The mystery bonds: Enter the cult! (Now it gets ULTRA strange...)

(Update: My articles have been vindicated. After you read the piece below, check out the sixth update to this Cryptogon article on the mystery bonds. The main Cryptogon article was written before my work but the update -- which gloms onto the Filipino connection -- was written afterward, independently. The giveaway was the "1934" date on the bonds. Apparently, when someone tried to pull this trick back in 2005, the bonds amounted to $3 trillion. Those guys on the Italian-Swiss border were pikers. For lots more info (included a damning photo), see my updated post, "Vindication.")

Our previous story on "The Italian job" has gotten stranger.

Before we get to the new stuff, we must recap: Two "Japanese nationals" (who may not actually come from Japan) were caught in Italy just as they were about to take $134.5 billion dollars in bonds into Switzerland. Most of these bonds, we are told, were of such a ridiculously high denomination ($500 million each) as to make them non-negotiable by normal humans. Only states could hope to use such things.

Mystery number 1: What did the "Japanese nationals" hope to do with these instruments?

Mystery number 2: Are the bonds counterfeit or real? If real, Italy stood to gain a windfall -- Italian law allows the government of that country to take 40 percent of the booty.

Mystery number 3: Why has the American press kept mum about a possible swindle that dwarfs the Madoff affair? The Europeans and the Asians are all over it.

Now that we are caught up, here's the latest: This site by Karl Denninger quotes a translated German news article which indicates that the bonds are probably real, or so sayeth the Italians. That clear up Mystery number 2.

Or does it? Recall that the Italians, who are conducting the investigation, have a strong financial stake in the outcome. Below, we will examine good evidence that the bonds are actually outrageous fakes.

Real or fake, just how did the two "Japanese" hope to cash such bonds? Who are these guys? Why are their names being kept out of all news accounts?

One news story -- immediately taken offline -- identified one of the "Japanese" as a notorious con man from the Philippines named Yohannes Riyadi, a.k.a. Wilfredo Saurin, whose associates in international crime are fairly well-known. The other guy may have been his comrade Joseph Daraman. These two men are the right ages, and they both could pass for Japanese. They've been trading in fake documents from the Federal Reserve for years.

A more basic question: Just what ARE these bonds?

Karl Denninger seems to think that we are dealing with bearer bonds. Such bonds are like the bills in your wallet (only lots more compact) -- they bear no record of the transaction. If you possess them, the money's yours. That is, if you can figure out how to cash a $500 million bond, which you probably couldn't.

But are they bearer bonds? The original Italian story referred to the bonds as mostly "Federal Reserve Bonds" plus "Kennedy Bonds." BabelFish it:

Duecentoquarantanove bond della Federal Reserve statunitense per un valore nominale di 500 milioni di dollari ciascuno, più 10 bond Kennedy da 1 miliardo di dollari ciascuno

And now I'm trying to figure out just what these words mean.

Maybe you'll have better luck than I did, but when I looked up the phrase "Kennedy bonds," I encountered no previous usage of that term. The classification almost certainly does not exist.

"Federal Reserve Bond" is a more difficult term. This site offers a discussion of the Italian mystery which includes an eye-opening comment by one sjfan:

I used to trade treasury bonds and cash for several institutions... there's no such thing as "Federal Reserve Bond". It doesn't exist. The fed do not issue their own debt instrument.

Is that claim true? The improper subject-verb agreement does not necessarily mean that we should dismiss what sjfan has to say. I've been researching the term "Federal Reserve Bond" and have found no hard evidence that such an animal has ever stomped the earth. Yes, there are Federal Reserve Notes, which we all know about. But the bonds shown in the photograph are not those.

So what are they? Here's where we enter the land of high strangeness.

I found a surprisingly relevant YouTube video produced by a group of Asian religious fanatics. This video allegedly displays old Federal Reserve Bonds, dug up from an underground stash. You really must watch this video, because it has a direct impact on our tale. Sorry about the annoying music, but at least the Beethoven is nice:



At about the 1:26 mark, you'll see a rather soiled financial instrument that looks an awful lot like the ones pictured in the photo taken of the Italian job. There must be a connection.

