$4 trillion swindle foiled by spelling error PAUL VALLELY (Independent)
LONDON - Every Monday morning 69-year-old Graham Halksworth would bid farewell to his wife and leave his home at the top end of the little town of Mossley, high on the shoulder of the Pennines. Smartly dressed and carrying a suitcase, he would negotiate the steps down from their unprepossessing little brick-built semi, whose only sign of pretension was its windows leaded with an unlikely escutcheon in the stained glass. (...) Few, then, could have suspected that inside Halksworth's briefcase was a plan to pull off one of the biggest frauds in history. The quiet man from up the hill was unobtrusively plotting to swindle the American government out of US$2.5 trillion ($4 trillion). Deep in the vaults of a London bank there lay 22 cases stamped with the American golden eagle. Inside them were crammed US Treasury bonds with a face value so high that if anyone tried to cash them it would virtually bankrupt the US government. An extraordinary story attached to them. In 1934 the Chinese Nationalist leader Chiang Kai-Shek was facing a twin threat - from the invading Japanese and from the Communist rebels of Mao Tse-tung. For safe-keeping his supporters sent 125,000 tonnes of Chinese gold to America and, in a covert deal with US President Franklin Roosevelt, were given US bonds in return. The sum was so large that it led to the creation of Fort Knox and paved the way for America to abandon the gold standard. But the bonds never reached China. The B-29 plane carrying them crashed shortly after stopping to refuel at Clark Air Base in the Philippines. The gilt-edged US government IOUs, packed in metal containers, lay undiscovered in the jungle on the island of Mindanao for decades, until found by local tribesmen who sold them to a former Yugoslav spy named Michael Slamaj. Getting far fetched? That is what the City of London police thought when they stumbled across the whole affair after a report by a sharp-eyed Mountie in Toronto (..). But when they approached Graham Halksworth, the man who had authenticated the find, and told him that the boxes were fakes - constructed of plastic that had been spray-painted black and lined with concrete to make them heavy - he shrugged and told them: "I don't authenticate boxes". (...) Two years ago, two men - a Korean living in Japan and a Canadian - walked into the Canadian Imperial Bank of Commerce's main branch in downtown Toronto and tried to cash US$25m of US Treasury Bonds. With the bonds they offered a certificate of authentication bearing Halksworth's signature. What the eagle-eyed Mountie spotted was that the letter 's' was missing from the word 'dollars' on the bond. This was not what those behind the scam had intended. The idea was not to try to cash the bonds. It was to offer them to financial institutions, along with the authentication documents, and the indication that the US government backed the documents with gold, to secure a line of credit. But the attempt to cash them subjected the whole scheme to close scrutiny. It was not long before the police were knocking on Halksworth's door. Even then the old hand was unfazed. Deliberate mistakes were often made in such bonds as a security device; ask the CIA, he said. But some bonds had so many mistakes on them it looked like a child had printed them, the police said; exactly, he replied, as if that proved his point. But the boxes were fakes, the police said. Not my responsibility, I just do the documents, he riposted. But the US authorities say the bonds aren't genuine, the police said. They would say that, countered Halksworth, because the sums involved are so huge the US Treasury nowadays can't afford to pay up on them; so they say they are fakes, but they're not. Indeed he told the UK police that even after the US secret service had hauled him in to say these were counterfeits, he had continued to authenticate them since he thought the Americans were lying because they could not afford to repay the US$2.5 trillion debt. There was in fact, he insisted, a semi-official redemption programme whereby the US government was seeking to get the bonds back but only at arm's length. It was a position he continued to maintain in the witness stand in the teeth of evidence from US secret service agents, FBI officers and Royal Canadian Mounties who all averred that there are no genuine Federal Reserve notes from 1934. But there were some bits of evidence to which Graham Halksworth had no answer. He and Slamaj claimed that Chiang Kai-Shek had given the Americans 125,000 tonnes of gold in the 1940s. But police inquiries on the London Bullion Market revealed that the cumulative total of all the gold mined in recorded history was only 63,500 tonnes by 1950. (It was only 145,200 tonnes by the end of 2001). Even more damning, the documents contained zip codes, which the US postal service only introduced in 1963 - and a Treasury Seal which was too modern. Oh, and the fact that analysis showed that some of bonds had been produced on an inkjet printer. All of this has set tongues wagging in the little town of Mossley. "Apparently he did it because he wanted the cash for a pension," said the man dipping slices of whiting into batter in the chippie. "Some pension." Actually, though it was a multi-trillion-dollar fraud, the forensic scientist only made £69,000 ($191,000) out of it, according to the evidence given at Snaresbrook Crown Court. (His standard charges were £1,500 to authenticate the first 15 bonds and thereafter £10 for each additional bond.) "Still," said the bloke supping Tetley's Smooth in the Bridge, "seventy grand is better than a poke in the eye." (...) After 18 hours of deliberations a jury of seven men and five women cleared Graham Halksworth of knowingly inducing a third party to accept the bonds. But he was convicted of conspiracy to defraud, an offence that has no maximum sentence but lies entirely within the judge's discretion. (...) On Friday, Halksworth and Slamaj were each sentenced to six years in prison. (...) Judge Birtles said (...): "It is submitted you were an incompetent conspirator and there was a very thin chance of the conspiracy succeeding. But the lack of your sophistication does not diminish the seriousness of the aim of the conspiracy or your part in it." Source: http://www.nzherald.co.nz/storydisplay.cfm?storyID=3532005&thesection=news&t hesubsection=world
