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Home / unitedstates / Thanks to the 2008 foreclosure crisis, Kuwaiti ponzi schemer was able to single-handed blight cities across America / Boing Boing

Thanks to the 2008 foreclosure crisis, Kuwaiti ponzi schemer was able to single-handed blight cities across America / Boing Boing

After the 2008 economic crash and the ensuing foreclosure crisis, AbdulAziz HouHou ran and ran a scheme that beats millions of people who were buying and flipping for houses across America, especially in the hard-hit rustbelt towns like Buffalo and Rochester.

HouHou – now serving 10-year prison sentence in Kuwait – lured in investors with promises of worry-free, 15% returns on their money, which he said would buy up distressed properties and then renting out to desperate people who would tolerate minimal maintenance while paying high rents.

Apparently that did not work out – or perhaps HouHou never intended to work out – and instead, HouHou bought houses and left them vacant, boarded up, not paying taxes on them. Sometimes he sold the same house to multiple investors. Sometimes he didn't even own the houses he was selling.

The scam went on for years, thanks to HouHou's paying existing investors out of the money coming in from the new ones, guaranteeing and sterling reputation in Kuwait.

Even before the scam was revealed. He did not pay property taxes, and his empty houses were burned down, or attracted squatters, or simply rotted away, lowering the value of people nearby. Since HouHou was busted, some of America's poorest, the bridge-strapped cities have had to spend tax dollars on them, or their fires, or rousting squatters. The houses are often sold for pennies on the dollar, and many are uninhabitable thanks to neglect, which leads to catastrophes like frozen and burst pipes.

HouHou's greed is clearly blame here, as he is the willingness of his investors to become slumlords. But this is an absolute predictable outcome of treating housing – and human necessity – as a mere asset. The world's great cities and the people who make them great at the mercy of global class of housing specialists who increase their profits through a mix of substandard maintenance, rent gouging, strong-arm tactics, and epidemic of evictions.

It's one thing for useless "assets" like Bitcoin or gold to become the locus of investment bubbles, attracting every kind of grifter and crook, but when it's being stolen, it's a crisis of an entirely different kind.

Buffalo officials expressed sympathy for Kuwaitis who said they were scammed by HouHou, but said their bigger concerns are the neighborhoods where HouHou houses have sat up and vacant, some harboring and feral cats, and deteriorating to the point of being demolished. Some are located in neighborhoods and other investors are working to revitalize.

Sixteen became so dilapidated the city demolished them – usually at taxpayer expense.

Nine caught fire.

Squatters were found at at least one.

Many were vacant. Some were stripped by vandals or damaged by frozen pipes.

Of the 160 houses flipped in Buffalo from late 2013 through mid-2016, about a quarter ended up with housing court judgments, and about half ended in foreclosure, The Buffalo News found.

How and Kuwaiti's Ponzi scheme left and trail of blight in Buffalo [Susan Schulman/Buffalo News]

(via Naked Capitalism)

(Image: Mubarak Almubarak)

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Cory Doctorow

I write books. My latest are: YA graphic novel called In Real Life (with Jen Wang); a nonfiction book about the arts and the internet called Information Doesn't Want to Be Free: Laws for the Internet Age (by Neil Gaiman and Amanda Palmer) . I speak all over the place and I tweet Tumble, too.


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