Thanks to the seizure crisis of 2008, a Kuwaiti pioneer was able to destroy alone cities in America / Boing Boing

After the economic crash of 2008 and the seizure crisis that followed, AbdulAziz HouHou set up a ponzi system that robbed other Kuwaitis of millions spent on the purchase and construction of seized homes. United States, particularly in the fortified towns of Buffalo and Rochester.

HouHou – who is now serving a 10-year sentence of imprisonment in Kuwait – has seduced investors with promises of 15% profitability, no worries, that he said spend to buy properties in distress and then to rent to desperate people who would tolerate minimal maintenance while paying high rents.

Apparently, it did not work – or maybe HouHou never intended to do it – and instead, HouHou bought houses and left them empty, closed, without paying taxes. Sometimes he sold the same house to several investors. Sometimes he did not even own the houses he was selling.

The swindle lasted for years, thanks to HouHou's ponzi tactic of paying existing investors with money from new investors, thus guaranteeing an excellent reputation in Kuwait.

Even before the scam was revealed, the cities were suffering from HouHou fraud. He did not pay property taxes and his empty homes were sometimes set on fire, or attracted squatters, or simply rot, thus lowering the value of neighboring homes. Since HouHou was dismantled, some of the poorest and most deprived cities in the United States have had to spend taxpayers' money on shaving them, extinguishing fires, or rousing squatters. The houses themselves are often sold for pennies on the dollar and many are uninhabitable due to negligence, resulting in disasters such as frozen or broken pipes.

The greed of HouHou is clearly to blame here, as is the willingness of his investors to become slum lords. But it is quite predictable to consider housing – a human necessity – as a simple asset. The big cities of the world and the people who make them big are at the mercy of a world class of home speculators who increase their profits through a mix of unhealthy maintenance, rent gouging, incendiary tactics and an epidemic of expulsions.

It is a thing for useless "assets" like Bitcoin or Gold to become the place of investment bubbles, attracting all types of grifter and scammers, but when they are houses that are stolen, the situation is totally different.

Buffalo officials have expressed sympathy for Kuwaitis who claim to have been scammed by HouHou, but said their biggest concerns were in areas where HouHou's homes were sitting and vacant, some harboring rodents and feral cats, and deteriorating to the point of being demolished. Some are located in city neighborhoods and other investors are working on revitalization.

Sixteen have become so dilapidated that the city has demolished them – usually at taxpayers' expense.

Nine caught fire.

Squatters were found in at least one.

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

Of the 160 houses redeveloped in Buffalo from late 2013 to mid-2016, about a quarter resulted in judgments by housing courts and about half were the subject of a seizure, revealed the The Buffalo News.

How the Ponzi scheme of a Kuwaiti left a flail trail in Buffalo [Susan Schulman/Buffalo News]

(via naked capitalism)

(Image: Mubarak Almubarak)

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