2.5 Trillion In Lost 1930's
US Treasury Notes?
Naive Scam - Or Secret CIA Counterfeits?

By Tim Luckhurst
The Scotsman - UK

A HAUL of $2.5 trillion dollars worth of United States Federal Reserve notes, dated 1934, bearing the signature of Franklin Delano Roosevelt, packed in sealed tins, some said to be protected by canisters of poisonous gas, does require explanation.
The prosecution alleged a naive scam, and the jury at Snaresbrook Crown Court in London this week believed them.
Michael Slamaj, 56, a Yugoslav-born businessman from Canada, and Graham Halksworth, 69, a retired forensic scientist who once worked for Scotland Yard, were found guilty of conspiracy to defraud. Slamaj was also convicted of possessing fake bonds.
The scheme was detected when two men tried to cash £15.5 million of the notes at a Canadian bank. It was noticed that the word "dollar" was printed on the bonds instead of "dollars".
Slamaj was arrested after he asked a solicitor to help him sell £31 million of the bonds. Police later recovered documents with a face value of £93 billion from his safety deposit boxes.
But his defence team offered an alternative explanation for his possession of the bonds, one that just might be true and that delves deep into the murky history of the CIAís post-war crusade to destabilise communism.
Slamaj claimed the vast haul was recovered from the wreckage of a B29 bomber that crashed on the Filipino island of Mindanao in 1948.
Professor Richard Aldrich, of Nottingham University and the co-editor of the journal Intelligence and National Security, was hired to investigate the claim - and his findings suggest it is plausible enough for Slamaj to have believed it in good faith.
As Chairman Maoís forces advanced through China in 1948, says Prof Aldrich, Britain and the US dreaded the prospect that one of the worldís largest stocks of gold - worth $83 billion at current prices - would fall into communist hands. So it was decided to extract the gold reserves from China before the communists could seize them.
The CIA provided the means for this bullion-rescue mission. Flying in B29 bombers decked out in the livery of its proprietary civilian airline, Civil Air Transport (CAT), it flew numerous missions to move huge shipments of gold from mainland China.
Where might Federal Reserve notes have fitted into the operation? Prof Aldrich explains that they may have been used "for persuading managers of major banks in the interior of China to part with their vast stocks of gold".
Printing Federal Reserve notes to a value much greater than that of the gold they were intended to replace could have been an operational necessity. The US almost certainly had no intention of honouring them anyway.
In fact, suggests Prof Aldrich, the monetary instruments obtained by Slamaj may be intricate forgeries, but if they are, it is possible that the CIA manufactured them.
The story starts during the Second World War, when the counterfeiting of currency became a major area of covert actions by Britainís Special Operations Executive (SOE).
The US was not slow to learn SOEís lesson. After 1945, economic warfare against communist states became a central instrument of Cold War policy.
Activity against China was on the grand scale and the regional centre for US covert operations in Asia was the Philippines. The CIA maintained sophisticated printing presses in Manila for the purpose. Its main base for secret air force operations was close by.
In his submission to the trial Prof ldrich suggested that if the notes are forgeries, they "were most likely manufactured at the CIAís ëregional service centreí [RSC]" - located along Roxas Boulevard, in Manila, at the seafront compound about a mile from the US Embassy.
He also found evidence to support Slamajís defence in the files of the Foreign Office. He wrote: "Foreign Office files also show that the CIA was involved in other currency issues, including the movement of printing plates for Chinese currency."
He said: "I note that the chronology of this operation fits very closely with that set out by the defendants."
Would the CIA really have printed such a vast quantity of these bonds and risked flying them into occupied China on vulnerable aircraft? Prof Aldrich says: "Because of the possibility of operational loss, surplus amounts of FRNs [Federal Reserve notes] were required.
"Regional banks receiving FRNs in return for their gold were aware that the FRNs were likely to be redeemable for only a proportion of their face value. Therefore a much larger value in FRNs would have been required than the total value of the gold that the Americans and Chinese nationalists were trying to extract from China."
Slamaj is preparing to appeal. He remains adamant that he truly believed the notes were authentic. If that is the case, Prof Aldrich suspects the CIA expected them to disappear into civil-war China and that their re-emergence has threatened to lift the lid on still classified aspects of economic warfare.
He says: "I cannot prove these FRNs were part of the operation to extract gold from China. But there is absolutely no doubt that such an operation took place.
A problem that has been most prevalent in the Far East recently surfaced in London when officers from the City of London Fraud Squad seized fake $US Treasury Bonds with a nominal value in excess of $2.5 trillion.
