It is not unusual for people to be caught smuggling on cross border trains, and on the border between Italy and Switzerland it is not unusual for the item being smuggled to be money or financial documents. But the shear scale of this incident is breathtaking. On June 3 two Asian men bearing Japanese passports were caught by Italian Customs trying to exit Italy and enter Switzerland at Chiasso on a Cisalpino train, carrying US Treasury Bonds concealed in a false bottom of a suitcase. Staggering is the only possible description of what they found, 249 US Treasury Bonds each denominated at $500 million, and 10 “Kennedy” Bonds denominated at $1 Billion each, plus some lesser Bonds. Total haul was just under $135 BILLION! The two men face potential fines of $38 Billion in addition to prison time, for not reporting the money to the Italian Government.
This is AMAZING. The report I read indicated that Italy might collect 40% of the booty. That would go along way to solving some of their current issues.
Now, who could be behind this…the North Korean government?
ed
My first question would be if the bonds are real or counterfit?
If they came from North Korea, they could be a forgery so good that the only way to tell would be to find another bond with the same serial number. The North Koreans were caught counterfeiting $100 bills about 10 years ago that were so good, the Secret Service only caught on because a defector tipped them off.
In the Italian legal system…if it is all counterfit, would they still be liable for the ‘taxes’ for not declaring it?
Wow, Kim Jung ill, son of Men Ta Li ill, is sure going to be royaly pissed off now![:-,]
That last probably ought to be “Il” instead . . . [swg] [tup]
this is “direct” from treasurydirect.gov:
“What is a Treasury Bond?
U.S. Treasury Bonds - not to be confused with savings bonds - are a type of long-term fixed-principal marketable security of 10 to 30 years. After purchase, interest payments are paid every six months until final maturity, when the principal is paid. The interest rate is determined at the time of auction. Minimum purchase is $100 with multiples sold in the same increment. The maximum amount for a noncompetitive purchase is $5 million in a single auction.” (emphasis added)
Think about it. There is no need for a billion-dollar Treasury bond. What purpose would it serve? It would be as useless as a thousand-dollar postage stamp. When the Treasury “creates” (by offering for sale) billions of dollars and people (often foreign national banks) buy them, they use electronic data just like most Social Security or checking accounts. If N. Korea wanted to risk a similar mischief, they might be forging U.S. passports. Plenty of competition right at home for those, though. The Treasury does worry about counterfeit paper money, which is why the $100 bill is the largest one in common circulation.
On one episode of The Simpsons, Mr. Burns came into possession of the world’s only billion-dollar bill, but that was farce and I hope taken a such. Where would you get change for a billion-dollar bond, assuming they are bearer bonds (able to be cashed in readily), which they aren’t? Note that the bonds have maturity periods of from 10 to 30 years; generally, as with corporate bonds, the issuer can “call” them in but we the buyer cannot decide when to cash them in. As such, they are worthless, and if Treasury got wind that someone had even tried to counterfeit a paper bond, they would simply declare that serial
Al,
Good analysis, but there’s a reason why the story may not hold up. If this is a case that depended on a source that the customs or other police want to conceal, they very well would put out a story that sounded very routine, but also seems to not hold up if you think about it. That way, others who might be suspected would not be able to determine for certain the reason why these travelers were detained.
Well . . . anything’s possible as far as motive, and perhaps this was an attempt to “hide in plain sight.” I’m nowhere near the only person to recognize the N. Korean/T-Bond story as the crock it is. I don’t know much about Homeland Security but I would think they would discourage the more “paranoid” type of suspicion in favor of more realistic concerns – not that we expect all the details.
As I said, I’d be willing to believe someone was caught at the Italo-Swiss border with a briefcase full of blank passports, but apparently they aren’t all that difficult to forge – probably easier than U.S. currency. - a.s.
Oops. Am the only one who thought the subject line read “Two Men Caught Snuggling…”???
Can anyone say “hoax”? I did an internet search for this story and came up with dozens of references, including this topic on Trains; but none were from a reputable, recognized news source.
Beside that, hoards of this size are the property of various national central banks. Should one of the few of those that have reserves of this size wish to transfer the paper elsewhere, the obvious answer is to transfer it in the diplomatic pouch of the country involved. That protects it from search by either the country being exited or the one being entered.
There are so many problems with this story that I’m wondering whether this wasn’t someone’s idea of a practical joke. But then again, what if this is essentially true? Considering all the odd things going on now—picture the N.Korean ruler as a madman out for power vs the West as one subplot. And some odd sorts of rough alliances between certain groups that occured in our recent past, I’m not going to rule this strange pink elephant out entirely. Extremist groups have been associating themselves with other groups for some time now. So who really knows—I was not there–and neither were anyone else–that’s why I think it an open question. Unless Snopes.com ends up with this one on their list of urban legends----
Another thing—could’ve been a misprint. $135 Million would have been more plausible—
sheeesh[:O] This is a tin hat story gone coocoo[:-^]
I doubt it was much of a story to begin with. Where is Treasury going to send the interest payments on those bonds, “General Delivery Pyongyang”? The USA has no diplomatic or consular ties with North Korea; we don’t even have an embassy. That’s why talks have to proceed not through “normal diplomatic channels,” since there are none, but through Hilary Clinton’s officers and on the other side, people designated by Kim.
Hello, Moderators . . . ? I have an instance of abuse to report.
Since there are no “Normal Diplomatic” channels it might end up going through some unorthodox channels such as numbered companies acting like proxy partners in a certain formation something along the idea of a shell within a shell corporation—off shore like… IIRC, Enron/Adelphia had some rather"unique" investment partners and methods to overcome some of our more orthodox methods of investments.R.T. Naylor, An Economics Professor who IIRC was at McGill University had written a number of books on this topic of shady trade practices and financial trickery—one of the books was called “Hot Money”—mind this book may be OOP but it gives one a glimpse into a lot of these things.
I have retired in Italy and traveled some with my wife, but not extensively. We’ve been across the Austrian border 4-5 times by train and bus, into Slovenia 4 times by bus, into Switzerland by train once, and Croatia by bus once. All were round trips, so the border crossing were double what I just said. Because of procrastination, we do not yet have a national ID card, so we carry passports. Since Slovenia joined the EU, border checks are no longer performed, and only once after that were our passports checked…when we exited Croatia and entered Slovenia. They had to be stamped because Croatia is not an EU member. Never once did I see anyone from customs checking anything on any of those trips. Actually, there is NO customs…trains and buses do not even slow down at the border. In some cases they do slow down…because you still have to go thru the border gates which are still standing. Miss that hole by a few feet…BAM…not a good place to crash. In most cases, you don’t even know where the border is. The only way to really tell is when the signs change language. And, I have never seen anyone but passengers and train personnel on any train…cross-border or not.
So, in my experience I find this hard to believe. If it’s true tho, it must’ve been a stakeout by Italian customs who knew everything ahead of time. In the past…like in the 1960’s-80’s, it was illegal to take money out of Italy, but I don’t think that’s the case anymore.
Switzerland is not an EU member state (nor is it part of the Euro currency zone), but does have extensive free trade agreements etc. with the EU and is part of the Schengen Area which allows passport-free travel across most western European countries (the UK and Ireland are the main exceptions [:(] ).
Tony
This story has made the sensational news, but I seriously doubt that banks will cash bonds from a guy who walks in the front door. Of course they could have been worth 135 Billion Lira (the old Italian currency) which is like a buck two eighty these days.
I stand corrected on Switzerland not being part of the EU. I thought it was.