Home Shows & Money Laundering by Jewelers from India, Customers and Hosts in trouble…
Over the past few years hosting jewelry shows at home in the US have become very popular. Many jewelers from India reach out to their customers ask them to arrange for home based Jewelry shows.
They entice their customers with incentives including lower pricing on jewelry and commissions on sales. Those entertaining these jewelers are taking huge risks.
It would all be fine if only these jewelers follow the laws. Most people who host these home shows are from professional backgrounds usually IT professionals and do not realize the legal and financial implications of their actions.
There are two major violations these jewelers indulge in, they do not carry a business license in the jurisdiction they conduct business in and handle the proceeds from sales illegally by hawala transfers or by depositing in individuals accounts, some times in the personal accounts of their hosts and ask them to transfer the funds to their accounts abroad in Dubai, HongKong, Sinagapore and sometimes India.
According to the U.S. Small Business Administration, failing to comply with the requirements of city and state governments issuing business licenses can result in expensive fines. The exact amount of the fine will depend on several factors, including the nature of the offense.
When such fines are imposed, they are imposed on the home owner/host, rather than the jeweler who actually conducted the business as they are no longer there and most probably do not even have legitimate business entity in the US.
In one incident last year, about 15 home owners received letters of violation which alerted the jeweler conducting these shows and took a hiatus for about a year and is back in the US and doing the same more subtly this time. This jeweler who actually has a business and employees in the US is being investigated for breach of employment laws and immigration laws and will be in news very soon.
The bigger problem is how the money from the sales is handled. The cash portion of the sales is usually passed back through hawala transactions and the payments received by check get deposited into personal accounts of employees, straw people and sometimes the hosts themselves.
US residents, alien or otherwise irrespective of their resident status, should be very careful when handling someone else’s money. Its better one does not get involved in such financial transactions. The concealment of the origins of money, typically by means of transfers involving foreign banks is money laundering, usually for the purpose of tax evasion.
Any individual facilitating such acts will become legally culpable. In today’s electronic banking system it is very easy for the authorities to trace the flow of money. As and when these operators get caught, the first thing any investigating authority would be looking at is not their Facebook account but their financial records.
As for the consumers, always pay by credit card or check made to a legitimate business, not an individual. Avoid payment methods like PayPal as you do not know who the recipient is on the other end.
Yes the jeweler might appear to have a great reputation in India and might be very well known, so was Nirav Modi and many others. Do not fall for appearances, how long they have been in business or how many celebrities they are associated with.
Follow some basic rules and avoid unnecessary complications. Always try to pay by credit card, transact only with legitimate businesses, when writing checks make sure checks are made to business name and not individuals.