Readers here know of my fascination for the various bearer bond scandals that began to break in recent years, beginning with the seizure of some $134,000,000,000 in allegedly counterfeit bearer bonds beginning with the Japanese Bearer Bond Scandal in Italy in 2009. Well, in case you haven't heard (funny how the media over here isn't reporting on these stories since the Japanese one, isn't i1!?), there has been yet another such story emerging, as recently as January of this year, as reported by Bloomberg here, and which I blogged about last January. But it requires a closer look:
The episode itself, you'll note, occurred in the year 2000 in the Philippines, when natives went into the jungle, pursuing rumors of a crashed American airplane in the 1930s, and discovered "12 boxes that contained $300 billion in bonds." Readers will particularly note the following details:
"Each box, emblazoned with the Great Seal of the United States and the words 'Federal Reserved Bond,' held five gold coins struck with a portrait of George Washington on one side, Estrella says. They rested atop stacks of certificates purporting to have been issued by the Federal Reserve Bank of Atlanta in 1934 and redeemable in gold bullion. The notes bore the signature of then Treasury Secretary Henry Morgenthau Jr.
"Such fixed-income instruments, also known as coupon bonds, belong to whoever holds them, rather than to a registered owner. Vouchers representing interest payments were attached to the 30- year bonds that were denominated in amounts of as much as $100 million."
Note the details here, for they will inform our analysis in part two:
1) the bonds were dated 1934;
2) the notes were signed by the then secretary of the Treasury, Henry Morgenthau;
3) the bonds were found in chests and stamped with the seal of the Atlanta Federal Reserve Bank;
4) the bonds were purportedly redeemable in gold bullion;
5) the bonds were also accompanied by five gold coins stamped with the image of George Washington;
6) the bonds were denominated in $100,000,000 amounts;
7) the bonds totaled some $300,000,000,000.
The mystery deepened when the boxes were brought to a hotel in Manilla, where the story then notes that during the 1990s, Manilla's hotels were "'filled with foreign treasure hunters. I met people who had 40, 50 boxes of bonds, and I looked at them. They were different from ours. What a mystery," according to Jose Cojuangco, the brother of former Philippine president Corazon Aquino, who, as the article notes, helped topple the regime of Ferdinand Marcos.
The bonds' discoverer, Chris Estrella brought the discovery to Manilla where he sold them to Ronaldo Quiwa, in turn in the year 2002:
"...took the two boxes of bonds across the Pacific to Garden Grove, California, for review by Kurt Schwalbe & Associates, a document-examination firm. Schwalbe’s signed one-page report dated Aug. 18, 2002, says he examined '250 Federal Reserve notes with 33 interest coupons attached from box 9494' and 'determined them to be genuine as to date and origin.'
"Quiwa says the analysis didn’t satisfy him.
“'Schwalbe’s report was not complete enough,' he says.
"The phone number on the report is no longer working, and further efforts to locate Schwalbe proved unsuccessful."
Adding to this mystery, the article goes on to note that in the case of the Japanese bearer bond scandal, the two Japanese men were tracked back to....the Philippines, whence they had departed for Europe and Italy. The article then notes that U.S. Secret Service Special Agent Robert Gombar, stationed in Italy, maintains that
“'Nowadays the bonds are almost always U.S. Treasuries from the 1930s, and the forgers have grown more sophisticated,' Gombar says. 'They go to great extremes, putting them in antiquated treasure chests stuffed with newspaper clippings from the 1930s. It takes a great deal of time and trouble to print these bonds and establish the con.'
"Across the Atlantic, in New Hampshire, financial-instrument specialist Winslow takes one of the gold coins from Quiwa’s treasure chest shown to him by Bloomberg News and flips it in the air. It falls on an oak table in his office with a clink.
“'Cheap metal,' he says."
Of course, the official position, as indicated in the above quotations, is that these instruments are fakes. But it is interesting to note that the officials involved in the attempts to authenticate these instruments have pointed out the same thing that I myself have argued in previous blogs, namely, that someone is going to great lengths to counterfeit not only the bonds but the Federal Reserve Branch Bank strongboxes that they are "discovered" in:
“'For a collector, these counterfeit bonds are awesome because somebody spent a lot of time trying to justify their authenticity,' Winslow says. 'It’s a marvelous deception.'
Indeed, that it the point: it is a marvelous deception, one which someone is going to a great deal of expense to counterfeit not only bonds, but coins, and strongboxes.
All this leads us, once again, to an analysis and synthesis of details...but those will have to wait until tomorrow...
...See you on the flip side...