county and in all of the counties immediately adjacent to that county and follows the procedures required by this subchapter.
(b) A person may not fraudulently represent that the person is conducting a going out of business sale.
I remember the manager telling me we were making $30,000 a day during the week-long sale. I guess "going out of business" is good business, haha.
One that especially sticks out is when the Circuit City chain went under. I remember reading about how they brought in an outside company to handle the sales, and the first order of business was to raise all the prices on everything in the store. DVDs that they couldn't sale at $10 were suddenly flying off the shelves at $20 (don't remember the exact numbers).
It makes you realize what a fine line (which each person has to draw for themself) there is between clever marketing and slimy, manipulative tactics.
Is this manipulative? I wouldn't call it that, at least not more than any other retail tactic. Consumers have more price information available to them than ever before, yet they are still amazingly susceptible to the idea that they are getting a good deal, nevermind that the widget that they are saving 25% on costs half as much on Amazon. If using psychology as a sales tool is unethical, then the idea of advertisement and "sales" must be as well.
People's perception of prices can be really malleable, so it can pay off a lot to have a high price in a location where people will be expecting the price to be better than usual.
A minority of condo owners want to continue to live in well-maintained condos in a nice part of town where commercial real estate is _very_ expensive.
You guessed it, the majority owner is a shell corporation with the church/school behind it. The majority owner has slowly purchased units, stripped them of utilities and let them lie fallow without renting them.
The subdivision has well-written deed restrictions limiting the land to residential-only use. Commercial entities are specifically disallowed (churches and private schools are commercial entities in Texas). The deed restrictions can be changed only by majority subdivision vote once every 10 years (2020 next vote). The church/school does not own a majority of the land in the subdivision.
Through these shell corporations, the church/school has quietly purchased properties at residential rates in this deed-restricted residential-only subdivision and then converted the land to commercial use (IMO a clear violation of the deed restrictions). Commercial land in the same neighborhood is _very_ expensive. The city is allowed to enforce deed restrictions but is reluctant to do so.
The condo regime requires that units be kept for the welfare of the owners and residents but soon the majority owner will take over the condominium board. Minority owners fear that the majority owner will use the condominium association's powers to drive them out..
To me there appears to be a legal conflict of interest: all condo owners sign an agreement to support the condo regime and the welfare of all owners in perpetuity, yet this particular majority owner seeks to liquidate the condo regime.
Anyone have expertise in handling this type of case in Texas? Or who can direct me to someone familiar with this type of takeover?
What does this have to do with conspiracy? The ties of the church/school to the city government, the local legal community and real estate developers are deep and intricate. Most real estate attorneys we have spoken to have some affiliation with the church/school (which is a very large and very wealthy organization) and cannot or will not sell their services to us. For years the companies that were acquiring units in the condo used multiple shell corporations to do so. It was not clear what was happening until fairly recently.
I feel like I'm missing some practical uses of knowing the superintendent, local and out-of-state lawyer for each building (or building/LLC combo). I only skimmed the linked How To Research a Slumlord, although the results seems to be "render the LLC useless by suing the actual owner".
Strip mining the equity? It's their building, isn't it? Seems to me that if someone wants to own a pile of cash and a worthless building instead of owning a well-maintained building, that's a business decision they should be entitled to make.
Thus, it may be argued that local governments have a legitimate interest in setting minimum property standards.
Typically, owners are given the opportunity to correct violations and fined if they do not.
As fines accumulate, governments will often work with prospective purchasers in order to make transfer of the building's ownership economically viable and provide relief to owners who are unable or unwilling to comply with minimum property standards established by law.
Keep in mind that these buildings are inhabited -- the tenants of these buildings are citizens.
The city government represents their interests - in the US property ceased being the basis for citizenship a number of years ago - and that other citizens are also paying for fire protection and other services which must be rendered by the jurisdiction.
Right, and that's why (most) cities have building codes.
Typically, owners are given the opportunity to correct violations and fined if they do not. As fines accumulate, governments will often work with prospective purchasers in order to make transfer of the building's ownership economically viable and provide relief to owners who are unable or unwilling to comply with minimum property standards established by law.
It seems to me that the fundamental problem here is that landlords can dodge fines by selling a building. If the tenants of sub-code buildings received a statutory reduction in rent until the building is back to code requirements, there would be no incentive for landlords to operate sub-code buildings.
The issue of imposing externalities on tenants is, however, entirely orthogonal to the issue of building equity which I was responding to.
Right, and that's why it's only profitable to strip mine for equity if you engage in fraud to avoid the building codes.
In some cases, civil penalties enforceable in a court of law may also be applied to the property, which the current owner may disclaim if they existed at the time of purchase (so the prior owner must pay).
See, for example, the FAQ from Sonoma County (outside of SF).
The theory that the prior owner must pay, is simply not the case. First because liens run with the land regardless of ownership, and secondly, because a new owner's name cannot be recorded on the deed until the lien is cleared (and thirdly because everything in a real-estate transaction is negotiable).
Thus, they are silent in regards to the maintenance of existing structures and the ways in which they are occupied, hence property maintenance and fire codes respectively - e.g. the building code inspects a fire sprinkler system when it is in installed, a property maintenance code may require continuous water service to the structure, and the fire code require that the system is regularly tested.
Here is the Vancouver, Washington Property Maintenance Code:
With proper Canadian propriety, here is Vancouver B.C.'s "By-law to prevent the existence of untidy premises
within the City of Vancouver": http://vancouver.ca/bylaws/4548c.PDF
However, then there would be an incentive for tenants to the building damage through neglect or abuse in order to avoid paying rent.
Or is this not true in the U.S. or certain states or cities in the U.S.?
Maybe you missed the part where the landlords were blatantly in violation of those regulations.
Also, the tenants continued to live there largely because they didn't have many options. For most of these people the only option otherwise available to them would likely be a homeless shelter.
I understand the sympathy for the poor, but that sympathy should not extend to giving them inefficient subsidies through rent control of high-value real estate. There are good ways to help the poor; letting them crowd out better uses of critical real estate that a thousand other people would thankful to live in at ten times the rent ... isn't one of them.
(If you're wondering what rent control has to do with this, it's the reason that slumlords have to resort to such elaborate tactics to clear out a building for redevelopment in the first place.)
Still, that's good detectivework and a great outcome!