Italy’s Financial Police display $134.5 billion in forged U.S. government bonds captured at the Swiss border.
Posted on 06/19/2009 6:23:49 AM PDT by SeekAndFind
A funny thing recently happened at the Italian-Swiss border. Italian authorities found a briefcase filled with $134.5 billion in U.S. government bonds. While this now appears to be merely a massive counterfeiting case, initial worries were that a major nation clandestinely attempted to unload a staggering sum of genuine U.S. dollar securities.
On June 3, Italy’s Guardia di Finanza (Financial Police) arrested two Japanese men in their 50s. They were apprehended in Ponte Chiasso, an Italian-Swiss frontier town about 25 miles from Milan. Rather than traveling express to Switzerland, these suspects were on a local northbound train where they stood out among working-class Italians.
When quizzed, the Guardia say, the two men claimed they had nothing to declare. Authorities inspected a briefcase the men carried. Beneath a false bottom, it featured a secret compartment that primarily concealed 249 U.S. bearer bonds, each with a $500 million face value. Nine more bonds, worth $1 billion each, showed President Kennedy’s face on the front and a NASA rocket launch on the back. Several smaller instruments brought the haul to $134.5 billion.
Officials were particularly intrigued; Italian law lets the government seize 40 percent of the bonds’ value exceeding the 10,000 euros ($13,952) that may cross borders without disclosure. This would have been a $53.8 billion bonanza, equal to 10.3 percent of the Italian government’s $521 billion 2009 budget.
These bonds were not obvious forgeries. For nearly two weeks, Italian authorities probed their authenticity and eventually requested the U.S. Securities and Exchange Commission’s appraisal. Asked what it concluded, SEC spokesman John Heine told me Wednesday: “I think I need to decline to comment on this.”
Wednesday evening, however, Bloomberg News quoted Treasury spokesman Stephen Meyerhardt. He called the bonds “clearly fakes” and added: “That’s beyond the fact that the face value is far beyond what’s out there.” Meyerhardt noted that only $104.5 billion in bearer bonds exist — $30 billion less than what that briefcase contained. That amount jointly would have made those Asian gentlemen America’s fourth-largest creditor, Bloomberg calculates, “ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.”
A $500 million U.S. bond may sound fanciful. However, the federal government indeed produced them between 1955 and 1969. To alleviate some of the physical burdens and administrative costs of storing and handling lower-denomination bonds, the Treasury began offering securities with much higher face values.
“The Bureau of Engraving and Printing only had to print one $500 million security instead of 500 $1 million securities,” economic historian Dr. Franklin Noll has explained. Electronic ledgers eventually obviated the need to keep actual paper securities, so nine-figure bonds followed the Indian-head nickel into oblivion.
So, these phony bonds could be central to a gargantuan scam perpetrated by big-league crooks equipped with sophisticated printing presses. If successful, such high-level scammers would make Bernie Madoff look like Warren Buffett.
Even scarier, counterfeit bonds cast shadows of doubt on legitimate ones. Thus, an evil group (terrorists? Japan’s Yakuza crime organization?) or a rogue nation (Iran? North Korea?) wishing to destabilize America’s wobbly economy even further could trigger at least mild tremors by making investors wonder which U.S. bonds are kosher and which are bogus.
hese enormous sums suggest a nation-state’s involvement. World War II witnessed such governmental shenanigans. The Academy Award-winning 2007 film The Counterfeiters tells the true story of Operation Bernhard, the Nazi scheme that forced Jewish graphic artists and printers to produce fake, undetectable British pounds. While Hitler hoped to hammer the British money supply just as he bombed its territory, the ersatz pounds never achieved widespread circulation.
Treasury’s declaration that those briefcase bonds were artificial reassured those who feared that a legitimate nation (e.g. Japan or China) may have tried to unload a Matterhorn of dollars in Switzerland, perhaps to purchase gold and hedge against a coming inflationary tsunami. Many economists expect a massive wave of price hikes and dollar devaluations stemming from Washington’s 18-month-long bipartisan earthquake of bailouts, spending, and money printing.
The two alleged crooks whisking sham bonds through the Alps were thought potentially to be state actors dumping soon-to-be flimsy dollars. This says less about these suspects than it does about the Bush-Obama administration’s reckless expenditures and promiscuous overproduction of Earth’s reserve currency.
— Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. Manhattan financier Brett Shisler contributed research for this opinion piece.
At least, that's the cover story the treasury came up with to calm the peons.
Are you implying that it might not even be fake and that some country is REALLY trying to unload our bonds ?
Missing! Two Japanese Nationals at heart of `counterfeit’ $134.5 billion U.S. bearer bonds story
Did you guys know that
“Again, $134.5 billion happens to be the exact amount remaining in the U.S. Troubled Asset Relief Program [TARP] announced by the Department of the Treasury on March 30, 2009.”???????
I heard this first in the Glen Beck program yesterday. He seemed to speculate that it was the North Koreans probably in cahoots with the Chicoms doing this as a massive counterfeiting of this magnitude can only be done by a government entity.
If so, what is their motive for doing this other than to crash the US bond market?
But then, why would the Chicoms be involved ? A crash in the US bond market would make the Chinese investments here worthless. Are they that suicidal ?
That is what more recent stories are starting to say. The bonds are probably real.
.....or maybe the US Gov't is printing bonds "off the books" like Italy did during WW II?
I really wouldn't put it past the thugs running things now.
I don't see how they could not be real. They RELEASED the two "Japanese looking" guys. If these were counterfeiters spiriting $134 bil in fake bonds across the border, there is no way that they would have been released. International investigators, most especially from the U.S., would be still be all over them.
Also, note the treasury spokeman (as per Bloomberg) seems to only want to drive the point home that they are "fake," yet provides absolutely no additional details such as where the supposed crooks were from, who is counterfeiting our bonds and WHY THE HELL THE SUPPOSED CRIMINAL ARE NO LONGER IN CUSTODY. Just, "they were fake, okay, see ya." Funny that the guy from the SEC (which was charged with verifying the authenticity of the bonds) doesn't want to comment.
The only reason I could think of why the supposed international counterfeiters are no longer in custody is because they weren't doing anything illegal.
How did those guys get a hold of them then, and who is going to come forward and claim the remaining 60% that the Italian government doesn't confiscate? BTW lose that kind of money and a whole bunch of people will probably have to pay with their lives. Anyone who had anything to do with smuggling them into Switzerland in such a stupid way. Even if counterfeit, the guys who got caught with them are probably dead by now.
Think maybe that could be part of the scam? Hey look we have the TARP money here.
These fake bonds have been floating around for years.
>> The Financial Times is reporting that there is some question about whether or not the two men are really Japanese nationals <<
This story involves so many implausibilities that if it wasn’t written on April 1, it must have come from the pen of an Italian “Scott Ott” clone.
Hmmmm! That gives me an idea!
bttt
They hardly need to come up with a cover story, just the facts. The bonds seized were supposedly issued in 1934, and the Treasury didn't issue $500 million or $1 billion denominations back then. Some of the billion dollar bonds were identified as "Kennedy Bonds". There is no such thing as a Kennedy Bond under any denomination except for some very old savings bonds in denominations of $100 or less. And the treasury hasn't issued 'bearer bonds' for almost 30 years. This is a half-assed forgery attempt that didn't have a chance of succeeding. Every bank in the world would have seen right through it.
And this is nothing new, either. Seven years ago the Philippine authorities broke up a smuggling ring and seized $2 trillion in counterfit U.S. securities. Compared to that these guys were small potatoes. Link
Yup. They could never admit that they're real. Japan has lots of explaining to do.
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