From: tcmay@netcom.com (Timothy C. May)
Date: Tue, 19 Apr 94 12:19:32 PDT
To: cypherpunks@toad.com
Subject: Re: Money Laundering thru Roulette
Message-ID: <199404191920.MAA07182@mail.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


I neglected to cc: the list on this reply to David Rees, and he was
kind enough to send me back the message so I could post it here.

This is me speaking:

> 
> Maybe I'm just misunderstanding the point David Rees is making:
> 
> >    Of course, as several people pointed out, there are a large number
> > of ways to break even in roulette.  So if you have bad money that
> > needs laundered, why not bet evenly on red and black each time.  Or even
> > easier, buy 10,000 dollars worth of chips and then cash them in immediately.
> > New and different money on demand.
> >    I get the impression though that I am missing something in the
> > discussion since no one has mentioned something like this and that merely
> > replacing the money isn't the objective here.
> 
> No, converting one wad of, say, $100,000 into another wad of $100,000
> is not the goal.
> 
> Let us suppose "Hillary" (much more interesting than our usual
> cryptographic stand-in, Alice) want to be able to spend $100,000 given
> to her by a friend at Tyson Foods in exchange for regulatory favors. 
> 
> He gives her a wad of $100,000. She takes this wad to Las Vegas (or,
> now, to the nearby Mississippi River gambling boats) and "exchanges"
> it. What has been accomplished? Nothing, except the comparatively
> trivial change in serial numbers (which _can_ be an issue if the bills
> are marked, as in a sting, but this is rarely an issue).
> 
> This is a _kind_ of money laudering, as is literally running currency
> through washer-dryer cycles (yes, this is done), but this is not the
> common meaning of "laundering," and the one which we're focussing on here.
> 
> No, one of the main goals of money-laundering is to make the
> bribe/whatever money appear to be "legitimately earned," so that taxes
> may be paid on it (yes) and the money then used for other investments,
> buying houses, etc. "Legitimately earned" can mean won in Las Vegas,
> or in cattle futures, etc. Hence the schemes here.
> 
> (In Hillary's case, suddenly having $100K that the IRS and other
> agencies can find no "paper trail" for would be evidene of bribery,
> for example. I suppose Hillary could claim it came out of her
> mattress, where she'd been saving money for years, but I doubt this
> would fly.)
> 
> U.S. casinos are closely watched for this kind of thing, of course. I
> wonder if the IRS looks suspiciously at money won at the casinos on
> Paradise Island, Bahamas? Or elsewhere.
> 
> And, germane to our list, the "Internet Casino" that Nick Szabo and
> others have talked about someday building.
> 
> --Tim May
> 
> 
> -- 
> ..........................................................................
> Timothy C. May         | Crypto Anarchy: encryption, digital money,  
> tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
> 408-688-5409           | knowledge, reputations, information markets, 
> W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
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