So where did these bonds come from? This cache is attributed to "Queen Salvacion A. Legaspi," who, near as I can tell, heads up a cult in the Philippines. As you will recall, we have tentatively identified the two "Japanese" nationals as a pair of notorious high-level Filipino grifters.

And where did the Queen supposedly find all this stuff? I'm dying to hear her tale of treasure and adventure, which I'm sure will be very entertaining.

In a 2007 press release preserved here (but currently missing from her web site), she announced that she was keeping the bonds in a secret location but was willing to give them to President Bush because they were originally issued by the United States, long, long ago. Alas, the press release does not explain how she "found" them. The Queen also says that there are enough $500 million bonds to fill up an airplane.

One comment on the YouTube page refers to these Federal Reserve Bonds as

"...fakes. Not forgeries. Just plain fakes. You can find a lot of those things in the Philippines. From Yamashita's treasure maps to these so-called war bonds."

Side note: Over the past few decades, there have indeed been many maps floating around, allegedly identifying the location of Yamishita's gold, the legendary horde best described by someone doing an expert imitation of Sidney Greenstreet. Think of it! All the gold looted in Asia during World War II! So much gold that acknowledging it would force authorities to double their estimates of how much gold has existed in all of history! And not just gold but silver and jewels and other valuables!

Author Sterling Seagrave, whom I respect, says that the stolen war loot is or was real. Perhaps -- but that does not mean that the maps are real. Many a wild goose has been stalked.

End side note; back to our story. My internet research has uncovered a few references to "Federal Reserve Bonds" of 1934 vintage being stashed in the Philippines. As far as I can tell, these yarns are pure legend. If you know differently, feel free to educate us all.

(Recall that the queen says that she has enough of these $500 million bonds from 1934 to fill up an airplane. Hm. So what was the U.S. gross national product back in 1934...?)

One thing's for sure: Those Filipinos do love their buried treasure stories.

Are you curious to learn more about Queen Legaspi, possessor (printer?) of the bonds? Looks like she's latest incarnation of JC. (He keeps coming back...and back...) If you want to see her in action, she has a couple of silent videos up, here and here. Lo, it is written:

On this anointment as God's Chosen as Manifested on her saga, these collective of events are being put together as a proof of her events as the Anointed Spirit of God, and The Chosen One. In any of all the places she goes, wherever she was, the Tribal Leaders/ Lumads, Religious Organization Leaders, Islamic or Muslim group, had blessed her and appoint her to be their Queen. This all happened unknowingly what is to come in the future.

Translation: She's a toon. But she's a toon with money and political ambition, or so it would appear. A toon like Moon.

Except for this one video, which was produced by a bizarre Asian religious sect, I have seen no visual evidence that Federal Reserve Bonds exist.

The Federal Reserve Bank of New York, in a 2005 announcement, says that

The Federal Reserve is aware of several scams involving high denomination Federal Reserve notes and bonds, often in denominations of 100 million or 500 million dollars, dating back to the 1930s, usually 1934. In each of these schemes, fraudulent instruments are claimed to be part of a long-lost supply of recently discovered Federal Reserve notes or bonds.

The Federal Reserve has never issued any bonds or notes with coupons attached. The Federal Reserve Bank of New York is not aware of any currency or debt stockpile of large denomination Federal Reserve notes from the 1930s and warns that any institution that pays out on such a claim does so at its own risk.

It should also be noted that the largest denomination of currency ever printed by the Bureau of Engraving and Printing was the $100,000 Series 1934 Gold Certificate featuring the portrait of President Wilson.

Okay, now we're getting somewhere!

