Real Estate News

Miami Beach condo poised to flip for big profit in strange offshore transaction

In January, a tiny Miami Beach condo sold for $162,000.

Two months later, an offshore foundation agreed to buy the same apartment for $258,000, a 60 percent markup, according to a sales contract obtained by the Miami Herald.

South Beach prices are rising — but not that fast.

“There is something very fishy there,” said Jerome Morlot, a real estate broker who sold the 468-square-foot unit in January but wasn’t involved in the flip. “I’m really surprised someone would pay that much. For that price, you could get a real one-bedroom that is much bigger.”

The $258,000 sales price would smash the record for Domicile Lofts, a 17-unit building at 2129 Washington Ave., just blocks from Lincoln Road. A larger, 550-square-foot condo there sold for $220,000 last May.

If the deal is legitimate, Morlot said, “the buyer is really getting screwed.”

But the transaction makes a little more sense if you know that the buyer, Digna Perez Martinez, shows up in the Panama Papers, a massive leak of files from inside Panamanian law firm Mossack Fonseca.

MF sets up offshore companies for the rich and powerful. One of the services the firm offers is stocking companies with nominee directors.

Sometimes called “dummy directors,” these corporate figureheads have little to do with the actual company. They are present only to shield the identity of the real owner.

The 62-year-old Martinez, who works as an assistant at a law office in Panama City, served as a nominee director of at least 11 Mossack Fonseca offshore entities established in the British Virgin Islands, Panama, Samoa and Hong Kong, according to the leaked files.

Owning an offshore is legal, as long as its assets are declared to tax authorities. There’s also nothing illegal about nominee directors. But regulators pillory offshores for allowing owners to stay anonymous and enabling corruption and fraud.

Big flip

The sales contract shows that Martinez plans to buy the Miami Beach condo through an offshore entity called Navajo Overseas Foundation, registered in Panama. The law in Panama doesn’t require private foundations — something of a hybrid between offshore companies and offshore trusts — to disclose their true owners.

“A Panamanian foundation is a total red flag for people in the banking industry,” said Kenneth Rijok, a former Miami attorney convicted of money laundering who is now a financial crimes consultant. “There is no identifiable owner.”

Navajo Overseas Foundation did not appear in the leaked Mossack Fonseca files, so the owner behind Martinez — if any — remains unclear.

Martinez did not return calls and emails. Neither did her real estate broker, Giorgio Picinelli.

Theresa Van Vliet, a former federal prosecutor in South Florida, agreed that the deal seemed bizarre.

“It could be a naive foreigner getting taken for a ride,” Van Vliet conceded.

But real estate is also a prime target for money laundering.

Money launderers have been known to sell property they openly own to shell companies they secretly control. The shell companies pay with dirty cash. Launderers can then claim the money was earned legitimately by selling the property. No one knows they paid themselves with their own dirty money.

An eye-popping sales price for a run-of-the-mill unit is one sign of possible fraud, said Peter Zalewski, a local condo market analyst.

Although in this case there’s no direct evidence of wrongdoing, Zalewski still said he finds it “highly suspicious that at a time when the number of units on the market is mushrooming and prices are stalling you could flip the unit at that type of price.”

Matteo Soldatini, a property investor who bought the apartment back in January, said he knew nothing about Martinez or Navajo Overseas Foundation. He refused to say how the lucrative new offer came in.

After Soldatini bought the unit on Jan. 22, it was never relisted for sale — raising questions about how the new buyer knew the unit was available.

His real estate firm, Red Group, has an office in Panama City.

When asked if he owned the Panamanian foundation himself, Soldatini said no.

He referred all other questions to Itai Tsanaani, his real estate broker. Tsanaani told the Miami Herald he had nothing to do with the deal.

Soldatini said there was nothing strange about the transaction, despite its high sales price.

“If I am able to buy a property for less than it is worth,” he said, “it means that I am a good buyer.”