On the first occasion $2.5 trillion worth of these bonds was seized from a safe keeping vault of a bank in the City of London in an assortment of 44 boxes, files and envelopes. Among the haul were a number of counterfeit Chinese Railway Bonds dating from the early part of the 1900s.
Although genuine Chinese Bonds have a collector's value of about £20 each, the faked US Treasury Bonds are well known to the US Secret Service and other law enforcement agencies, in Hong Kong, Singapore, the Philippines, and Canada. Attempts have been made by fraudsters to use them as collateral for loans or to obtain money from naive investors.
On the second occasion a number of people were arrested in the City of London after presenting billions of dollars worth of these bonds to a financial institution attempting to obtain 'facilities'. Two women have been charged.
The story usually given by the fraudsters is that these bonds were printed by the CIA and given to Chiang Kai Sheck who opposed Chinese Communism in the 1930s. However, so the story goes, some were lost and were then found in caves/crashed aircraft/sunken submarines (take your pick) by illiterate natives who passed them on to city slickers in exchange for a few trinkets. The fraudsters have even attached details of a B17 bomber, its tail number and details of the crew which perished in a crash in the rain forests of some distant tropical island.
Investors in the Far East have parted with huge sums of money to buy these bonds at 1¢ on the dollar. In June 2001, a US resident shot his wife and two children then turned the gun on himself after finding that these bonds, which he tried to cash at the US Bureau of Public Debt, were complete fakes.
Invariably, the bonds are contained in what looks like a metal box with a serial number and a key number. The seal of the United States is usually embossed on to box lid. Once opened, the box will contain the bonds (which have a peculiar creosote aroma), sometimes large and heavy yellow metal coins in denominations of anything from $100m - $1bn, a negative film roll and a supporting documents such as an international certificate of immunity.
Although the Treasury Bonds are well presented, the fraudsters did not realise that the various Federal Reserve Banks have codes attached to them as follows:-
Boston: A; 1 Richmond: E; 5 Minneapolis: I; 9 New York City: B; 2 Atlanta: F; 6 Kansas City: J; 10 Philadelphia: C; 3 Chicago: G; 7 Dallas: K; 11 Cleveland: D; 4 St. Louis: H; 8 San Francisco: L; 12
Some of the treasury notes have the incorrect seal code for the Federal Reserve Bank purporting to have issued the note. How did this happen? Quite simply, the fraudsters cut and pasted images of current $US currency into the bonds and they didn't look too closely or they didn't understand what the codes meant. On occasion, if you know where to look, you can see the remnants of the currency that they have tried to hide or cut in the process.
If you are presented with documents of this nature, the US Secret Service at the US Embassy would be delighted to hear about it and will assist in any way that they can.
For other examples of this high profile crime please see the following web pages:-
Revised: 17 June 2002
Note - In spite of the above dismissals, there is actually circumstantial evidence to suggest the basic premise of this story just have some truth to it: that a HUGE dollar amount of legal and legitimate special issue, extremely large denomination US Treasury notes were created and ended up in the Phillipines just before WWII.
It is further conjectured that one or more of the transport planes carrying the sealed boxes containing the Treasury notes DID crash...and that a good portion of the notes either washed up on shore in their boxes, or were found at an inland crash site, and then made their way to a number of different people...mostly powerful Phillipinos. Remember the Marcos fortune? It was reputedly a lot bigger than the media knew and Imelda is pressing in court to this day to try to recover at least some of it.
There have, over the years, been a number of attempts by various individuals and groups to redeem some of these Treasury notes (real or hoaxed)...with alleged values of $20 million to $100 million dollars US...for cash at banks and other financial institutions around the world.
As far as is known, all efforts to collect have failed...the banks and institutions have been told, it is suggested, that under NO circumstances are they to cash the notes. As one might imagine, the US Treasury is more than a little concerned about the potential of a couple trillion in legitimate Treasury notes floating around or getting into the hands of adversaries.
We have received reports that the Treasury has conducted secret talks with a few of the note holders and has made offers to redeem them for a small percentage (1-10%) of their face value. The Treasury clearly wants these notes turned in and removed from 'circulation'...but will not pay full face value for obvious reasons.
If anyone has anything further - of substance - on this story, please let us know. --ed




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