J. Edward

When I was a kid, the Bronx was burning. My dad was a fireman who happened to be an Ivy League graduate. He told me it wasn’t the crackheads torching the city, whatever the news said. It was fraud. Let me explain how it worked…. John Doe buys a rundown apartment building for $100k. He pockets the redevelopment tax break, then sells it to Joe Doe for $250k. Joe pockets the tax break, then sells it to Jerry Doe for $500k. Rinse and repeat until the building is worth $5 million. The tax breaks are real. The money is not. Because the buyers are all family, the cash flows out of Swiss bank account 27852 and right back into 27852 after every sale. There’s a transaction cost, sure, but the tax breaks more than cover it. Then comes the payoff: they insure the building for $5 million and burn it down. The name for this was “Jewish Lightning.” The phrase stuck around not because the landlords were all Jewish, but because the stereotype hit a nerve in a city run by Jewish mayors from 1974 to 1989, the peak of the burning. Fair or not, the term stuck. So why was none of this investigated? NGO funding, of course. The NYPD union was powerful, and NYC detectives had sweeping investigative authority over almost everything. Except arson. Arson belonged to FDNY detectives. NGOs, routing money through union donations, stoked the rivalry between cops and firemen. Long story short, arson investigators got no funding and zero cooperation from the NYPD. No money for investigations means no arrests. Eventually the Bronx ran out of buildings to burn, and Giuliani drove the final nail into arson fraud’s coffin. But the lesson survived, and it’s the foundation of today’s fraud. The lesson was this: the actual value of the asset doesn’t matter. 👉What matters is the movement of money. Destruction is still very profitable. When the Baltimore bridge collapsed, the cleanup and rebuild were estimated at $1.7 billion, with the bridge reopening in 2028. The cost has since ballooned to $5.2 billion, and the wreckage still isn’t fully cleared. Money pours into demolition,, engineering, environmental review, project management, waste removal. But if the work doesn’t actually get done, the real expenses stay low. The money moves; the bridge doesn’t. And here’s the leap: you don’t have to destroy anything at all. You just have to not build it. Democrats allocate money to a government body, which hands it to a project manager, who hires consultants, who hire subcontractors, who hire more subcontractors, who funnel it back to Democrats, who allocate more money. The fewer the actual costs (labor, materials, equipment) the more of the flow you can capture. And if a taxpayer complains, you hire a PR firm and a few consultants to explain why costs keep exploding while nothing gets built. The easiest thing to blame is red tape. So why does red tape exist? Because destroying valuable property, while profitable, is too obviously unethical. Burning buildings gets you arrested, eventually. Not building gets you a ribbon-cutting and a press release. Here’s the deeper trap. Because our most valuable assets are fixed (houses, cars, index funds) we think of money as static. You have what you have. It grows over time, but it doesn’t flow. That’s exactly where the fraud lives: in the flow. The light bulb moment was realizing you don’t need to destroy physical property. You only need to destroy productivity. If labor and materials are never purchased while money pours in, the fraud works. You don’t have to build or destroy anything of value, just productivity. You just announce a project and start writing checks while throwing up enough red tape to block any real spending on labor and materials. This is basically why Congress handed @PeteButtigieg $1.2 trillion and our roads and bridges still suck five years later. They put up signs, traffic cones, and red tape, and little else. But there are a few residual problems. 1/2