How Venezuelan Used ‘Scrape’ to Make Six Times Her Salary

[Bacchus4.0]

http://www.bloomberg.com/news/2013-07-31/how-venezuelan-used-scrape-to-make-six-times-her-salary.html?cmpid=yhoo


Venezuela’s currency controls are turning trips abroad into profitable junkets.

A 27-year-old trade analyst from Caracas said she earned six times her monthly salary by traveling in April to Lima, where a business swiped her credit card and gave her $1,600 cash, charged at the official exchange rate of 6.3 bolivars per dollar. When the analyst, who requested anonymity because what she did is illegal, returned to Venezuela, she sold the dollars at the street rate of 29-to-1, enough to pocket 25,000 bolivars after paying off her credit card and travel expenses.


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The dollar shortage has helped the bolivar’s street rate weaken 70 percent in the past year to 31.5 per dollar, according to El Liberal Venezolano, a website that tracks the trade in bolivars on the Venezuela-Colombia border. Photographer: Andrew Harrer/Bloomberg
.The scheme, known as “raspao” or “big scrape,” is booming in Venezuela as a decade of currency limits causes a dollar shortage that is fueling the fastest inflation in the region and a scarcity of staple products including rice and toilet paper. From Miami to Madrid, travelers use the raspao to undermine socialist President Nicolas Maduro’s rules on dollar purchases.

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The dollar shortage has helped the bolivar’s street rate weaken 70 percent in the past year to 31.5 per dollar, according to El Liberal Venezolano, a website that tracks the trade in bolivars on the Venezuela-Colombia border. That’s led to a more than 400 percent spread between the two exchange rates, the widest in the world after North Korea’s 6,000 percent, according to Steve H. Hanke, a professor of applied economics at the Johns Hopkins University in Baltimore.

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Venezuelans getting dollars through the auction, or using their credit cards abroad at the official rate, sign an online oath that they will use the money for legitimate purposes. Travelers must also file an expense report and save receipts for three years in case they are audited. (!!!!!!?????)

[Bacchus4.0]

1. I have a sudden urge to travel to Venezuela

with a couple grand. Sell at the black market rate and then come back to Miami and buy back dollars at the official rate.

[joshcryer]

2. It's a true racket beyond comprehension.

And it benefits the right wing exiles the most, btw.

[Bacchus4.0]

3. I bet it also benefits the Boligarchs

who have access to dollars and the system and can simply buy then sell dollars at will.

[joshcryer]

4. There's a distinction?

[Bacchus4.0]

5. touche', hey, but seriously

its would seem quite lucrative for a foreigner to sell dollars at the black market and then buy them back at the official rate in Miami or at wherever money exchange. It would seem like an easy money making venture. It would pay for the trip plus a handsome profit. You could make a living doing that.

[joshcryer]

11. Don't think for an instant that rich Miami exiles want to stop this.

They are making massive bank with this crap just as they make massive amounts of money on the Cuban black market. It's a goddamn travesty and these states allow it because they can't admit that they're corrupt and basically anti-egalitarian.

And to be sure people don't even think that they're doing a bad thing. I tell the story here occasionally but as a kid we were on food stamps, back when food stamps were like monopoly money. When you bought something with that monopoly money they would give you change back. My parents smoked so they sent us kids into stores around town to buy something for 25 cents and then we'd get back 75 cents. Pow, pack of cigs in a few visits. We as kids didn't think anything was bad about it. My parents didn't think it was necessarily bad because we got a soda or a candy bar. So we were benefiting from it. And of course there's always the Colombia gas black market which we've talked about before (poor Venezuelans paying a few cents for gallons of gas to sell it in Colombia for hundreds of dollars).

Same thing here. If I'm going to travel might as well double up so that the trip pays for itself.

And guess who's doing all the traveling in Venezuela? It's not the poor barrio people. It's the fucking rich elites. And this is theft from those poor barrio people who deservingly should get that piece of Venezuelan taxpayer money.

[MADem]

12. Or the locals, like this young lady, who can travel where ever she might like...

That's Hugo's daughter:

[joshcryer]

14. I remember that.

I don't like to use kids in said topics, and in this instance I'd frown on it, but it's not hard to observe the disconnect. I'm glad they had pops pulled off life support 'cause the Cubans would probably still have him on it with whatever was left of his rotting corpse sitting in garbage bins somewhere.

[MADem]

17. She put all that stuff up on facebook...it's on her "official page"

There are also a number of shots of her with that jerk Justin Beiber...not the typical experience of a kid from the barrio, certainly.

[Socialistlemur]

13. Your business plan doesn't work

You would have to travel to Caracas. Round trip cost say $500 USD. Then you take your $2000 cash and buy say 63 thousand bolivars. This is illegal and you can go to jail, but lets say you get away with it... Then you say you go back to Miami and buy at the official rate? Where? Nobody would buy a stack of bolis like that in Miami at the official rate. They'll pay you at best 1 usd per 35 bolivars. So you lose.

