Offshore corporations: The secret shell game
Talk about playing the market.
Real-estate investor Matteo Soldatini flipped a tiny Miami Beach condo for an eye-popping profit after owning it for just three months. He sold it to a mysterious offshore firm whose listed owner shows up in the massive leak of secret documents known as the Panama Papers.
A Panamanian offshore called Navajo Overseas Foundation closed the deal for the 468-square-foot unit on April 19, paying $258,000 in cash, according to Miami-Dade County property records and a sales contract obtained by the Miami Herald. That meant a $96,000 profit for Soldatini, who had paid $162,000 for the one-bedroom condo in January.
Real-estate professionals consulted by the Herald last month for a story on the transaction said $258,000 struck them as extremely high for the no-frills unit. Even South Beach’s soaring home values didn’t seem to justify the deal, they said.
I make good deals. This is what I do.
Whatever the reason for the impressive payday, the sale illustrates how easy it is for the real players in South Florida’s real-estate market to stay in the shadows.
Soldatini didn’t list the unit for sale, says he never met the owner of Navajo and doesn’t know who it is.
“I make good deals,” he said. “This is what I do.”
Soldatini’s real-estate firm, Red Group, has an office in Panama City.
Giorgio Picinelli, the Miami Beach real-estate broker who represented Navajo, did not respond to requests for comment.
When a reporter dropped by the building at 2129 Washington Ave. on Friday, a young man who did not want to give his name said he was staying in the unit for a weekend trip. The man said a friend had given him the key but declined to name the friend.
“Panama Papers?” he said with surprise, when told about the unit’s link to a story that’s gone viral around the world. “No way. I guess that’s the allure of Miami. No one really knows what’s up.”
Other than the out-of-towner, almost no one involved in the deal wanted to talk to the Herald, including Digna Perez Martinez, who is listed in a sales contract as the owner of the offshore entity that bought the unit.
$96,000Profit made by Soldatini on tiny Miami Beach condo
Offshore shell companies have a variety of legal uses, including liability protection, privacy and tax breaks for their owners.
Navajo Overseas Foundation is registered in Panama. Foundations in the Central American country don’t have to reveal their true, or “beneficial,” owners. Instead, they can list directors who usually have little or nothing to do with the operations of the company.
Martinez shows up as a director of at least 11 offshore companies set up by Mossack Fonseca, the under-fire Panamanian law firm whose internal files were leaked last year to nearly 400 journalists working under the global umbrella of the International Consortium of Investigative Journalists.
Advocates for corporate transparency call figureheads such as Martinez “dummy directors” who provide cover for the real owners. They argue that shells can mask illegal activity, including tax evasion, political corruption, money laundering and drug trafficking. On the sales contract, Martinez said she worked as a secretary at another Panamanian law firm. That firm is a client of Mossack Fonseca, according to the Panama Papers.
Although Martinez is in the papers, Navajo Overseas Foundation is not. That means Mossack Fonseca didn’t set it up. Its true owner — if it is not Martinez — remains unknown.
The real-estate industry has largely been exempt from the strict “know your customer” rules imposed on banks and other financial institutions in the United States. New regulations, including a federal anti-money laundering crackdown targeting Miami-Dade and Manhattan, are worrying many South Florida industry professionals who want to stay on the right side of the law.
“We don’t want to go to jail,” said one Realtor sitting in the audience for a panel discussion that took place earlier this week at the opulent sales center for the Armani/Casa condo tower in Sunny Isles Beach.
The event focused on the impact the Panama Papers will have on the local real-estate market. It was held amid ultra-luxury finishes hand-picked by Giorgio Armani and his team of designers, according to the tower’s developer. The sales center cost $10.5 million to build.
These transactions normally don’t like the light
Kenneth Rijock, a convicted money launderer who is now a financial crimes consultant and spoke on the panel, agreed the Panama Papers would bring never-before-seen regulatory interest to South Florida real estate.
Rijock added he was surprised to see the Miami Beach condo deal go through after the Herald first reported on it last month.
“These transactions normally don’t like the light,” he said.
The Panama Papers continue to make news around the world. Here’s the latest:
▪ The International Consortium of Investigative Journalists plans on Monday to publish a searchable database showing the names of offshore companies and their owners but not the underlying documents. The Miami Herald will post the database online on its website. The consortium said it would not publish the complete files because they include passports, bank statements and other confidential documents.
▪ The anonymous whistleblower known only as John Doe who released the documents to journalists finally spoke publicly on Friday. In a statement, John Doe said growing global income inequality and the “injustices” revealed in the documents motivated the leak. You can read John Doe’s full statement on MiamiHerald.com.
▪ A global conference on anti-corruption reforms is set to take place in London next week. Representatives of as many as 40 countries will attend, including Secretary of State John Kerry, the Guardian reports. The Panama Papers will be a major focus.