Coming clean: High-dollar home purchases are coming under scrutiny
Buyers who spend more than $1 million on a home in Miami-Dade County will now find it more difficult to shield their identities from the U. S. government.
The Financial Crimes Enforcement Network (a U. S. Treasury unit known as FinCEN) issued Geographic Targeting Orders that require most title insurers to determine the owners behind holding companies that pay for even part of such real estate purchases via cash, certified check, cashier’s check, traveler’s check or money order. The title companies must record a copy of the actual buyers’ driver’s licenses, passports or similar identification. That information must be entered into a law enforcement database. The trial orders apply only to transactions in Miami-Dade and in Manhattan (where it applies to sales of $3 million and more), and they expire on Aug. 27.
Right now, the orders “apply to actually a very narrow group of all-cash purchases,” says Robert S. Rausch, a partner with Hunton & Williams in Miami who specializes in real estate. He notes that cash purchases, or portions of purchases, are generally conducted via wire transfer, which is more convenient — and already tracked. Lenders, too, are already required to scrutinize all borrowers.
The trial initiative is aimed at combating money laundering. Rausch doesn’t think the tracking efforts will slow the county’s real estate market, but he does expect that lawyers, real estate agents, sellers and others involved in large real estate transactions that include cash will look at buyers a bit more closely. “Once you see that the federal government is aggressively going after these types of transactions, everyone wants to be very careful,” he notes.
Although purchasing real estate anonymously, through shell companies or other means, is generally legal and done for reasons as simple as privacy, the FBI has said that such anonymity has stymied investigations in the past.
CORAL GABLES — Bank regulators levied two Bank Secrecy Act and anti-money laundering compliance violation fines against Gibraltar Private Bank & Trust in connection with convicted Ponzi schemer Scott Rothstein. Meanwhile, former Gibraltar CEO Steven Hayworth sued the bank for violating his employment agreement. MBF Healthcare Partners launched another private equity fund, which will invest up to $500 million in health care industry companies.
DORAL — World Fuel Services will spend $260 million to buy ExxonMobil’s aviation fueling operations at 83 airports outside the U.S. Aventura-based Triarch Investment Group purchased the three-building,17. 8-acre Doral Costa office park for $73.75 million.
HIALEAH — Prudential Insurance broke ground on the largest industrial project in Miami-Dade County — the Centergate at Gratigny II, which consists of two 300,000-sq.-ft. distribution warehouses on 29 acres. It’s building the warehouses on spec.
KEY LARGO — Developer Blue Jay Capital plans to break ground this spring on 121 Marina, a condominium development in the Ocean Reef community. San Francisco-based real estate private equity firm KHP Capital Partners purchased the 200-room Hilton Key Largo Resort and its 13 acres of waterfront land from the Blackstone Group.
MIAMI — California-based luxury cruise line Crystal Cruises will grow its 50-person Miami office early next year as part of an expansion by parent company Genting, which also owns Miami-based Resorts World Bimini and 11% of Norwegian Cruise Line Holdings. Turkey’s largest real estate firm, Turyap, opened its first U. S. franchise in Miami, citing growing Turkish interest in south Florida property. Non-profit Lotus House, which provides shelter for homeless women and children, plans to use a $19-million loan from Marty Margulies to expand its Miami shelter, increasing capacity from 225 to 490. The plan requires city commission approval. Fresh Diet founder Zalmi Duchman led an investor group that bought back 90% of the company from publicly traded Innovative Food Holdings based in Bonita Springs, which had purchased it in 2014. The National Marine Manufacturers Association, which held the 2016 Miami International Boat Show for the first time at the Miami Marine Stadium Park and Basin on Virginia Key, says attendance was up 4% this year — to 100,279 people.
MIAMI-DADE COUNTY — The White House has designated the county as a TechHire community, part of an initiative to train people ages 17 to 29 for technology jobs. The designation means the county can compete for part of $100 million in grants from the U.S. Department of Labor. Florida International University joined the 35-member Ashoka University Changemaker Consortium, a group of campuses fostering social entrepreneurial opportunities for students and the community. Miami-Dade College joined the consortium last year; the county is the first metro area to be home to two Ashoka University campuses. The planned $265-million, 1-million-sq.-ft., Miami Ocean Studios movie studio complex has been canceled. The project had qualified for a $10-million county subsidy.
MIAMI BEACH — City voters did not give a planned 800-room hotel next to the Miami Beach Convention Center the 60% approval it required .The city hopes to place a revised proposal on the November ballot
MONROE COUNTY — The Legislature passed the Florida Keys Stewardship Act, which allocates state funds for the county to buy environmentally sensitive land or pay for water-quality projects. However, the Legislature cut the proposed funding to $5 million a year for 10 years, from $25 million.
OPA-LOCKA — The FBI has been investigating alleged kickbacks to local contractors for two years. No arrests have been made, but the agency’s Miami Area Corruption Task Force executed search warrants at City Hall. A federal criminal grand jury has reportedly issued subpoenas to 18 current and former city employees.
Jed Royer wanted to create a fund-raising app that wasn’t tied to Facebook, which he feels captures an older demographic. A creative director and graphic designer with his own agency, Royer designed Challenge- Star, an app that non-profits can use to set up a range of challenges. He contracted with programmers in Bangladesh. In addition to the app, non-profits have access to emails of supporters, as well as help from Challenge-Star in marketing. The company has five employees in its Miami office and seven more around the world. “We feel we’re in a great space to shake things up,” he says.
Alexandre Hohagen, former head of Facebook and Google in Latin America, became CEO and partner of Miami-based digital marketing agency Nobox after he acquired the company. Pedro Cabral, founder and former CEO of Brazil’s AgenciaClick, is the company’s chairman and investing partner. Nobox co-founder Jayson Fittipaldi will remain as chief creative officer
Ralph Lopez took over as American Airlines’ Miami hub vice president, replacing Marilyn DeVoe, who will retire this summer. Lopez was managing director of the airline’s London Heathrow operations.
In 2015, investors flipped more homes in Miami- Dade than in any other U.S. market.
Total number of homes and condos resold within a year
Percentage of all sales flipped
Percentage of homes flipped nationally