Could this villainous urban development scheme be easily detected?

Question

THE SCENARIO: I've been inspired by shows like The Shield and The Wrong Mans to come up with my own (even more flamboyantly evil) development scheme, to use as the backdrop for the action in a low sci-fi crime story set in modern day Detroit.

Here's the direction I've taken: My smirking corporate villain contracts with the city to build a state-of-the-art job-creating factory in a slum, using land bought under eminent domain. The city government offers to reimburse him for X-million dollars, provided his own investment first exceeds a stipulated, much larger amount.

The villain then proceeds to build a really incredible factory ... on paper. He invents an array of dummy contractors and fake expenses to inflate the size of his own investment. Meanwhile, the factory that he actually builds is a rickety shell of a building made with the cheapest materials possible. He pays for most of it with the public money, and funnels what's left to a private overseas bank account.

Finally, to cover his tracks, he firebombs the property, causing it to collapse. He plants evidence to direct the blame on local gangs, and then quietly backs out of the project citing the level of risk posed to his workforce. He may even be brazen enough to claim the insurance at the inflated value, though I suspect that's the stage that invites the most serious risk.

THE QUESTION: Neither white-collar crime nor urban renewal work is exactly my specialty, so this entire idea may well have some serious holes. If so, my goal is to discover them, and hopefully patch them. So, could this scheme be easily detected, and if so is there a way to get around that?

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BOUNTY EDIT: I've started a bounty only to reward some of the answers I already got. More answers are always welcome, but the bounty is already set aside. It just says I can't award it for 24 hours, so, until then...

Answer 1

The hole in your story: You seem to think people working for government are either 100% stupid or 100% too lazy to do their job; that will not be the case. You have inspectors, for one. Building inspectors, safety inspectors, accountants, bookkeepers and other bean counters. There are many, many safeguards in place, both legal and routine, in every major public budget.

There are only two types of multi-million dollar contracts: Corrupt ones, and legitimate ones. You sound like you are aiming for a legitimate one, something politicians want to point to as an accomplishment: Publicized contracts like that extend to hundreds of pages when millions are involved and will be monitored. You will have a schedule to keep, milestones to reach, and the people doing the inspection will not be glad-handing politicians but actual engineers, architects, electricians, plumbers, drainage experts, safety experts, fire marshals, etc.

You will not get a choice in the Insurance inspection, either. The fire marshal and arson investigators do their job no matter how innocent the fire may look; they are trained skeptics and will involve the insurance company and look into your financing to seek motives for setting the fire. And find it.

If you want a plausible story, do not depend on your opposition being a caricature of stupidity and laziness that is so easily fooled. If cities really were as incompetent as you portray them to be, they wouldn't exist.

You need a reason for professionals, with the authority to look into every nook and cranny of your developing jobs center every month, and a natural interest and pride in serving their city and preventing it from getting ripped off, to not hit the brakes: They need to believe you are putting your money where your mouth is; and some ramshackle warehouse decorated with some motivational posters is only going to convince them to look deeper.

Added

If you want to save your story, ditch the city, and ditch the smirk. Make your criminal "The Music Man" (watch that old musical with Robert Preston); a con man of consummate skill that convinces non-government companies, charities, wealthy donors and more that what Detroit needs is a Jobs Center! (Robert Preston convinces the citizens of River City they need a Boys Band). Preston actually delivers the musical instruments; your guy actually delivers the Jobs Center, it just isn't going to work they way he said it would. The Music Man had a surprise happy ending with an innocent love story; but your story can end however you want. Inspectors will let you build something that just barely meets standards, it is not their job to ensure you keep your public promises, just that you meet the minimum allowable standards. They don't care if you collect \$100M in donations and are still begging for more on TV, even though they know you have only spent \$5M of it, and your "artistic renderings" of the Jobs Center cannot be realized with what you are doing -- the space isn't big enough, you are putting cheap flooring down, whatever. They aren't there to keep you moral, just to keep the building from falling down or killing people when it catches fire. This addendum is to answer the second part of your question; "is there a way to get around that?"

That answer is "I doubt it," but if you make it so the city itself has no contract on the line, and your villain is defrauding non-experts and they absolutely love him, he can raise 20 million, spend 5 million, and vanish with 15 million, leaving behind a grand entrance that says "Job Center" that opens on an empty, dusty warehouse with cobwebs in the exposed rafters.

Or the twist could be the "Stone Soup" fable; which is basically the plot of The Music Man: The con man generates so much excitement that the project becomes self-fulfilling: expectations were far lower than what he expected; enthusiastic volunteers make it all work out and nobody (but the IRS) ever looks at the money end -- and the IRS is not there to prosecute or expose any fraud.

Say your villain has been promising he can stop the violence and reform one of the gangs. A bloody gang war erupts; and all the psychopathic leaders of both gangs end up slaughtered, one side murdered and the other side blown up the next day. The rank and file all call a truce, they will reform themselves, and come in for job training -- and our villain's corporate partners step in with new vigor, with materials, equipment and volunteer employees to help these gang members get it, to end the gang wars once and for all. It's great publicity for them, the villain is just the revival tent preacher with fire in his eyes and thunder in his voice.

