I get how you could buy a business and inflate your revenue in order to launder money you acquired illegally, but why would falsely inflated operational costs help you?
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From a legal standpoint, some operational expenses are tax-deductible so it could have been a bookkeeping tactic to limit tax liability.
Because it allows you to keep more of your falsified income. Otherwise youd have to pay a ton in taxes.
Ie you declared 100k of illegal income using a front. Since the front doesnt actually do anything you have to pay taxes based off 100k of income which might be 30% or something. Now if you also falsified 100k of operating expenses you would have a tax liability of 0, meaning you keep the entire 100k.
The thing you might have missed is that the money he spends is actually going to the cartel.
Take the air conditioners for the resort, for example. He spends $100K on 30 air conditioners. That $100K goes to the cartel’s AirConditionersRUs business which can now show $100K of legitimate income on their books. The resort shows $100K of legitimate expenses on their books. 5 air conditioners were actually delivered and installed. It all looks good on paper unless someone notices that there aren’t 30 new air conditioners. It would be the same with the carpet. The resort spent $50K buying $5K worth of carpet from the cartel’s carpet store. (All numbers pulled out of my butt – don’t be confused if they don’t match the numbers in the show.)
ELI5 – “Launder Money” means that the criminal origins (‘dirty’) get ‘cleaned’ when it enters the money system.
From claiming losses on taxes to phony costs and fake payrolls – the goal is to hide (launder) the criminal origin of the money.
Fake profits and fake payroll can generate real taxes – ergo the money (less taxes) is now “clean” and can be moved to a bank or invested just like any money.
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