The same page offers a warning about Riyadi (a.k.a Saurin), the likely culprit. And this Bloomberg story mentions that the bonds in the Italian cache supposedly date from 1934. (They sure look new in the photo! The ones in the video look aged. That sort of thing can be faked, of course.)

So not only are the bonds captured in Italy a probable hoax, the entire concept of a "Federal Reserve Bond" seems to be a myth. Nevertheless, such bonds did become a topic of discussion recently, within a section of the blogosphere not normally traversed by Cannonfire readers. On Lew Rockwell's site, one Michael Rozeff claims that

Rumor has it that the Federal Reserve is considering selling bonds. The legality is in question. Leaving that aside, why would the Fed do such a thing? If it did, how would such a thing work? What would be its effects?

Rozeff goes on from there, and it's all pretty interesting. But he speaks of the Federal Reserve Bond as a theoretical construct. Such things do not yet exist -- and may never exist, since they are probably not allowed by the law which created the Federal Reserve.

So: What are our options? Can we cobble together a revised theory of the Italian mystery, based on all of this additional information?

1. The Italian news story got it wrong. They used the term "Federal Reserve Bond" incorrectly; the financial instruments are actually bearer bonds.

This theory has one big problem: That damned video! The bonds captured by the Italians look exactly like the bonds pictured in the video, and they are clearly marked "Federal Reserve Bonds." The bonds in the video -- which has a terribly unpersuasive provenance -- are probably fake.

Yet the Italian authorities (according to the German article) lean toward the theory that these bonds are not counterfeit. Not only that: In their first press release, the Italians said that the bonds were virtually indistinguishable from the real thing. How could they make such a claim if Federal Reserve Bonds do not even exist?

2. The bonds are real. Maybe there is such a creature as a Federal Reserve Bond. It's not just a theoretical possibility; they've been around for decades. But they are traded on a very august level, far from the sight of we ordinary mortals. Thus, there is no mention of this type of bond in Wikipedia or on any other "respectable" web site. The Federal Reserve of New York is lying when it claims that such bonds do not exist.

Is that theory possible? If you say "Yes," then perhaps you also think that space lasers destroyed the twin towers.

3. "We got a great big con-job; ain't it a beautiful sight?" Our pals Wilfredo and Joseph decided to put together their own cache of fake financial instruments, probably using the same printing press which "Queen Salvacion A. Legaspi" used. Why? Perhaps their intent was not to negotiate the bonds but to use them to fleece the gullible. There are lots of ways a con artist can cause mischief if he can convince a dupe that he (the conster) has a lot of money.

So why did the Italians say that the bonds are indistinguishable from real?

As noted earlier, under Italian law, the government gets-a to keep-a 40 percent-a da money -- if the bonds are genuine financial instruments.

Maybe Berlusconi somehow got wind of what Wilfredo and Joe-Joe were up to -- hey, SISMI is not entirely useless -- and decided to turn the situation to his advantage. Maybe he decided to put the bonds in a bank and simply credit the money to a government account. (Berlusconi to bank officer: "These bonds are real. You want proof? My pal Vito the leg-breaker will give you proof.") Like magic, fake money becomes genuine coin.

But is such a thing possible? Could Silvio Berlusconi falsely label fake bonds real, stash them in a government bank account, and then start singing the Italian version of "We're in the money"?

Again, it all seems highly unlikely. Of course, Silvio's whole life has been one massive experiment in unlikelihood.

By the way: Our Randroid "friend" Pam Geller feels certain that she knows who the real culprits are: The Norks! (That is, the North Koreans.) She has, of course, zero evidence for this assertion. So far, the evidence tends to point to the Filipino underworld. But if you enjoy baseless accusations, it's "Wham, bam, thank you Pam!"

Please do me a favor and spread word about this post. Although the Italian job has engendered a lot of blogosphere speculation, no other site known to me has put together as much of the story as you'll see here. (Things may be different in a few hours, of course.) Incidentally, a Daily Cheeto diary made mention of this story. That post, along with six comments, has now been pulled. Why? You tell me!