In the meantime we still want to put capital to work.Central banks are undoubtedly blowing an asset bubble and punishing savers however there will still be winners.

If you don't think wrongdoing should be punished whenever possible, then you're probably someone who wouldn't be against wrongdoing if you found it would help you accomplish something you otherwise would be prevented from accomplishing. 

TBH, I don't know the fines or punishments for renting a not-primary  residence in Denver - I'm sure you do and I'd love it if you shared for the OP's benefit - but this "tenant" is showing no regard for the legal document he signed.

I would do the things above,  and also contact him telling your sister/brother-in-law/uncle is a judge (don't mention they judge cat shows) and you were advised this is a felony wire fraud, or just fraud, whichever seems more plausible, punishable by a minimum of 2 years in prison. 

Teach them that notifications are intended for documentation purposes not as a punishment.

That is the biggest issue I see with my investor / insurance clients in NE Ohio...They are so focused on getting the maximum rent that they select a bad tenant and get punished for it.

If you had a bad experience you had a bad LO who didnt know or care what he was doing, and they LO probably got punished for his lack of customer service. 

If they pay late you punish them for 6 months with the higher rent fee.For this to work rents need to be kept at market.

It seems to me it is there to punish gross offenders but likely wouldn't be triggered in most instances.

This is not a punishment.