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Fake Bonds

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  • 22-02-2012 9:41pm
    #1
    BattleCorp
    Registered Users Posts: 11,758 ✭✭✭✭


    Maybe I'm in the wrong forum but I'll ask the question here anyway.

    Last week the Italians aided by the US Secret Service intercepted a load of fake bonds, over $7 trillion. Some of these had a face value of $1 billion.

    Now here is where I am being a bit thick. What good is having a bond worth $1 billion if it's fake. Where do you go to deposit it/cash it in?

    Surely if something has a face value of $1 billion, then a fair bit of examination would be done to see if it is legitimate. How would fakes slip through the net?

    Am I missing something here?


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    #2
    Suryavarman
    Registered Users Posts: 2,583 ✭✭✭Suryavarman


    They could have been fakes used as some sort of joke instead of fakes used for defrauding people. I'm inclined to think this as they were dated as being issued in 1934 when the deficit was only $4.5 billion. Anyone capable of buying the $1 billion bonds would know this information. I also hope nobody was stupid enough to think they could pull this off.

    Story here.


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    #3
    BattleCorp
    Registered Users Posts: 11,758 ✭✭✭✭BattleCorp


    Suryavarman wrote: »
    They could have been fakes used as some sort of joke instead of fakes used for defrauding people. I'm inclined to think this as they were dated as being issued in 1934 when the deficit was only $4.5 billion. Anyone capable of buying the $1 billion bonds would know this information. I also hope nobody was stupid enough to think they could pull this off.

    Pretty elaborate joke, seeing as they were kept in safe deposit boxes with false bottoms. Not much of a joke with all the people getting arrested and facing a hefty jail sentence.

    No, sorry, I dont' buy your joke scenario.

    Secondly, how do we know that fake bonds haven't been cashed/deposited before.

    Agreed, bonds with a face value of $1 billion dated 1934 seem a bit high. But smaller bonds might have been cashed. Bonds from 1934 are still valid today. I'm just wondering how banks know if they are real. Safety features in 1934 aren't what they are today. Records from 1934 mightn't be what you'd hope they'd be, no instant access like with computer records etc etc. How do you verify such bonds?


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    #4
    andrew
    Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 3,368 Mod ✭✭✭✭andrew


    I presume banks would be naturally wary of some randomer claiming to have an absolutely staggering amount of wealth coming to them and trying to sell em. I really don't get how such a scam could work.


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    #5
    BattleCorp
    Registered Users Posts: 11,758 ✭✭✭✭BattleCorp


    andrew wrote: »
    I presume banks would be naturally wary of some randomer claiming to have an absolutely staggering amount of wealth coming to them and trying to sell em. I really don't get how such a scam could work.


    Neither do I, but they went to some pretty elaborate lengths to try and get it done.

    I'm just wondering if anybody in this forum knows anything about the security measures for bonds. How are they verified, etc etc.

    This isn't the first time that this has happened so that leads me to believe that it may have been successful on a smaller scale in the past.


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    #6
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    BattleCorp wrote: »
    I'm just wondering if anybody in this forum knows anything about the security measures for bonds. How are they verified, etc etc.
    They are identified by ISIN/ CUSIP/ SEDOL codes (unique identifiers) attached to these securities and verifiable. Any securities pre-dating the introduction of these codes can presumably be verified via the issuer.

    Nowadays, this is all handled electronically. But an institution would be very wary of accepting a non easily traceable bearer certificate/ bond without verifying its authenticity with the issuer/ agency, if such verification were not easily done using the security's identity features.


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    #7
    andrew
    Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 3,368 Mod ✭✭✭✭andrew


    later12 wrote: »
    They are identified by ISIN/ CUSIP/ SEDOL codes (unique identifiers) attached to these securities and verifiable. Any securities pre-dating the introduction of these codes can presumably be verified via the issuer.

    Nowadays, this is all handled electronically. But an institution would be very wary of accepting a non easily traceable bearer certificate/ bond without verifying its authenticity with the issuer/ agency, if such verification were not easily done using the security's identity features.

    Is it possible to buy papers bonds at all these days? A framed bond would be a cool gift.


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    #8
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    I bought some old share certificates at Hermann & Wilkinson in Rathmines a couple of years back. So I imagine there are bearer instruments out there as well. It's far more common to find these certificates in the UK, though, as far as I am aware. You could always try online?

    PS, enthusiasm for old stock certificates and bond indentures is called Scripophily, and an enthusiast is called a Scripophile. Something to put on a CV maybe :pac:


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    #9
    andrew
    Moderators, Science, Health & Environment Moderators, Society & Culture Moderators Posts: 3,368 Mod ✭✭✭✭andrew


    later12 wrote: »
    I bought some old share certificates at Hermann & Wilkinson in Rathmines a couple of years back. So I imagine there are bearer instruments out there as well. It's far more common to find these certificates in the UK, though, as far as I am aware. You could always try online?

    PS, enthusiasm for old stock certificates and bond indentures is called Scripophily, and an enthusiast is called a Scripophile. Something to put on a CV maybe :pac:

    I hope someone looking to buy me a present sees this post....maybe I'll print it out and leave it lying around :pac:


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