The trade is done using electronic transfers and a net of partners:

First you take 12600 bolis and get the $2000. Then you buy the ticket out of the country, say 7000 bolivars. You are out 19600 bolis. Then you go to your "partner" in Miami who has visa sales points for a fake hotel, and say three fake restaurants and three stores. You ring $1500 through the fake charges. They give you your cut, say $1200 usd. They keep $300 commission. You spend the $500 you didn't swipe in their system for expenses for a couple of days in Miami. Then you deposit the $1200 cash into a bank account for a friend or "partner" in a USA bank. And fly back to Caracas. In Caracas you arrange another buy. This time you deal to transfer say $1000 to a bank account in the USA in the name of a person who is planning to escape from Maduro's Venezuela. This guy in turn sends an electronic transfer to you, 31500 bolivars. So this is the net flow:

Initial investment: 19600 bolivars
Dollar expenses (profit for USA based partners, usually a relative): $500 usd
Bolivars returned after black market sale: 31500 bolivars.
Net bolivar income: 11900 bolivars.

Thus what you need is say 30 people with passports and a lower middle class background with chavista connections. These are needed to grease the system to make sure you get the subsidized dollars. Say you have to share 50-50 with the chavista side. This means you make 30 times 11900 bolis per trip times 50 %. Or 178500 bolivars. And you and your relatives with the Visa card machine get $15000 back in the USA. The guy trying to move the cash out gets $1000 in a USA bank. His bolivars come from selling property such as his home to a chavista boligarch.

This is the way people fleeing Venezuela move cash out. According to statements made by the central bank president approximately $12 billion usd were moved this way in 2012. This explains in part why Venezuela shows a current account surplus but at the same time they are broke.

The billions of usd they borrow seem to be filtering out and finance the transfer of property to the new rich boligarchs, of which Diosdado Cabello, the National Assembly leader is the Godfather. The word according to Mario Silva was that Cabello had partners and they moved billions using this method but with megabuck contracts and purchase orders issued to fake companies. In a sense, the Venezuelan government seems to be made up mostly of a network of mafias and gangster groups. Some steal via the forex laundering machine, some are plain bribe takers, some do drug trade, and the small fry are into kidnapping.

It's a government of thugs blended with Cuban elements from Havana which are trying to impose order via their G2 elements penetrating the Venezuelan centers of power. Chavez was extremely corrupt. Maduro is more of a follower and is clearly being run out of Havana. The guy doing the day to day managing is Izarra, and they keep Maduro traveling around. But Izarra follows Cuban guidance and the Cubans lack the power to destroy the chavista mafia because its a hydra and its heavily armed.

[joshcryer]

15. $12 billion USD? Stolen from the Venezuelan people.

And helping to erode the intellectual and economic capital of Venezuela (those fleeing are going to be elites or those with education or wealth). Truly discouraging to say the least.

This to an extent reminds me of Eva Golinger's million dollar apartment in New York. Being a shill for the chavistas / boligarchs is lucrative...

[Bacchus4.0]

19. the illegality of the black market exchange wouldn't bother me, I have contacts

and would simply arrange a transaction just like you would buy a set of speakers on Craigslist. I would not go to some street corner. However, I don't have all the info, but it seems even if the Money Exchange at the airport does change Bs its like 17:1 probably making any trip to Venezuela a wash at best, which isn't horrible but not a money making scheme.

I read another article that in Curacao and other countries the businesses widely accept Venezuelan credit cards and do the fake receipt thing and then give the Venezuelans dollars and keep a percentage.. One guy in Curcacao says he made $300,000 in a month. So a better business venture would be to set up an exchange in Miami of some sort that caters to the Venezuelans.

Yep, the most corrupt and inept government in the hemisphere undoubtedly.

[joshcryer]

23. Well if you do it let me know.

If Eva can profit off of Venezuela maybe I can too...

I tease. I'm not serious. It's disgusting.

[SheilaT]

6. In 1980 I was on a trip

to Poland. There was a huge spread between the official and the unofficial exchange rate. We (my new husband and I) were too cautious to do any unofficial street exchanges, but on our last night in Warsaw we had a nice dinner in the restaurant of our fancy hotel.

When it came to pay the bill, the waiter was extremely eager to accept our U.S. cash instead Polish cash or even a credit card. I no longer recall the exact amount we exchanged, but it was maybe $20.00 which covered the room and our nice meal.

When we checked in there was a large sign at the registration desk offering a significant room discount if you paid with a U.S. credit card.

We only slightly regretted not being brave enough to do more illegal currency exchanges, but were concerned that we'd be an easy target for a sting type of operation.