Then all your villain has to do is open the doors on that completely empty warehouse and he becomes a hero. Despite having the worst intentions, his Job Center succeeds and he is credited with turning around the lives of hundreds of Detroit youths. He even gets credit for stopping the gang war even though he had nothing to do with it. The city pins a medal on him, and MegaCorp: They may know many truckloads of money went missing, but it wasn't all theirs and it gave them a lot of free air time, so they don't mess with a good thing.

Answer 2

There are at least two problems here:

Building officials, utility companies, etc.

Your villain has to pay off the city's building officials, who are charged with making sure that the relevant building codes are followed. Since corrupting building officials is a long-standing practice, there are safeguards against it, which mean that he needs to bribe a lot of people. If anyone is resistant to bribery, suspicion will start to spread, even if nothing is immediately provable, and journalists will start to poke around.

Edit: The difficulty with corrupting the boss of the inspectors is that the fact that it's obvious a building is going up within the city. The inspectors also know all the building contractors. Unless their boss has a very good reason why none of them are inspecting it -- and building in a city without inspection is simply illegal -- the inspectors are going to suspect their boss of being corrupt. And the journalists get tipped off, and it all unravels.

A factory needs utility services: power, water, drainage, etc. Putting in conduits for them is expensive and needs to be done at the start of building, because it's even more expensive later. If those are skimped, that's also suspicious, and it's the kind of thing journalists will check.

Edit: The people at the utility companies will become suspicious if the utility provision during building is too small for a factory. They will have a pretty good idea what's required. The essential problem with this scheme is that it's trying to fool the competent, non-political people who keep a city running and safe.

What about the machinery for the factory?

A factory isn't just a building plus workers. The production machinery that goes in it often costs far more than the building. It needs to be ordered and deposits paid well in advance. The various manufacturers of appropriate machinery (who they are is dependent on what kind of manufacturing is to be done) will be keen to bid, and if no contracts are placed, or they're with unknown companies, that will raise suspicion.

Edit: The contracts aren't required to be public, but part of getting a public subsidy for this kind of operation is the expectation that you will spend much of the money locally. So if the politicians don't see press releases about contracts being placed, they will become unhappy. Also, their political opponents will be on the lookout for wastes of the public's money. And bribing everyone gets too expensive.

This scam isn't impossible, but it's rather risky. It's big and complicated, requires corrupting a lot of people, and there are a lot of ways it can be exposed.

Edit: People have ben trying these kinds of scams ever since it's been possible to get public subsidies for building, which was likely during the Roman Empire. Systems have evolved to catch them. You need a more original crime.

Answer 3

Oh... so you need a shady land development deal that just happens to be beloved by millions and people will greatfully throw money at. Well, there's only one obvious person to model: WALT DISNEY!

Now before you go grab your tourches and pitchforks, I'm exagerating a bit... but check out some of the things he did when buying land for what is today Walt Disney World. It was very hush hush (to avoid a sudden spike in the price of land near then podunk Orlando Florida, Disney had a bunch of shell companies purchase the land and when it was ready to develop, fold them back into Walt Disney Company. These companies struck a deal with the Flordia Government (before they were known to be Disney Companies) that allowed them to basically be free of almost all local and state level oversight... in fact, the only interaction Disney officially submits to on the Disney World Property is Florida Property Tax Laws and Elevator Inspection. Everything else is operated by Disney Staff and only Company men own home property on the land (rules require any changes to the property managment to be voted on by residents... the City of Celibration, Florida was actually given back to the state to avoid non-Disney staff from participating in voting). The property they control is 44 square miles... twice the size of Manhattan Island.

If you want some good reading, look into the Reedy Creek Improvement District... Disney World is basically the coal company town on steroids... Happiest Place on Earth indeed.

Answer 4

my previous answer was deleted because not enough details were given but... here is an example, in Moberly Missouri, where such a "villain" scammed the city for millions of dollars by promising to build a sweetener factory and hire hundreds of people. https://www.bloomberg.com/news/articles/2014-09-05/swindler-of-moberly-missouri-pleads-guilty-in-sweetener-scam

The other answers above do not describe human nature very well. We are not entirely logical beings, we are not robots. We have emotional and social components as well. Strong emotions such as hope (having a new factory for our town would bring so many new jobs!) or desperation leave people vulnerable, even entire communities to exploitation from an outsider.

Answer 5

Other answers have addressed the large numbers of inspectors and officials that would need to be bought off for you to even construct the "factory". But your problems don't end there.

Suppose you somehow do get past all the inspections and get to the point where your factory is open for business. A factory has to have employees, right? Where are yours, and where are your (and their) employment taxes? Even if your city is corrupt, tax fraud at the state and national levels will be much harder to pull off. And all those employees should be having an effect on traffic and parking in the immediate area; unless traffic is already terrible (in which case people probably objected during the planning phase), eventually somebody's going to notice.

And what about your consumption and output? A big factory should be drawing tons of power, even if you put solar panels on the roof (which doesn't appear to be a terrible idea in Detroit but probably won't run your plant by itself). Depending on what you claim to be producing, you should be drawing a fair bit of water too -- if nothing else, you'd need lunch, toilets, and maybe showers for all those workers you (don't) have. And sewage to go with. Depending on your processes, possibly also industrial waste that requires special handling.

If you (claim to) be consuming and emitting all this stuff, eventually somebody's going to notice that the meter readings and/or utility incomes don't match. If you claim to somehow not need all that, environmentalists, reporters, and others will be beating down your door to find out what your secret is.

"Building" a fake factory is already hard; "operating" it will bring you additional difficulties.