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“The closer to the train station, the worse the kebab” – a “study”

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Re: “The closer to the train station, the worse the kebab” – a “study”

#261

Post by tinco »

skrebbel wrote: post #257
jillesvangurp wrote: post #246

Here in Berlin there are an enormous amount of kebab places (thousands). Basically, most places are embedded in neighborhoods and have a crowd of locals that go there. The quality varies wildly as a lot of these places are obviously aimed at the money laundering business (cash only) rather than serving food. Poor hygiene, indifferent service, etc. Many of these places are completely pointless from a business point of…

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

You have money you can't explain to the IRS how you got it, that's dirty money. Now you use some clean money to buy a kebab shop. Every day you give your dirty money to the kebab shop, the kebab shop prints fake receipts. Now the IRS can be convinced the money came from cash in hand customers.

Re: “The closer to the train station, the worse the kebab” – a “study”

#262

Post by jclulow »

skrebbel wrote: post #257
jillesvangurp wrote: post #246

Here in Berlin there are an enormous amount of kebab places (thousands). Basically, most places are embedded in neighborhoods and have a crowd of locals that go there. The quality varies wildly as a lot of these places are obviously aimed at the money laundering business (cash only) rather than serving food. Poor hygiene, indifferent service, etc. Many of these places are completely pointless from a business point of…

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

The point is generally to recover cents on the dollar from money you can't otherwise use. Imagine you have a network of people moving illegal drugs. They collect money from their customers, and they need to pay it to you, the supplier. Arrange for them to eat a lot of food at your restaurant. Maybe they shout their friends. The money goes into the restaurant, and is mingled with other money. That money is used to pay costs for the business, but some of it is still profit. That profit, while less than the illegal input money, is _clean_ money, which is much more valuable because you can spend it without fear generally.

It's really just about making it harder for law enforcement folks to draw associations by looking directly at the bank accounts of several people they suspect are in cahoots. Or, in some cases, about making it harder to trace specific cash serial numbers or other instruments like cheques.

I recall reading of a crime outfit in Australia that would have the elders in their family take their illicit cash and use it to place an endless stream of bets on poker machines. By law they're required to return some high percentage, say, 75%, of the money put into them (the house keeps the rest). If you gamble tens of thousands in those machines, and you don't care about the losses, you get a reasonable expectation value back out as laundered winnings. In that case you don't even have to own the pub with the pokies, that's just how they work.

Re: “The closer to the train station, the worse the kebab” – a “study”

#263

Post by shizzor »

skrebbel wrote: post #257
jillesvangurp wrote: post #246

Here in Berlin there are an enormous amount of kebab places (thousands). Basically, most places are embedded in neighborhoods and have a crowd of locals that go there. The quality varies wildly as a lot of these places are obviously aimed at the money laundering business (cash only) rather than serving food. Poor hygiene, indifferent service, etc. Many of these places are completely pointless from a business point of…

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

They already have the money, they just need a business as a facade to claim the money was earned by running the business. But you are right, eventually it would be suspicious if they only sold food but never bought the matching raw ingredients. That's probably why they now moved to barber shops - nobody knows or can prove you didn't cut the hair of the hundreds of people that were never there.

Re: “The closer to the train station, the worse the kebab” – a “study”

#264

Post by estsauver »

Galanwe wrote: post #247
cloudbonsai wrote: post #217

Earlier quoted context omitted.

> be true! If you ignore the fact that the correlation is so weak that calling it 'statistically insignificant' would be quite generous. I actually came to a different conclusion than the author. Here is the way I'm thinking about the presented statistics: 1. There is 17 Kebab shops (out of 400 samples) with a google review lower than 3 stars. Let's call them "bad kebabs". 2. All those "bad kebabs" actually located w…

> 2. All those "bad kebabs" actually located within 500m from the nearest station. No kebab located in further than >500m is bad. Right, but this is selection bias. There will always exist a distance D from which all bad kebabs are located. Unless D is provenly chosen _before_ looking at the data, this has no meaning. One also has to take the kebab density into account.

This "you have to choose D" ahead of time nonsense is why people distrust and dislike statisticians! Humans have priors on what is "close" that are independent of this particular article. If they had said "See, everything within 5000m" or "everything within 5m" you might have a point but "500m" being a rough definition of "close to a train station" is pretty reasonable.

Re: “The closer to the train station, the worse the kebab” – a “study”

#265

Post by thaumasiotes »

jclulow wrote: post #262
skrebbel wrote: post #257

Earlier quoted context omitted.

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

The point is generally to recover cents on the dollar from money you can't otherwise use. Imagine you have a network of people moving illegal drugs. They collect money from their customers, and they need to pay it to you, the supplier. Arrange for them to eat a lot of food at your restaurant. Maybe they shout their friends. The money goes into the restaurant, and is mingled with other money. That money is used to pay…

> If you gamble tens of thousands in those machines, and you don't care about the losses, you get a reasonable expectation value back out as laundered winnings.

