$134.5 billion in bearer bonds seized in Italy were fake

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$134.5 billion in bearer bonds seized in Italy were fake

Thursday, June 18th, 2009 | Economics, True Crime |

Italian authorities recently arrested two men smuggling $134 billion in U.S. bearer bonds into Italy. The U.S. government says the bonds aren’t real:

“They’re clearly fakes,” Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington, said yesterday. “That’s beyond the fact that the face value is far beyond what’s out there.”

Meyerhardt said Treasury records show an estimated $105.4 million in bearer bonds have yet to be surrendered. Most matured more than five years ago, he said. The Treasury stopped issuing bearer bonds in 1982, Meyerhardt said.

Had the notes been genuine, the pair would have been the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.

Via Patrick.net, Seeking Alpha notes some problems with the story.

2. According to a brief Bloomberg article regarding this story, the seized bearer bonds allegedly were dated as of 1934. Since bearer bonds in denominations of $500 million did not exist in 1934, the bonds were deduced as fake, though the Italian police are still waiting for a declaration regarding the bonds’ authenticity from the SEC. There is something truly “off” about this declaration. How can the quality of the forged bearer bonds be so meticulous that they “are indistinguishable from the real ones”, yet the people involved in the alleged forgery so ill-informed as to not date the bearer bonds with a more recent year that would not immediately identify them as fraudulent?

In comments someone linked to a 2004 story about scams involving fake bearer bonds dated 1934:

Moldy bonds and bills that con artists used to try to bilk seniors were on display in downtown San Diego yesterday, the loot from two recent seizures by federal fraud cops. The bonds and bills are dated 1934 and bear incredible denominations – $500,000, $100 million, $500 million – and portraits of former President Ulysses S. Grant and one-time Treasury Secretary Salmon P. Chase.

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