Reference no: EM131713334

Question: Leases. Betty Gosh runs ByGosh Realtors in Seattle, Washington. The company is a multimillion dollar agency, and the realty company has been in business for twenty years. Besides selling real estate, the company provides a rental management service for landlords' apartments and commercial properties. All properties that are for sale and for rent are listed on By Gosh's website. The terms of the rental contract follow the requirements of the city statutes that require a two-day cooling off period whereby the lessee may cancel the rental contract. The refund can be made with a check or as a credit to the card used to make the original payment. At the time of cancellation, there is a five-percent penalty. It is normal for Betty to request a credit check on any renter and this is the procedure followed with all accounts.

The rental contract is not consummated until payment is received. Many of the payments are made over the Internet with a credit card after the lessee has requested a rental property. Betty's accountant, Mary Stans, prepared a report showing that the number of cancellations on rental properties with one-year advanced payments has increased by more than 100 percent in the last year, and the vast majority of cancelled accounts have requested a check rather than a credit to their card. This has resulted in the collection of substantial revenue in penalty fees for ByGosh. Betty is worried about this unusual trend in cancellations, and she casually discussed it with a friend who happened to be a member of the local police force. Betty's friend joked, "It sounds like money laundering to me." Mary checked and all the credit card numbers are different. How could it be determined whether the Internet payments are the basis for a money laundering scheme?