(The Information presented in this post is speculative and NOT FACT or based on evidence, it's based on observation, information collected from Open Sources, and Factor Models - and should be treated as a discussion)
Firstly,
Congratulations fellas, what a splendid achievement we have had here from the Subreddit. I've gotten the chance to chat to some of you, and it just goes on to show how we can all come together regardless of our social background.
One of my favourite places to come home from work and banter with you folks.
I've discussed with a few of you about my job as an Analyst in Cyber Forensics.
My first job out of uni was working for the Govt' to learn about Cyber Crimes and Tax Frauds, which helped develop my Data Analytics skills.
I'm not from the United States, and as such I can't speculate on the specificities of the laws there. However the nature of Financial Scams is similar, and can be understood once we analyse the facts and data available to us.
A theory that I considered regarding TPG and their supposed meteoric rise to success, much attributed to their success on YouTube and Social Media (US, the Casual Viewers they now Mock).
As my professor once said, "Point to an industry you think is clean, and I'll show you just how corrupted it is". Point being, every industry tends to be filled with unscrupulous individuals.
Case in Point: Avi from (Avi & Co) were involved a major money laundering scam back in the day.
[Source: https://cityroom.blogs.nytimes.com/2011/06/10/case-dismissed-but-jewelry-stays-in-government-hands/ ]
Here is the information I've been able to gather from several sources (the numbers might get nerdy):
Firstly, any watch dealer must comply with Insurance. They're liable to insure any piece they hold, whether it's consignment or purchased and paid for - IT MUST BE INSURED. This is a standardised practise to ensure that if the watch was damaged or stolen, the customer can and must be reimbursed.
Based on the last video TPG posted, they now hold most of their Inventory at Anthony's Home. This would mean the Insurance Company would NOT honour the agreement. Since the conditions of Insurance require a Safe and a Specified Location.
Inventory must be moved in an Armoured Car, and kept in a safe location disclosed and approved to and by the Insurance Company.
Doing Business on Chrono24, some of you may be aware of this - but Chrono24 isn't a charity. They're a business.
Their source of income is Subscription and Commission on Sales.
Chrono24 has a very publicly available model on how they conduct business, whether you're a private seller or a business. For the nature of this message, we focus on the "Dealers" Category.
Monthly subscription fees:
The monthly subscription fees range from €69 to €1.999 per month. The exact amount is driven by your subscription type and the number of watches you want to list on the platform. You can choose between the subscription types Light, Pro and Premium. Number of watches listed start from up to 25 watches to up to 1.000 watches. If you want to list more than 1.000 watches, you have to opt in for the Pro subscription type and have to contact the sales department to agree on the price.
Once a Dealer selects a Subscription which suits them, they're now liable for a Commission to Chrono24 upon a sale.
Dealer fees commission charges:
The dealer fees for commission charges vary between 2%-8% per watch and are dependent on the type of subscription and the type of watch. Chrono24 has developed an algorithm that can estimate the margin a seller makes on a specific watch based on the brand, model, condition and other characteristics.
Sales tax fees for professional dealers:
Sales tax and VAT may be charged by local governments. Most of the countries in the EU, USA and Asia have a "margin agreement". This means the margins a commercial dealer makes, will be charged with a VAT. So for example when a watch is sold for €10.000 (sales price) with a purchase price of €9.000 there is a margin of €1.000. This means with a VAT of 25%, the tax authority will charge €250. Making the net proceeds €750.
Transactions are also charged with a 7.5% surcharge in the US.
Shipping and Insurance Cost:
This is an area I'm not an expert in, but granted most Shipping Companies have their own methods for calculating Insurance Cost upon Shipping. Which is again, based on Margin and Cost of the Item.
(We aren't adding Customs Duties here since that would make this post insanely long)
[This is JUST Chrono24, but it gives us a good baseline for what sort of costs are involved in a sale)
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Breakdown.
- Business Overhead Costs.
- Asset Insurance Costs.
- Employee Overheads and Payroll Taxes.
- Lease Agreement Cost.
- Consignment Insurance Cost (upon holding, deductible from Customer after sale).
- Car Lease, Food & Beverages, Travel, Film Crew, etc.
- Income Tax, Sales Tax, Corporation Tax (not sure if this applies in the US?)
The Consensus:
If TPG claim to be making $1,000 per watch (not including the hype pieces or pieces that went up in value since purchase, in an economy where prices change every day for certain watches) - The margin of $1,000 doesn't make sense if you include the basic Shipping, Insurance, and Sales Tax.
So what was the point of this post?
Let's discuss the excessive spending. Consider the exuberant lifestyle, the insane bills at Nick & Sams, the Bitcoin Event (which btw I'm not sure if they even taxed properly), the mysterious Investor who happily chucks in another $400,000.
It doesn't add up.
A watch business, a normal one - where people come to work and go home to a decent non-glamourous life maybe make a decent living.
Just look at some of the other dealers and how long it takes them to develop the Business.
The possibility of "Merchant Based Money Laundering" (A Legitimate Reason for Bank Accounts being Frozen):
As we have all concluded by now, Banks DO NOT freeze accounts based on YouTube Comments or Social Media.
Even a Police Report of disappearance would require a 14-day Stay and Hold request rather than a direct freeze on the account. (This tactic is employed so as not to alert the individual and still observe their banking activity, allowing investigators to collect evidence - and locate the individual if they disappear).
So what is Merchant Based Money Laundering?
[Transnational Organized Crime (TOC)]
Merchant-based money laundering is a process where goods / services being paid are either under-valued or not present at all (phantom transactions / shipments). For example, the drug mafia in Mexico actually provides a “line of credit” to wholesale buyers in the US. These wholesale dealers then sell drugs using any of the mentioned methods or via direct cash transactions. The revenue generated is then sent back to Mexico via another transaction laundering method called merchant-based money laundering. The crime syndicate ties up with cash-intensive businesses such as supermarket, vending machine operators, convenience stores, restaurants, private ATMs, cigarette distributors, liquor stores, parking garages, and others. They either collude or coerce the cash-intensive businesses to mingle the illegitimate cash with their legitimate cash for a fee.
The cash-intensive business is then instructed to make regular purchases from specific merchants in Mexico on a regular basis, via which the illegitimate money gets transferred across the border. The Mexican merchant, on its part, may not actually ship anything at all, given that the purpose of the transaction was to transfer the illicit money and not for any real business need.
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Discussion:
Glad you made it to the end, please feel free to share your thoughts and views. If you have further information to add - please feel free to do so. Let's keep it respectful, guys. Cheers!
Sources Used in the Post:
