Page 75 of An Inside Job
“Because much of the bank’s lending isn’t actual lending. And many of its clients aren’t actual clients. They’re merely fronts for our friends from Naples.”
“How does it work?”
“You did a bit of mischievous banking in your past life. You tell me.”
“A company called Mafia Limitato opens an account at SBL.”
“We should probably do something about the name. But please continue.”
“Mafia Limitato then retains the services of the bank’s asset management division to invest its money wisely. The asset manager plows some of the money into bonds and equities and uses the rest to purchase real estate.”
“Incorrect.”
“Where did I go wrong?”
“Mafia Limitato actuallyborrowsthe money from SBL to purchase the real estate.”
“Why?”
“The tax advantages, of course. Mobsters hate to pay taxes.”
“So Mafia Limitato takes a loan it doesn’t need and then buys the loan from the bank?”
Martin nodded. “Which launders still more dirty money and removes nonexistent risk from the bank’s balance sheet.”
“Why is the risk nonexistent?”
“Because there is absolutely no chance Mafia Limitato will default on a loan it took from a bank it controls.” Martin sighed. “Do I have to explain everything?”
“It’s a shell game? Is that what you’re saying?”
“In a manner of speaking, yes. But it also provides SBL with additional capital to lend to other clients. One of those clients borrowed four hundred million dollars from SBL to purchase a piece of commercial real estate in London. And SBL, of course, immediately sold the loan to Mafia Limitato.”
“Who was the unlucky client?”
“Something called the Mayfair Group. It looks as though it might be a real estate holding company. It was represented in the deal by a Milanese financial adviser, a certain Nico Ambrosi. His firm is called Piedmont Global Capital.”
“And the property?”
“A retail-and-office block on New Bond Street. Which is the interesting part.”
“How so?”
“I know the property well. In fact, my firm took a hard look at it when it came on the market.”
“And?”
“I wouldn’t have paid more than two hundred million for it. But the Mayfair Group, whatever it is, paid twice that. Not surprisingly, it defaulted on the loan two years after it was issued.”
“And Mafia Limitato was left holding the bag?”
Martin nodded slowly. “As you can imagine, they weremoltoangry.”
“What does any of this have to do with my Leonardo?”
“Your Leonardo was used to repay the loan. At least that is my strong suspicion.”
“Based on what?”
