When the Panama Papers dropped on Sunday, we in Miami were not surprised to learn that there’s a lot of shady business linked to our luxury real estate market.
It’s been one of the city’s worst kept secrets for decades. But the massive data leak – 11.5 million files from the Panama-based law firm Mossack Fonseca, which set up offshore shell companies for individuals – takes us way beyond the rumors and assumptions we’ve always had.
For the first time, we have a real paper trail that touches countless parts of the city.
That’s a gamechanger, according to Nick Nehamas, a Miami Herald real estate and banking reporter who has written several of the local bombshell reports coming out this week.
“People have been talking about illicit money in Miami’s condo markets since the 1980s. We found examples here or there… but there hasn’t been a way until the Panama Papers for us to crack these shell companies,” he said.
The Panama Papers, as the investigative project has been dubbed, is a massive undertaking. The International Consortium for Investigative Journalists brought together almost 400 reporters from more than 100 media outlets around the world to sift through the 11.5 million files for up to two years. And they’ve been keeping it a secret that whole time.
The Miami Herald, Fusion, and Univision got looped in a few months ago by McClatchy because well, they figured that shady real estate deals would lead back here anyways.
“Given how much foreign cash and secret shell companies are active in Miami, he suspected there would be a lot of real estate transaction,” said Nehamas, referring to McClatchy Chief Economics Correspondent Kevin Hall.
Miami has the dubious honor of being the American focal point. We’re a “magnet for questionable currency,” said Nehamas.
The Herald has published several stories already (all of them can be found here) and there are more coming (but Miami is far from alone – places like Delaware and Wyoming have also been put under the microscope). The entire project can be found on the ICIJ website.
But we might be seeing the results of this leak for years – the journalists have only scraped the surface of the 11.5 million files. And the Panama Papers concern only one firm when there are scores more operating in Miami alone.
“This is going to make perhaps corrupt people think twice about investing in Miami,” predicted Nehamas. “I’d also say that anyone who has an offshore down here might want to let us know before we find it in the database.”