[Bacchus4.0]

7. I know a couple of people in Venezuela, thats the route I would take

and not go to a street exchanger. My main concern is actually how much can you exchange back in the US. Would you be able to exchange $5000 worth of Bolivars at the Miami airport exchange or is there some limit? I hear banks won't buy Bolivars so the places where you can exchange are limited. The airport exchange is like 11:1 but that is still far below the black market rate.

[SheilaT]

8. I'm sure you can find out what kind of limits

there would be on what you could exchange at the Miami airport. Perhaps a way around those limits would to be exchange the ultimate amount over a period of days or even weeks.

For the most part it's hard to exchange any foreign currencies here in the U.S. We're just not used to that kind of thing.

[Bacchus4.0]

10. yeah, it would seem an incredibly easy way to make money

It appears other latin american nations won't change Bolivars. Its in their own best interest not to since the official rate is nowhere near the actual value.

[Bacchus4.0]

9. Just spoke with my Ecuadorian friend, no-one wants Bolivares

Ecuador uses the US dollar as its currency making it a popular destination for Venezuelans looking for dollars using the scheme in the OP. and then return to Ven with dollars to sell on the black market or hold on to.

Banks in Ecuador do not change Bolivares. They change Colombian pesos, and Peruvian soles but not Bs. I assume this is true in all South America.

[Socialistlemur]

16. Nobody buys bolivars in a change house, guys

You need to study what I outlined above. It's possible to set up a fully legal laundering system in Miami. But you'll need a contact in Caracas, preferably a chavista who has connections into CADIVi or the PSUV higher ups.

I wouldn't get too interested, this trade requires connections you won't have. When you get in business deals with people like this and they think you crossed them they'll send somebody from the FARC cousins in Medellin to pay you a visit in Miami. And evidently people who move millions of usd have to be into the swamp big time. The FBI, CIA and other USA agencies have them pinned. But this trade is illegal in Venezuela but not in the USA as long as they file their taxes with the IRS. And the USA is mighty happy to see $12 billion a year flow into USA banks and finance the nice increase in investment in real estate in South and central Florida. Obama knows Florida is a key to future elections and the feeling of euphoria from the improving economy helps democrats' chances. The Venezuelan government is famous for being somewhat stupid, but this takes the first prize.

[joshcryer]

18. But a lot of chavistas and boligarchs have those connections.

That's the point.

This particular elite had the connections so she was able to get it done.

It still remains theft from the Venezuelan people, particularly the Venezuelan poor, who don't have these connections.

This is why some have noted that Miami exiles are mostly white Cubans and that black Cubans aren't able to enjoy the Cuban black market.

[Bacchus4.0]

20. I don't think the woman referenced in the OP is an elite

given her salary and she made 6 times that amount simply by traveling to Lima. Elites and chavistas in power don't have to travel.
I am sure they get access to the purchase of dollars at the the official rate and simply resell on the black market or just to anyone,
rinse and repeat.

Regular Venezuelans do it to supplement their income and get free trip to boot. Not a bad deal but they don't have access to the purchase of dollars in country like the Boligarchs and corrupt chavista officials.

I wonder what are chavista friends think about this matter.

[Socialistlemur]

21. This lady is either crazy or very connected or imaginary

I give you three choices:

1. She's crazy. The authorities can check people flying and spending cash in Lima. Check their profession, then pin her down, get her bank accounts, intervene her email...and put her in jail.

2. She's so,connected she didn't mind revealing the laundering machine ...maybe she's a chavista trying to show the system is rotten. After all many Chavistas are saying so openly.

3. She's made up. Many people know how the system works, the newspaper used a hypothetical person to hide their sources.

I heard about this laundering cycle in Venezuela many years ago. It was bad when the difference between legal and black market was less steep. Now with the black market rate solidly above 30 bolis to the dollar the incentive is huge. It's so bad many of these mules don't even use their plane tickets. Which shows there's a lot of government people involved.

The solution as I mentioned many times is to set up a real secondary market like the old SITME with the bolivar at say 15 per usd. At that rate it gets a bit steeper to break the law. Right now the government might as well be tossing dollars out the window. And because to get these dollars you do have to be connected or pay off a chavista official it means its all the predatory Chavistas who got into the party to steal who are killing the "Bolivarian Revolutin", which increasingly looks like a band of thieves trying to grab what they can while the Titanic sinks.

[Bacchus4.0]

22. I actually wouldn't select any of those

It appears to be a common practice and hers was just one example. I agree that the government is throwing money away and that the chavistas are nothing but thieves.

and this is the model that our chavista friends on DU hold up as a model government and society.

[Socialistlemur]

24. It is common practice but...

She talked. The mafia doesn't like it when people talk.

[joshcryer]

25. They can't connect her to anyone.

Money talks. They prefer money over anything else.

[Socialistlemur]

26. Sure they can

They give her age, profession and a trip to Peru. It would be easy to check passenger lists, cross reference credit card charges and pick up her buys because she's registered in RUSAD.