The Italian Job: Border Police Seize $134 Billion in US Government Securities

Sir Alec Guinness as John Le Carre's George Smiley

Sir Alec Guiness as John Le Carre's George Smiley

Although the story is being widely reported across Europe and Asia, it’s received scant media coverage in the US.

AsiaNews along with other major media outlets outside the US are reporting that Italy’s financial police, the Guardia Italiana di Finanza, seized US government bonds worth $134.5 billion from two Japanese nationals at Chiasso, located less than 50 miles from Milan on the Italian-Swiss border.

Other than a skeptical piece at Bloomberg News Wednesday, the seizure hasn’t been reported on in the US.

This is surprising because the haul includes 249 Federal Reserve bonds worth $500 million each plus 10 Kennedy bonds and other US government securities worth $1 billion each.

The question business reporters should be asking is whether the bonds are real, meaning a foreign government is trying to quietly dump US Fed securities? Or are they counterfeit, a scheme to destabilize the American economy and currency during a period of economic crisis? But, so far, US financial journalists are as inquisitive about the suitcase full of bonds as they were about, oh, AIG’s dodgy underwriting practices, the sub-prime market, toxic assets in banks and Bernie Madoff before the lid on each was blown sky high.

Pyongyang’s Game?
In the 1990s, North Korea was caught running a huge and highly sophisticated counterfeiting scheme, printing what the Secret Service described at the time of the bust as excellent quality $100 bills printed on undetectable yet not quite genuine paper, distributing the money mostly in Macao but also around Asia.

The counterfeit ring was shut down as was at least one Asian bank found to be active participants in the scheme. But it shows that the North Koreans have the capability to print superb if fake bank notes that are almost undetectable. With the United Nations’ new sanctions choking off Pyongyang’s access to hard currency, it’s entirely possible that the North Korean government hatched another counterfeit scheme to generate cash.

“We’re working with the Italian financial police to determine whether the securities are genuine or are part of a counterfeiting operation,” is all a US Treasury spokesperson tells me today before declining further comment because the matter is under investigation.

Privately, a source in the intelligence community says that if the notes are fakes, it makes sense that they would originate in North Korea.

“Pyongyang is smart enough to not try shipping nuclear or other material it knows we’re all looking for coming out of the country,” the source tells me. “We know they can print fake money no one other than experts can spot so why not print fake bonds?”

The source estimates that $134.5 billion in counterfeit bonds would produce a fast $250 million in hard currency for North Korea when sold “and maybe a little more if they’re willing to shop around and wait a bit.”

Calling George Smiley
The Bloomberg article’s lead correctly says the news sounds like a plot straight out of a John Le Carre novel.

A rogue state is hemmed in on all sides and even its best friend, in this case China, is staring it down. Nuclear technology, its one exportable cash commodity, is suddenly on everyone’s black list. There’s a leadership crisis in the capital and hard-liners in the military are demanding money to pay for extremely costly nuclear tests and missile launches. Moderate elements need hard currency to buy black market food and medicine for the nation’s starving population.

And then everyone remembers the printing press sitting over in the corner, unused for a while but fully functional. All that’s required is obtaining three or four of the real bonds, spring the country’s best engraver from a dank political prison cell, and run off a few hundred billion of the US bonds.

All that’s missing is Connie Sachs, Le Carre’s alcoholic research expert with the world’s deepest memory rummaging through old files, passing notes to the mad Hungarian, Toby Esterhase, and George Smiley up in his pepper pot room on the fifth floor of the Circus pulling the strings.


The trouble is that the Italian border seizure isn’t fiction.

If the bonds are the real deal, then which government is fire saleing its stash of US debt obligations? If they’re fakes, who is trying to flood the market with counterfeit American government obligations?

And why aren’t Americans being told about this?


Charley James
The Progressive Curmudgeon

LA Progressive


  1. says

    Thanks, “what,” for reading the article.

    The problem facing counterfeiters is that when they sell the notes, they take a hit against face value because someone else is now carrying the risk. The larger the denomination, the bigger the premium that’s charged. This is why, in the US, most counterfeiters do $20 or $50 bills – they’re easy to pass and easy to sell: $100,000 in fake Twenties might generate $15,000 in cash from the fence. Meanwhile, a $1-million Fed or Treasury note might fetch only $40,000 or so because it’s hard to turn such a large demonination into cash.


  2. Pete in FL says

    We haven’t heard much about it because Americans can’t stand the truth. We have become a nation of sheep, worried more about what our next pair of Nike’s will cost than the state of our Republic and its blasé media.

    In short, we’re the Roman Empire in 400AD.

  3. What says

    What are you talking about? How can these bonds if NOrth korean produce $250m for them? My guess base don your story is if they sell them… who with the right mind will buy US$134bn just like that!? Do you know what this vast, sheer number means! The answer is no one. Even for the $500m denomination the answer is pretty much the same… So how they make these US$250m?????

  4. TCinLA says

    The reason it isn’t reported is it’s a fraud. These were created by a cult in the Philippines in 1934. The US Treasury has never issued bonds in the denominations these are, and periodically warns banks not to cash them. This was reported earlier this week at the “How The World Works” blog at Salon.

    Sorry all you conspiracy theorists, but the world still doesn’t work the way you think it does.

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