Smuggled $134 billion in T-bonds are fakes, U.S. says

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Speculation about the Italian smuggling case involving $134 billion in purported U.S. Treasury bonds may have been fun while it lasted, but the Treasury Department says today the bonds are bogus.

‘They’re obvious fakes,’ said Steve Meyerhardt, a spokesman for the Treasury’s Bureau of Public Debt in Washington.

Two Japanese men were detained by Italian authorities last week after they were caught trying to enter Switzerland with what appeared to be $134 billion in U.S. Treasury bonds in a suitcase.

As I noted in this post on Wednesday, conspiracy theories have run wild in the blogosphere based on the few details that had emerged about the case -- and because mainstream media had largely ignored the story.

Meyerhardt said Treasury authorities could see immediately from photos of the bonds that they were doctored.

What’s more, the package of bonds was said to include ‘Kennedy’ bonds worth $1 billion each. ‘There is no such thing as a Kennedy bond,’ Meyerhardt said.

Most important, the total of Treasury paper ‘bearer’ bonds outstanding is a mere $105 million, he said. The Treasury has been issuing bonds solely in electronic form since 1986, although a relative handful of investors never bothered to convert their bearer bonds to electronic form.

And yes, I realize that there’s probably nothing Treasury can say to satisfy people who believe that there’s something more sinister going on here.

The big question, still, is what the apparent forgerers hoped to do with the paper.

-- Tom Petruno