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Quatloos! > Investment Fraud > Treasury Scams & Forgeries > Exhibit: Phony Securities

Exhibit: Phony Securities

Reprinted from:

Examples of Known Phony Securities

"Limited Edition" Treasury Securities

The U.S. Treasury has become aware that certain foreign individuals and groups are attempting to sell fictitious Treasury securities referred to as "Limited Edition" Treasury securities. As part of this scheme, entities such as broker-dealers and banks are being approached to act as fiduciaries for transactions. The proposal to sell these fictitious securities makes misrepresentations about the way marketable United States Treasury securities are bought and sold and it also misrepresents the role that the U.S. Treasury plays in the original sale and issuance of our securities.

The U.S. Treasury has requested that the SEC investigate this matter and that it notify its foreign securities regulatory counterparts. The U.S. Treasury has also contacted the NASD, NYSE and financial institution regulatory agencies to alert their examiners and their respective members or financial institutions that they supervise. The Secret Service and FinCEN have also been notified. All of these organizations were advised that there is no such security as a "Limited Edition" Treasury security. In response to our requests, a number of regulatory agencies have issued alerts or warning notices to their institutions and members.

U.S. Treasury Bills - One Year "Fresh Cut"

The U.S. Treasury has become aware that the above-named fictitious securities are being offered for sale. An individual was offered these securities by a person who represented himself to be a consultant to Lesser Developed or Third World countries. This particular transaction was for $500 billion -- an astounding amount in itself. In another incident, a large government securities dealer was contacted to enter into a transaction involving these fictitious securities. The U.S. Treasury has never issued any Treasury bills that were named One Year "Fresh Cut."

"U.S. Dollar Bonds"

The U.S. Treasury gets many inquiries, mostly from the Far East, about these bonds being issued in the 1930's or early 1940's by the CIA to help Chiang Kai-shek fight the communists. It is alleged that they have been buried in caves by his generals and their heirs for years and have recently been unearthed. They are now being fraudulently offered to people at a fraction of their face value. This story is false. These securities are not genuine and do not bear provisions that even remotely resemble Treasury securities. Click on the thumbnail image at left to view a full-size image of an alleged "U.S. Dollar Bond" (130K JPG file, uploaded 4/16/99).

Most of these fictitious obligations, on their face, refer to the Ministry of Finance of the United States and the Washington Bank of America. There never was a Ministry of Finance of the United States and to the best of our knowledge, the Washington Bank of America is non-existent. When confronted with this information, fraud artists still fall back on the "CIA did it and didn't tell anyone" routine. The visual appearance of a registered or bearer Treasury security is considerably different from so-called United States Dollar Bonds.

There have been arrests and convictions in the United Kingdom against individuals that were alleging these to be obligations of the United States. Several other investigations are being conducted. Many of our inquiries come from West Coast law firms that are checking on the validity of these bonds for clients that reside in China, Singapore and Taiwan.

Fraudulent "Federal Notes" or "Bonds"

The U.S. Treasury has received hundreds of contacts about these bogus securities, commonly known as "Morgenthaus" as Robert Morgenthaus was Secretary of the Treasury in 1934. These "federal notes" are not currency, neither are they bearer bonds. They are in fact crude forgeries that appear to have originated out of the Philippines. The "story" being told is that the United States shipped them to Philippine freedom fighters in the WW II era to help with the war effort. Some "investors" have brought them to us in so-called "Federal Reserve" metal boxes, along with other related certificates, such as Global Immunity (file size 92K, JPG file uploaded 10/26/01), FDIC Insurance (file size 83K, JPG file uploaded 10/26/01), Gold Bullion (file size 123K, JPG file uploaded 10/26/01), shipping manifests and "gold" coins. These crude forgeries were likely made by inserting images of $100 dollar bills (Ben Franklin), $1,000 dollar bills (Grover Cleveland) and even $1 dollar bills (George Washington) into a computer program, then altering the amounts to read $100 million and $500 million, then adding coupons both in English and Chinese script. Most were then printed on modern color printers or copiers. These modern color printers or copiers did not exist in 1934 when these bogus notes are alleged to have been issued. The Treasury Department did not issue securities (bonds) in $100 million or $500 million denominations during the time period alleged in this fraud.

To view one variety of these "Federal Notes", please click on the thumbnail image at left" (117K JPG File, uploaded 4/16/99).

To view two other varieties of these "Federal Notes", please click here (878K JPG File, uploaded 10/4/00) and here (961K JPG File, uploaded 10/4/00).

The largest federal reserve note (currency) every printed was $100,000 and was only used inside the banking system. For more information on this currency item, please review the FAQ at opc/ opc0034.html "What was the largest currency denomination every produced?"

US Secret Service Agent Displays Counterfeit Federal Reserve Bonds in Manila. To view article click here. (168K PDF File, uploaded 3/1/01)

U.S. v. Fareed Shabbar

On April 10, 2000, in Federal District Court for the Middle District of Tennessee in Nashville, Mr. Shabbar was convicted of violating 18 USC 514, the fictitious instruments statute. Mr. Shabbar had attempted to secure funds to finance the negotiation of several of these bogus federal notes. For any questions relating to the prosecution of this case, please contact Asstistant United States Attorney Trey Hester at 615-736-5151.

U.S. v. Edward Keith Howick

On April 14, 2000, in Federal District Court for the District of Montana, Butte Division, Mr. Howick was convicted for violations of 18 USC 514 and 18 USC 472. Mr. Howick had attempted to pass, utter or present a 100 million and a 500 million bogus federal note. For any questions relating to the prosecution of this case, please contact Asstistant United States Attorney Kris A. McLean at 406-542-8851.

U.S. v. Kevin Jackson- Newark, NJ, May 29,2001

The defendant was convicted of conspiring to transmit a bogus 1934 $100M Federal Reserve Note in interstate commerce. Prior to testifying, the defense agreed to stipulate that our testimony would have been that these $100M notes were fraudulent. The jury then returned a guilty verdict in one hour and twenty minutes, which included lunch.

"De-facto" Treasury Securities

This term usually appears in offers to assign, rent or lease Treasury securities to an offeree for a fee, for a certain time period. These securities are bogus as the U.S. Treasury has never issued any securities called "de-facto" Treasury securities.

Philippine Victory Notes

There have been several inquiries regarding Philippine Treasury Certificates of Deposit and their relationship to Philippine Victory Notes. Philippine Treasury Certificates, Victory Series 66, commonly known as Philippine Victory Notes, were issued in 1944 by the Philippine Government. These currency notes were for use only in the Philippines, which at the time was a dependency of the United States, and were obligations of the Philippine Treasury.

The 500 Peso Philippine Victory Notes were demonetized by the Philippine government on December 31, 1957, and were withdrawn from circulation. At that point, other denominations of the Philippine Victory Notes, Victory Series 66, were no longer regarded as legal tender but could be exchanged or replaced at par, without charge, for legal currency until July 30, 1967. After that date, Series 66 was considered demonetized. If these notes are presented to you and purported to have current value today, it is a scam.

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