Chiasso financial smuggling case
Encyclopedia
The Chiasso financial smuggling case began on June 3, 2009 near Chiasso, Switzerland (near the Swiss/Italian border), when Sezione Operativa Territoriale di Chiasso in collaboration with officers of Italian customs/financial military police (Guardia di Finanza
) detained two suspects (who appeared to be Japanese nationals
in their 50s) who had attempted to enter Switzerland with a suitcase in their possession with a false bottom containing what at first appeared to be U.S. Treasury Bonds worth $134.5 billion. The two possessed 249 U.S. bonds worth $500 million each (among other securities, they also had 10 "Kennedy bonds" denominated at $1 billion each); and the large denominations of the securities, along with accompanying bank documentation was what attracted the Italian police's attention. Large denominations are not available to the general public; only nation-state
s handle such amounts of money.
On June 18, 2009 the Financial Times
reported that the Italian police and the U.S. Secret Service had concluded that "the bills and accompanying bank documents were most probably counterfeit, the latest handiwork of the Italian Mafia." Though this information has not been verified by Italian official sources. Mckayla Braden, senior adviser for public affairs at the Bureau of Public Debt at the U.S. Treasury Department also said that this type of counterfeit bond scam "has been going on for years." Although these bonds, if fake, appear to have been of very high quality. Col. Rodolfo Mecarelli, the provincial commander of the financial police in Como, said that the bonds "are made of filigree paper of excellent quality."
The Financial Times also reported that the two suspects "had been released" by Italian authorities. No additional comment or elaboration from the Guardia di Finanza
headquarters in Rome was available. As well, Ed Donovan, a spokesman for the U.S. Secret Services has said that the “U.S. Secret Service, which polices counterfeiting of U.S. currency, is assisting Italian authorities in tracing the source of the fake bonds."
Nonetheless, Japanese authorities also remained interested in the matter; Takeshi Akamatsu, a press secretary for the Japanese foreign ministry
, confirmed that the two suspects were carrying Japanese passports and had been detained and questioned by the Guardia di Finanza
(Italian financial/customs military police), but that Tokyo had not been informed of their names or whereabouts during or after their release.
The motivation or likelihood of passing counterfeit bonds of these types and size is not known at this time.
Other questions include the identities of the Japanese men detained, the reason for their release, the origin of these high quality fake bonds, the U.S. Secret Service investigation, lack of Italian official acknowledgment of fakes and many other questions.
Initial reactions to the story contemplated the possibility that the bonds were genuine; if the bonds had proven to be genuine, this case would have been regarded as the largest single act of smuggling
(with respect to financial value) in recorded history. The total value of the counterfeit bonds was estimated at approximately one percent of total U.S. GDP in 2008. The pair would also have been considered the fourth largest creditor to the U.S., ahead of the United Kingdom
and just behind Russia
. As well, according to Italian law failing to declaring currency above 10,000 euros can be punished by fines of 40%.
Since the confirmation by American officials that the bonds were counterfeit, some reactions have shifted to taking note of a general loss of confidence in international banking and finance
(in general) and the U.S. dollar in particular—as noted by a recent downward trend in the U.S. Dollar Index
(and the dollar reaching a new low for 2009 vs. other world currencies on July 28, 2009). The Daily Telegraph
commentator Edmund Conway noted that when U.S. Treasury Secretary Timothy Geithner traveled to China
(in June 2009) and asserted in Beijing that Chinese financial assets denominated in the U.S. Dollar "are very safe," it drew laughter from the audience, even though laughter was not Geitner's intent.
Conway also speculated that this incident may be a sign that "America is on the brink of losing its economic superpower status."
, this time involving two (apparently) Philippine nationals
smuggling U.S. Treasury bonds (valued at approximately $180 billion) at Malpensa Airport
(the largest airport in Milan, Italy). The two were detained and the assessment of this case is on-going.
On January 26, 2011, another similar incident was reported by the Italian military police Carabinieri
, this time involving six smuggling U.S. Treasury bonds (valued at approximately €20 billion and said to be counterfeit) at a highway rest stop. The six are under investigation for receiving stolen goods.
