2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy

[Jan Klimkowski]

Via a poster on Karl Denninger's Market Ticker site:

1934 MORGENTHAU TREASURY BONDS
A problem that has been most prevalent in the Far East recently surfaced in London when officers from the City of London Fraud Squad seized fake $US Treasury Bonds with a nominal value in excess of $2.5 trillion.

On the first occasion $2.5 trillion worth of these bonds was seized from a safe keeping vault of a bank in the City of London in an assortment of 44 boxes, files and envelopes. Among the haul were a number of counterfeit Chinese Railway Bonds dating from the early part of the 1900’s.

Although genuine Chinese Bonds have a collector's value of about £20 each, the faked US Treasury Bonds are well known to the US Secret Service and other law enforcement agencies, in Hong Kong, Singapore, the Philippines, and Canada. Attempts have been made by fraudsters to use them as collateral for loans or to obtain money from naïve investors.

On the second occasion a number of people were arrested in the City of London after presenting billions of dollars worth of these bonds to a financial institution attempting to obtain “facilities”. Two women have been charged.

The story usually given by the fraudsters is that these bonds were printed by the CIA and given to Chiang Kai Sheck who opposed Chinese Communism in the 1930’s. However, so the story goes, some were lost and were then found in caves/crashed aircraft/sunken submarines (take your pick) by illiterate natives who passed them on to city slickers in exchange for a few trinkets. The fraudsters have even attached details of a B17 bomber, its tail number and details of the crew which perished in a crash in the rainforests of some distant tropical island.

Investors in the Far East have parted with huge sums of money to buy these bonds at 1¢ in the dollar. In June 2001 a US resident shot his wife and two children then turned the gun on himself after finding that these bonds, which he tried to encash at the US Bureau of Public Debt, were complete fakes.

Invariably the bonds are contained in what looks like a metal box with a serial number and a key number. The seal of the United States is usually embossed on to box lid. Once opened, the box will contain the bonds (which have a peculiar creosote aroma), sometimes large and heavy yellow metal coins in denominations of anything from $100m - $1bn, a negative film roll and a supporting documents such as an international certificate of immunity.

Although the Treasury Bonds are well presented, the fraudsters did not realise that the various Federal Reserve Banks have codes attached to them as follows:-

Boston: A; 1 Richmond: E; 5 Minneapolis: I; 9
New York City: B; 2 Atlanta: F; 6 Kansas City: J; 10
Philadelphia: C; 3 Chicago: G; 7 Dallas: K; 11
Cleveland: D; 4 St. Louis: H; 8 San Francisco: L; 12

Some of the treasury notes have the incorrect seal code for the Federal Reserve Bank purporting to have issued the note. How did this happen? Quite simply, the fraudsters cut and pasted images of current $US currency into the bonds and they didn’t look too closely or they didn’t understand what the codes meant. On occasion, if you know where to look, you can see the remnants of the currency that they have tried to hide or cut in the process.

If you are presented with documents of this nature, the US Secret Service at the US Embassy would be delighted to hear about it and will assist in any way that they can.

For other examples of this high profile crime please see the following web pages:-

http://web.singnet.com.sg/~twells/news110.htm

http://www.fraud-stoppers.info/alerts/treasury.html