19th of January, 2010 --------------------------------------------------------------------------- Detecting Criminal Investments in the Dutch Real Estate Sector ------------------------------------------------- Study prepared for the Dutch Ministry of Finance, Justice and Interior Affairs by First Part: Utrecht University School of Economics Prof. dr. Brigitte Unger Joras Ferwerda, PhD cand. Jaap Trouw, MSc. Second Part: University of Maastricht Prof. dr. mr. Hans Nelen, Drs. Luuk Ritzen Third Part: Utrecht University School of Economics Prof. dr. Brigitte Unger Joras Ferwerda, PhD cand. Table of Contents Introduction ............................................................................................................................................6 Part One: Economic Approach ...........................................................................................................11 1. Introduction ........................................................................................................................................11 2. Market Analysis of the Real Estate Market........................................................................................13 2.1 The market players .......................................................................................................................14 2.2. Speculation ..................................................................................................................................20 2.3. Mortgages and taxes ....................................................................................................................22 2.4. Real estate market in numbers.....................................................................................................23 3. Criminal abuse of real estate ..............................................................................................................27 3.1. Methods.......................................................................................................................................28 3.2 Other criminal use of real estate ...................................................................................................32 4. Research Method and Indicators ........................................................................................................34 4.1 Research method ..........................................................................................................................34 4.2 Indicators......................................................................................................................................38 1. Financier.....................................................................................................................................39 1.1 Financier is from abroad...........................................................................................................39 1.2 Financier is a person not a company.........................................................................................40 1.3 Financier is a non-business party..............................................................................................40 1.4 Financier has unregistered shareholders...................................................................................41 2. Financing....................................................................................................................................41 2.1 Financing has an unusual amount compared to income ...........................................................41 2.2 Financing has an unusual amount compared to appraised value (WOZ)..................................42 2.3 No mortgage .............................................................................................................................42 2.4 Financing has a creditor and a debtor that are the same subject ...............................................43 3. Owner .........................................................................................................................................43 3.1 Country of residence.................................................................................................................43 3.2 Owner is a person with antecedents..........................................................................................44 3.3, 3.4 and 3.5 Owner is a person with a disproportionate number of objects or purchases or a fast growing real estate portfolio...........................................................................................................44 2 3.6 Owner is a straw man ...............................................................................................................45 3.7 Owner is a company with an unclear Ultimate Beneficial Owner............................................45 3.8 Owner is a company with a particular exploitation ..................................................................46 3.9 and 3.10 Owner is a company just established or almost closed ..............................................47 3.11 Owner is a company without employees ................................................................................47 3.12 Owner is a ‘world citizen’ (unknown by the Tax Administration).........................................47 4. Real estate object........................................................................................................................48 4.1 Real estate object has multiple transactions .............................................................................48 4.2 and 4.3 Real estate object is in a very bad or very good neighborhood....................................48 5. Purchase sum..............................................................................................................................51 5.1 and 5.2 Purchase sum is unusual compared to the appraised value (WOZ) or previous purchase sum .................................................................................................................................................51 5. Data Collection...................................................................................................................................53 5.1 Introduction ..................................................................................................................................53 5.2 Merging the datasets.....................................................................................................................57 5.3 Indicators......................................................................................................................................58 5.4 Conclusion....................................................................................................................................81 6. Research results..................................................................................................................................83 6.1 Introduction ..................................................................................................................................83 6.2 Indicators......................................................................................................................................84 6.3 Comparison of total number of red flags....................................................................................105 6.4 Comparison between houses and industry..................................................................................106 6.5 Conclusion..................................................................................................................................107 7. Evaluation of Research Method .......................................................................................................108 7.1 Introduction ................................................................................................................................108 7.2 Correlations ................................................................................................................................108 7.3 Distribution of red flags per object.............................................................................................111 Appendix 1 ...........................................................................................................................................113 Appendix 2 ...........................................................................................................................................118 Part Two: Criminological Analysis...................................................................................................120 Introduction ..........................................................................................................................................120 3 1. Concepts, methods and analysis .......................................................................................................122 1.1. The concept of conspicuousness and the use of narrative theory ..............................................122 1.2. Top down-analysis.....................................................................................................................123 1.2.1. Top-down phase 1a: creating case descriptions..................................................................125 1.2.2. Top-down phase 1b: preparing a data-matrix .....................................................................128 1.2.3. Top down phase 1c: final considerations............................................................................135