$6 Trillion In Fake US Treasury Bonds Seized In Switzerland

ackthpt writes "If you're going to steal, steal big, right? Italian anti-mafia prosecutors have announced the seizure of $6 trillion of allegedly fake U.S. Treasury bonds, an amount that's almost half of the U.S.'s public debt. The probe focusing upon money laundering has also include financial dealings alleged to direct money to Nigerian sources to buy plutonium. Sound like a movie plot, yet? $6 Trillion, that's a lot of lettuce."

Comments

Please clue me in.

[grub]

The U.S. embassy in Rome has examined the securities dated 1934, which had a nominal value of $1 billion apiece, they said in the statement.

I'm admittedly not a financial/bonds guy, but wouldn't $1 billion securities raise some eyebrows? In the same way that trying to pay for a Slurpee with a $1000 bill would.

Re:Please clue me in.

[superwiz]

Generally, no. Bonds are issued in fairly large denominations. But in this case, it would raise eyebrows because of the date. $1billion dollar bond would not be issued in 1934. No financial institution would have lent money in such one large chunk against 1 financial paper. Today bonds are issued in at least 100 million issues, but as someone pointed out, today they are registered, so it doesn't matter what the original issue is.

Re:Please clue me in.

[VinylRecords]

The plan allegedly was to sell them to developing nations and dupe their governments. The mafia would create a circus theater filled with distractions to make them look like a legitimate outfit. Office space, limousines, fancy suits, lots of showmanship. They'd use foreign diplomats and politicians on their payroll to get presidents or warlords of a foreign country into a face to face meeting.

They get a leader of some inexperienced government, possibly even a wealthy warlord, of a developing nation, and try to get them to transfer $1 billion worth of wealth in exchange for a $1 billion U.S. treasury bond. It is actually very creative. Had they not been caught they might have been able to pull this off. Though I don't see how any bank would have not raised a million red flags for this transaction and the reports are that the criminals wanted to move the money through Swiss banks.

This isn't the first treasury bond scam nor will it be the last. Organized crime loves this scam. Every year a few individuals are arrested with fake bonds on them that are valued at billions of dollars. The Italian police found a bunch of fake $1 billion bonds during a routine car stop a few years ago.

Re:Please clue me in.

[phantomfive]

Here is a story with a picture of the bonds. Kind of cool to look at, even if not real. You are right though, here is a quote from the story:

Creating fake Treasuries is a “common scam, especially in Italy,” he said. The tipoff was the “astronomical” face value of each bond, he said. Fake bonds in high denominations are more common in Europe, where people are less familiar with the face value of U.S. Treasury bonds than in the U.S., he said.

Re:Please clue me in.

[Anonymous Coward]

Banks are greedy motherfuckers, too. I worked for one (big one) doing due diligence. I personally delivered files on unsavory corporate raiders who gutted many companies and left behind ecological disasters that had to be then cleaned up by the EPA on taxpayer dime. But since none of them were ever convicted of anything, the bank smiled politely and opened their accounts.

Re:Please clue me in.

[Anonymous Coward]

However, just 10 years earlier in 1924 the Germans, who live next door to Switzerland, experienced hyperinflation. This got so bad that they had to change currencies and literally remove 12 zeros from the old one. Maybe the counterfeiter got his 2's and 3's mixed up?

The German reichsmark was issued in both metal coins and as paper. Already during WWI the real world value of these different forms of payment began to diverge. The German hyperinflation only affected ther paper money (papiermark) - bonds sold abroad were denominated in goldmark and as such stable.

the hyperinflation ended with introduction of the rentenmark - which by a fairly complex scheme was looking as much like a gold currency as a currency can do without being backed by gold (rentenmark could be exchanged for bonds that paid the papiermark value of one goldmark at maturity) and was trading 1:1 with goldmark. As prices stabilized the rentenmark was converted 1:1 into the new reichsmark.

The goldmark was never affected by all these shenanigans and during the peroid of hyperinflation big business transactions were often conducted in goldmark (or foreign currencies).

Nobody ever said crooks were that smart

[Sycraft-fu]

Crooks come up with stupid plans all the time, and often let their own greed blind their judgement. Hell look at some of the people who scam the 419 scammers. The 419 scammers are counting on people's greed to overwhelm their good sense, and then fall victim to the same thing.

Indeed such a thing would almost certainly raise eyebrows but the crooks likely didn't think it through.