Where does the laundering come into it? If the machine pays out in cash and you just walk away with it, you've gone from having a big pile of dirty money to having a slightly smaller pile of dirty money. You could declare that the smaller pile is all gambling winnings (off of a low base), but as soon as that gets audited you have to refer the auditor to the casino's security cameras and there you are spending a lot more than you got back.

You could ask the casino to make a formal declaration that your smaller pile of money is gambling winnings (maybe it's chips!), but why should they lie for you?

And if it is chips, you had to buy chips originally. How do you explain how you afforded those chips?

What's the part of this scheme that works?

Re: “The closer to the train station, the worse the kebab” – a “study”

#266

Post by thaumasiotes »

estsauver wrote: post #264
Galanwe wrote: post #247

Earlier quoted context omitted.

> 2. All those "bad kebabs" actually located within 500m from the nearest station. No kebab located in further than >500m is bad. Right, but this is selection bias. There will always exist a distance D from which all bad kebabs are located. Unless D is provenly chosen _before_ looking at the data, this has no meaning. One also has to take the kebab density into account.

This "you have to choose D" ahead of time nonsense is why people distrust and dislike statisticians! Humans have priors on what is "close" that are independent of this particular article. If they had said "See, everything within 5000m" or "everything within 5m" you might have a point but "500m" being a rough definition of "close to a train station" is pretty reasonable.

> If they had said "See, everything within 5000m" or "everything within 5m" you might have a point

On the contrary, if everything was within five meters, that would make the finding much more impressive.

Re: “The closer to the train station, the worse the kebab” – a “study”

#267

Post by lqet »

skrebbel wrote: post #257
jillesvangurp wrote: post #246

Here in Berlin there are an enormous amount of kebab places (thousands). Basically, most places are embedded in neighborhoods and have a crowd of locals that go there. The quality varies wildly as a lot of these places are obviously aimed at the money laundering business (cash only) rather than serving food. Poor hygiene, indifferent service, etc. Many of these places are completely pointless from a business point of…

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

> If nobody eats there, how do they launder money?

The laundered money is reported to the tax office as cash payments from customers. Add some fake invoices from meat suppliers to make your books look legit, and you have converted dirty money into clean, even taxable income.

This only works to a certain degree, though. If the tax office becomes suspicious, they will definitely use undercover people to count customers and meat deliveries over a few weeks. But if for example only 10% of your sales volume is fake, it is quite hard for the tax office to prove this. For smaller laundry volumes, you don't even need fake supplier bills, you can always just claim that you put a bit less meat on the kebap, etc. The general idea is to take advantage of the fact that even the tax office acknowledges that it is impossible to keep books accurate to the last penny in such businesses.

When I was a student I often ate pizza in a really nice Italian restaurant which later turned out to be a money laundering front for the Mafia. But the pizza was great!

Re: “The closer to the train station, the worse the kebab” – a “study”

#269

Post by yard2010 »

maeln wrote: post #256
lqet wrote: post #243

Earlier quoted context omitted.

Why did you include metro stations in your study? The original quote only included train stations. The metro originally largely replaced a tram network, so the metro station density in Paris is higher than for other underground systems. I think it is very hard to find kebap shops in Paris that are not within 500 m of a metro station. This kind of dilutes the significance of your study, because I never really noticed…

I would second this. In Paris, but I find it to be true in most European city, the area surrounding train station is usually not very nice. It is usually surrounded by cheap hotel for 1-night traveler, overpriced fast food (hence the initial theory) and social housing / cheap building (a lot of people don't want to live next to a train station due to the nuisance, so poor people often get stuck there). On the other h…

This is such a dystopian phenomenon, I'm far from an expert but I guess it's a matter of city planning?

Re: “The closer to the train station, the worse the kebab” – a “study”

#270

Post by robocat »

tinco wrote: post #261
skrebbel wrote: post #257

Earlier quoted context omitted.

Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.

You have money you can't explain to the IRS how you got it, that's dirty money. Now you use some clean money to buy a kebab shop. Every day you give your dirty money to the kebab shop, the kebab shop prints fake receipts. Now the IRS can be convinced the money came from cash in hand customers.

Does the IRS somewhat encourage dirty money to be taxed? I'm guessing they would prefer to have it highly taxed but perhaps getting some tax is second best.

In New Zealand "Income that is earned from illegal activities needs to have tax paid on it." however they do try to deter money laundering, tax evasion and tax fraud.

In New Zealand it is getting harder to launder money because cash is not used as much as it used to be. Certainly a legitimate kebab shop should now receive the majority of their money as card payments. Few businesses here would have a majority of takings in cash.

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