$134 Billion in Smuggled Bonds? Almost Surely a Scam

My inbox is bulging with gossip about the $134 billion in supposed smuggled bonds seized by Italian customs agents on June 5 from two Japanese men. The news is old, but William Pesek’s comment in Bloomberg yesterday morning gave the second-day story some legs.

The idea that $134 billion in U.S. Treasury securities held by some government have gone walkabout and somehow were stolen by a Japanese gang is fairly preposterous. The securities almost certainly are forgeries. Forged securities (except for the occasional bearer bond) never are traded, because it is too easy to verify authenticity. But there is a scam as old as the Spanish prisoner story involving fake collateral. I’ve seen purported certificates of deposit of nine-figure denominations forged with the letterhead of South American or Russian banks. The object was to get a brokerage account somewhere to accept them as collateral.

The most likely explanation is that the supposed Treasury securities were intended as props in a scam. Perhaps something resembling the Bernie Madoff operation required visual proof that the proceeds of a Ponzi scheme were invested in something real; perhaps the corrupt employee of a minor bank intended to use the securities as fraudulent collateral for brokerage loans. The fact that the Italian authorities stated that they required time to determine authenticity is very odd. An email to the Treasury Department should have taken care of that.

There may be an espionage angle; this is the sort of thing we’ve come to expect from the North Koreans. I am reliably informed that during one year not so long ago, North Korea’s single largest export was counterfeit Marlboro cigarettes. North Korea has been caught red-handed counterfeiting US currency. Why not government bonds?

Comments

[User 305589]

@jewskilled
nobody here is interested in your fascist, nazi-propaganda! Just shut up and get lost!!

I urge Seekingalpha to instantly remove that user and his avatar. It is nothing but a blatant attempt to openly display nazi symbols and spread fascist ideology covered up as ''financial commentaries''.

2009 Jun 18 08:04 AM

[User 305589]

thanks to SA! That really happened in a blink of an eye.

2009 Jun 18 08:04 AM

[john s. gordon]

the north korean govt is testing the robustness of the counterfeit-detecting system & got caught, this time.
> jack

2009 Jun 18 09:02 AM

[wg]

Excuse me, but what on earth is Nazi about this man's observations about these certificates? They seem fairly sound to me. Or am I a Nazi too?

2009 Jun 18 09:53 AM

[Howard_T]

wg, User 305589's comment concerned a previous commenter whose post was subsequently removed. It did not refer to the author.

Concerning these bonds, I now expect to receive an e-mail from "the representative of a foreign government" offering me a part in the return of these bonds and a healthy reward. All I have to do is send my bank account numbers to...

2009 Jun 18 02:09 PM

[norom]

If this were part of a ponzi scheme it would have been far easier to enter larger and larger numbers into an excel spreadsheet and simply make them a chart, the label it a ROR, and stamp it with an official logo. Rich people have been proven stupid enough to belive anything presented as a statistic or chart.

2009 Jun 18 02:18 PM

[Donald Ingram]

We won't know if they are real or fake until the facts are in.
Until then - all is just conjecture.

2009 Jun 18 02:39 PM

[notsosmart]

all this insanity is here to stay.its a different world now & it doesnt seem better.the new world order will obsolete all the charts,graphs & figures of yesterworld as the ponzi/casino charade continues.anybody mentioning the over $900b of toxic paper still out there? the green shoots may be trampled under the soles of the 15-20% unemployed.this is a good amusing site.

2009 Jun 18 03:25 PM

[snagglesnarf]

During the asian meltdown crisis ten years ago it was common for Russian bondholders to unload their increasingly worthless ruble notes in Switzerland and elsewhere at significantly reduced values.
Why not the U.S. dollar? There are still lots of paper bonds out there and the Japanese have billions of them. You don't believe the U.S. would actually confirm someone was dumping dollars, do you?

2009 Jun 18 06:22 PM