Guardia di Finanza
The Guardia di Finanza is a Italian law enforcement agency under the authority of the Minister of Economy and Finance. Like the Carabinieri, it is part of the Italian Armed Forces. The Guard is essentially responsible for dealing with financial crime and smuggling; it has also evolved into Italy's...
) detained two suspects (who appeared to be Japanese nationals
Japanese people
The are an ethnic group originating in the Japanese archipelago and are the predominant ethnic group of Japan. Worldwide, approximately 130 million people are of Japanese descent; of these, approximately 127 million are residents of Japan. People of Japanese ancestry who live in other countries...
in their 50s) who had attempted to enter Switzerland with a suitcase in their possession with a false bottom containing what at first appeared to be U.S. Treasury Bonds worth $134.5 billion. The two possessed 249 U.S. bonds worth $500 million each (among other securities, they also had 10 "Kennedy bonds" denominated at $1 billion each); and the large denominations of the securities, along with accompanying bank documentation was what attracted the Italian police's attention. Large denominations are not available to the general public; only nation-state
Nation-state
The nation state is a state that self-identifies as deriving its political legitimacy from serving as a sovereign entity for a nation as a sovereign territorial unit. The state is a political and geopolitical entity; the nation is a cultural and/or ethnic entity...
s handle such amounts of money.
Investigation and determination
Assessment as to the authenticity of the bonds began immediately (counterfeiting of these securities was suspected). One source reported that the U.S. Securities and Exchange Commission had been requested to verify the authenticity of the bonds. A spokesmen for the Bureau of Public Debt has commented on the matter.On June 18, 2009 the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
reported that the Italian police and the U.S. Secret Service had concluded that "the bills and accompanying bank documents were most probably counterfeit, the latest handiwork of the Italian Mafia." Though this information has not been verified by Italian official sources. Mckayla Braden, senior adviser for public affairs at the Bureau of Public Debt at the U.S. Treasury Department also said that this type of counterfeit bond scam "has been going on for years." Although these bonds, if fake, appear to have been of very high quality. Col. Rodolfo Mecarelli, the provincial commander of the financial police in Como, said that the bonds "are made of filigree paper of excellent quality."
The Financial Times also reported that the two suspects "had been released" by Italian authorities. No additional comment or elaboration from the Guardia di Finanza
Guardia di Finanza
The Guardia di Finanza is a Italian law enforcement agency under the authority of the Minister of Economy and Finance. Like the Carabinieri, it is part of the Italian Armed Forces. The Guard is essentially responsible for dealing with financial crime and smuggling; it has also evolved into Italy's...
headquarters in Rome was available. As well, Ed Donovan, a spokesman for the U.S. Secret Services has said that the “U.S. Secret Service, which polices counterfeiting of U.S. currency, is assisting Italian authorities in tracing the source of the fake bonds."
Nonetheless, Japanese authorities also remained interested in the matter; Takeshi Akamatsu, a press secretary for the Japanese foreign ministry
Ministry of Foreign Affairs (Japan)
The is a cabinet level ministry of Japan responsible for the country's foreign relations.The ministry is due to the second term of the third article of the National Government Organization Act , and the Ministry of Foreign Affairs Establishment Act establishes the ministry...
, confirmed that the two suspects were carrying Japanese passports and had been detained and questioned by the Guardia di Finanza
Guardia di Finanza
The Guardia di Finanza is a Italian law enforcement agency under the authority of the Minister of Economy and Finance. Like the Carabinieri, it is part of the Italian Armed Forces. The Guard is essentially responsible for dealing with financial crime and smuggling; it has also evolved into Italy's...
(Italian financial/customs military police), but that Tokyo had not been informed of their names or whereabouts during or after their release.
The motivation or likelihood of passing counterfeit bonds of these types and size is not known at this time.
Reactions and speculation
There has been very little in the way of official statements regarding this case, raising concerns about who made them, dumping of U.S. debt and Italian interests.Other questions include the identities of the Japanese men detained, the reason for their release, the origin of these high quality fake bonds, the U.S. Secret Service investigation, lack of Italian official acknowledgment of fakes and many other questions.
Initial reactions to the story contemplated the possibility that the bonds were genuine; if the bonds had proven to be genuine, this case would have been regarded as the largest single act of smuggling
Smuggling
Smuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...
