Italian anti-mafia prosecutors say they have seized a total of 6,000 fake U.S.Treasury bonds each with a nominal value of $1 billion, amounting to a total of $6 trillion, almost half the U.S. public debt.
According to Financial Times, the fake bills carrying the date 1934, were found in three wooden chests, each containing a forged copy of the 1919 Treaty of Versailles sealed in lead cylinders. The chests were made elaborately with bronze inscriptions reading "Chicago" and "Federal Reserve System."
They were allegedly shipped in 2007 from Hong Kong to Zurich.
Los Angeles Times reports that "if you acted quickly on the $6-trillion offer, you'd get a signed copy of the Treaty of Ve rsailles, the 1919 document that ended World War I."
Swiss authorities, acting on a tip off from Italian police, seized them in a safety deposit held by a Swiss trust company.
According to Bloomberg, prosecutors from the southern city of Potenza, Italy, say they arrested eight people in connection with the investigations called "Operation Vulcanica." According to Financial Times, one of the eight men arrested was Rocco Menzella, former mayor of the small town of Montescaglioso in the southern region of Basilicata. Bloomberg reports that Edward Donovan, spokesman for the U.S. Secret Service, said the U.S. assisted in the investigations which focused on a Sicilian living in Potenza already "known for money laundering and exporting currency abroad."
The U.S. embassy in Rome examined the securities with a nominal value of $1 billion apiece. Los Angeles Times reports that Brian Leary of the U.S. Secret Service commented on the bonds that carried an image of former U.S. President Wilson: "It's a piece of paper with something printed on it. It's worthless." The U.S. Embassy in Rome said: "These fictitious bonds were allegedly part of a scheme to defraud Swiss banks."
The U.S. embassy in Rome, according to Bloomberg, tweeted the message: “Thanks to Italian authorities for the seizure of fictitious bonds for $6 trillion.”
Reuters reports the scheme was designed to defraud Swiss banks by using the fake certificates as collateral to secure loans. Los Angeles Times reports the fraud also involved a scheme to purchase plutonium from Nigeria. Two checks were issued through HSBC Holdings Plc (HSBA) in London for 206,000 pounds ($325,000). According to Bloomberg, prosecutors discovered from a monitored phone call that the individuals involved in the fraud were planning to buy plutonium from Nigerian sources.
Italian authorities said the fraud posed a "severe threat" to international financial stability.
Frauds involving bonds are common in Italy, but the Italian authorities were amazed at the "astronomical" face value of the the new fake bonds uncovered. According to Donovan, fake bonds in high denominations are common in Europe because people are less familiar with the face value of U.S. Treasury bonds.
This is not the first time the Italian authorities are seizing fake bonds. Bloomberg reports there were at least three cases in 2009. Italian security agents seized fake U.S. Treasury bonds with face value of $116 billion in August 2009, and $134 billion in June of the same year.
Los Angeles Times reports a recent scam that involved bonds alleged to have been bound for China in the 1930s as part of a secret government deal, but were lost when the plane carrying them crashed in the Philippines.
The U.S. Immigration and Customs Enforcement has warned the public to be wary of investment pitches involving billions of dollars in U.S. bonds.