Re:Nobody ever said crooks were that smart

[goose-incarnated]

None of that makes any sense, so perhaps a new MI movie instead.

Duh!

[Guppy06]

Everyone knows the real ones are in China!

Re:Duh!

[nedlohs]

No they didn't, in fact they increased their holdings significnantly (by almost 20%) in 2011 - almost taking back the top holder spot from China (China held 5% more) at the end of the year.

But don't let facts get in the way of your fantasies about the financial condition of Japan. Of course better to pick facts that aren't quite so published.

Re:Duh!

[metlin]

Slashdot, where people's knowledge of technology is only surpassed by their knowledge and understanding of of economics.

But here you go: major foreign holders of treasury securities. Holdings at the end of Dec 2011:

China: 1100.7B USD
Japan: 1042.4B USD

And oh, here's the data on the Japanese GDP since 1960.

FYI, it's grown from 4.6674T USD in 2000 to to 5.4588T USD in 2011. Sure, it fell for a while from the high of 5.2644T USD in 1995, but to state that their economy is not performing well only shows your stupidity.

Never intented to be used directly.

[Kaenneth]

I would guess the planned scam (Including the Nigerian connection) would be sending spam e-mails, etc. saying "as a nigerian prince, I inherited this billion dollar certificate. I just need a loan of $10,000 to pay for security, transport, etc. to have it redeemed, then you'll get $100,000 back..."

The certificates themselves would never be 'redeemed' just used to bait greedy people into getting scammed.

Re:Photos cast doubt on whether or not they are fa

[NotQuiteReal]

Why do the photos have a 50 star flag over the "series 1934" label? The box itself isn't even correct... unless there is some good reason it doesn't have the period correct 48 star flag.

Wow, Zero Hedge is going full on truther there

[Sycraft-fu]

Seriously, that is the dumbest conspiracy theory I've seen. The fact aside all the truther bullshit of "9/11 was an inside job" there's no way the bonds were real on account of the amount. In 1940 the US debt was only about $43 billion dollars (the GDP was only $97 billion). So there weren't $6 trillion of bonds floating around. The debt didn't hit the $6 trillion mark until late 2002 (the GDP was about $10 trillion). However, dates of the bonds aside, the treasury doesn't issue physical notes anymore. They are all just electronic entries in a database. Far more convenient, secure, and trackable.

Might want to lay off the conspiracy sites. Here's a hint: If someone starts going on about 9/11 being an inside job, they are a conspiracy nut.

Re:Wow, Zero Hedge is going full on truther there

[Openstandards.net]

That's what I thought. But, the more I dig on the boxes, the more historical they appear to be. Here is an interesting thread discussing them: http://www.thunting.com/smf/index.php?action=printpage;topic=2598.0

DEAR KIND SIR

[Shoten]

(Okay, I originally typed this in all caps...because it's funnier that way...but Slashdot's code doesn't permit it.)

I am the widow of A.Q. Khan from Pakistan. I am contacting you in good faith because I know you are a good person and will help me. I need your help in moving $6 trillion worth of plutonium out of the country. In exchange, you will receive a ten percent commission...

Pretend they are real

[tlambert]

Pretend they are real and pay down the US debt?

-- Terry

Re:Pretend they are real

[Sir_Sri]

The US federal debt is only 15 trillion dollars. 6 trillion would make a big difference. Of course these are government bonds, so the US government would be obliged to pay them back, er.. something, there's no one to pay if the government has them, but that's beside the point.

With 6 trillion dollars or even half of that, you could get rid of basically all foreign debt the US has. Then your debt would be borrowed entirely from yourselves (which is mostly is now, but not completely). The reason Japan hasn't imploded, despite having 200+% of GDP in debt (compared to the US ~100%), and they've been like that for a decade, is they owe that money to themselves.

Government debt is odd. Especially because it's in a currency you control. Mild inflation, with economic growth and a close to balanced budget deficit makes even big debts like the US has go away very quickly. That won't work for japan because their population is shrinking, and aging, but it will for the US because the population is at least flat, if not growing. But 6 trillion dollars could do a lot of interesting things for the US. Including just cover the deficit for the next 8 or 9 years. (900 billion this year, and progressively less after that, theoretically).

Re:Movie Plot?