(with respect to financial value) in recorded history. The total value of the counterfeit bonds was estimated at approximately one percent of total U.S. GDP in 2008. The pair would also have been considered the fourth largest creditor to the U.S., ahead of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and just behind Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. As well, according to Italian law failing to declaring currency above 10,000 euros can be punished by fines of 40%.
Since the confirmation by American officials that the bonds were counterfeit, some reactions have shifted to taking note of a general loss of confidence in international banking and finance
International finance
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, global financial system, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes...
(in general) and the U.S. dollar in particular—as noted by a recent downward trend in the U.S. Dollar Index
U.S. Dollar Index
The US Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies.It is a weighted geometric mean of the dollar's value compared only with* Euro , 58.6% weight...
(and the dollar reaching a new low for 2009 vs. other world currencies on July 28, 2009). The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
commentator Edmund Conway noted that when U.S. Treasury Secretary Timothy Geithner traveled to China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
(in June 2009) and asserted in Beijing that Chinese financial assets denominated in the U.S. Dollar "are very safe," it drew laughter from the audience, even though laughter was not Geitner's intent.
Conway also speculated that this incident may be a sign that "America is on the brink of losing its economic superpower status."
Similar Incidents
On September 18, 2009, a similar incident was reported by the Italian financial military police Guardia di FinanzaGuardia di Finanza
The Guardia di Finanza is a Italian law enforcement agency under the authority of the Minister of Economy and Finance. Like the Carabinieri, it is part of the Italian Armed Forces. The Guard is essentially responsible for dealing with financial crime and smuggling; it has also evolved into Italy's...
, this time involving two (apparently) Philippine nationals
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
smuggling U.S. Treasury bonds (valued at approximately $180 billion) at Malpensa Airport
Malpensa Airport
Milano Malpensa Airport "City of Milan" , former "Aeroporto Città di Milano" is Milan's largest airport. It is located 39.97 km northwest of central Milan, Italy...
(the largest airport in Milan, Italy). The two were detained and the assessment of this case is on-going.
On January 26, 2011, another similar incident was reported by the Italian military police Carabinieri
Carabinieri
The Carabinieri is the national gendarmerie of Italy, policing both military and civilian populations, and is a branch of the armed forces.-Early history:...
, this time involving six smuggling U.S. Treasury bonds (valued at approximately €20 billion and said to be counterfeit) at a highway rest stop. The six are under investigation for receiving stolen goods.
See also
- U.S. Dollar
- SmugglingSmugglingSmuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...
- Counterfeiting
- Securities fraudSecurities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
- Financial crimesFinancial crimesFinancial crimes are crime against property, involving the unlawful conversion of the ownership of property to one's own personal use and benefit...
- Organized crime in Italy
- U.S. Dollar IndexU.S. Dollar IndexThe US Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies.It is a weighted geometric mean of the dollar's value compared only with* Euro , 58.6% weight...
(a general measure of global confidence in the U.S. Dollar) - Currency crisisCurrency crisisA currency crisis, which is also called a balance-of-payments crisis, is a sudden devaluation of a currency caused by chronic balance-of-payments deficits which usually ends in a speculative attack in the foreign exchange market. It occurs when the value of a currency changes quickly, undermining...
External links
- AsiaNews article about doubts on claims that bonds are fake.
- Financial Times Deutschland story on the age of Japanese men
- Secret Service is Investigating
- NY Times Story
- If the bonds are confirmed, then it is the largest financial smuggling operation in history.
- Unconfirmed if the two are, in fact, Japanese nationals.
- The two had 249 U.S. Treasury bonds each worth $500 million.
- This source stated that the SEC has been asked to authenticate the bonds.
- The CIA's estimate of U.S. GDP in 2008 was $14.3 Trillion.
- In Italian--from the official webpage of the Italian financial police, the Guardia di Finanza, describing the incident.
- Bonds are counterfeit and, curiously, the two suspects were released.
- In the Telegraph, commentator Edmund Conway stated that this story points to falling global confidence in the U.S. Dollar.
- Bloomberg report that U.S. Dollar reached a new low in 2009 vs. other world currencies
- A similar case, source one.
- A similar case at Malpensa Airport in Milan, Italy, source two.