[Bill Currie]

Discharge a AA nicad batery (~1200mAh) in 4.3 miscroseconds, and you have 1.2GW, so a few lettuce leaves poses no problem. Now, getting a GJ would take a few head of letuce.

Re:Wow

[Sir_Sri]

Huh? This story seems to have hit the press the moment it was discovered, and they all sort of ignored the absurdity of it. It's the guy with a printer argument, only expensive printer and organized mafia, but it was absurd. 10 seconds of internet searches reveals US gpd in 1934 as under 100 billion dollars, so a 1 billion dollar bond is just nonsense. That they printed 6000 of them, which is maybe a few thousand dollars in forgery is hardly that significant.

It doesn't seem like anyone important who saw them took them as actually legitimate. They found them and reported them as a result of some bad cheques (that were to the tune of 200k), and that was the end of it.

Not really an interesting story

[Sycraft-fu]

Because the scale means it was pretty much automatically ineffective. Also the instruments they counterfeited were never real. There are no billion dollar bonds floating around from 1934, and certainly not $6 trillion worth.

Effective counterfeiting requires that you are cloning an instrument that actually exists and people would accept, and that you pass it off in amounts that doesn't raise suspicion.

It's amusing, but it isn't as though these were some supergenius criminal masterminds who came close to making $6 trillion. They are some idiot criminals who had a scam pretty much doomed to fail.

Re:Photos cast doubt on whether or not they are fa

[artor3]

It's even weirder than that... Here's the highest res shot of the front of the thing that I could find - link. (Caution -- source website contains industrial grade crazy. Just mousing over the link will get you on at least four watch lists.)

Zoom in on the flag. It's grainy, but I'll be damned if there aren't eight rows, alternating between 6 and 7 stars each. That's 4 x 13 = 52 stars.

Personally, I choose to believe that these are boxes sent back from the future year 1934 AA (after apocalypse), by future Americans who live in a 52 state US (50 + Canada + Mexico + Airstrip One - California [it finally sank]). In the future, the six trillion dollars barely buys a sandwich, but if they invest it several thousand years ago, they'll be rich! Unfortunately, the time traveler who was supposed to invest the money got distracted chasing after a bunch of loonies who were just trying to let all the animals out of the zoo, and the money ended up in the hands of the mob.

Hey, it makes more sense than any theory from those Divine Cosmos people.

Re:Photos cast doubt on whether or not they are fa

[Openstandards.net]

I only count 13 stripes: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/Chicago_Bonds_4_0.jpg

But, the staggered stars does not coincide with the common 48 state pattern of that time.

Based on what I've read, there are either lot of counterfeits of a real thing, or this was one incredibly engineered large scale counterfeit. These boxes have been found from all over the world recently, with highest concentrations in the Philippines, with people digging them up in the 1990s. There are quite a few stories to go with them, some more plausible than others. Yet, I cannot find any solid scientific evidence placing the origin of these boxes in history, other than when they were dug up or acquired and the condition they were in.

Given how interesting this could be even if it all the boxes are fraudulent due to its large scale and long history, I think this is worth trying to understand better.

Re:Bearer bonds

[um... Lucas]

Wiki it

Short story is that bearer bonds pay to the bearer of them. There's no tracking of ownership. If you bought the bond and I stole it from you, you can't call the issuer to have them void that bond and issue a replacement. So literally, the bearer of the bond is the one who gets paid. Contrast that with a stock certificate - you have it, but the company knows who has them as well, or at least the transfer agent does. I steal your certificate, and you report it stolen to the transfer agent, and they void the old one in their records and issue a replacement to me.

The us government stopped issuing them in the 80s, I believe.

Because forgers are smarter then the average /.er

[SmallFurryCreature]

A few years ago two old forgers, father and son, were caught. They did masterful work but their real master stroke was in authenticating the items. How do you proof something is yours and is legit? Well, you shows that you, or rather, someone long death in your family, bought it legit at an auction.

How? They used an old and real auction catalog, pointed to an item description that was similar to the item they had forged and went with a story like my father bought this item here, what do you think it is worth if we wanted to sell it? It worked wonders. The documents were 100% legit and therefor in no doubt, they just weren't related.

If you want to sell these bonds, you have to come up with a convincing story of why you have trillions worth of bonds. You don't just dump them in a shopping bag and get payed. A scam is about the details and a period container complete with dust is a nice detail.

Mind you, you would have to be bloody greedy to believe such a scam but there are plenty of greedy people on the planet.