Authors: David Capps
“Anything actionable?” Jake asked.
Briggs computer pinged. “Huh.”
“What is it?”
“Inter-departmental notice. Customs is holding two Chinese businessmen at La Guardia Airport for not declaring financial documents in excess of $10,000.”
“And this concerns us how?” Jake asked.
“They were carrying a business card—Daniel Jacobson, Federal Reserve Bank. Outside of a passport and cell phones, the card is the only possession they have in addition to the financial instruments.”
“What kind of instruments?”
Briggs tapped a few more keys. “Gold bearer bonds, ten of them.”
“Denomination?”
“Hang on, there’s a graphic,” Briggs said. “Wow.”
“What?”
“Take a look.”
Jake had heard about these, but he’d never seen one before. “It says the bearer bond is in exchange for one metric ton of gold. The bonds are issued by the Federal Reserve Bank of New York. Face value is $1,120,000.”
“Yeah,” Briggs said. “Look at the date on the bonds.”
Jake leaned closer to the screen. “June 6
th
, 1941. You’ve got to be kidding me.”
“Ten tons of gold, at today’s prices?”
Jake ran the calculations in his head. “We’re at 384 million dollars, and that doesn’t include any interest that would have accrued. No wonder they didn’t want to declare them to customs!”
“I know you’re officially off duty, but their only contact was killed right in front of you. You want to take a look at the bonds and talk to these two?” Briggs asked. “I don’t actually have anybody else available.”
“What about the New York office?” Jake asked. “Wouldn’t they want to be on this?”
“Yeah, about that.” Briggs leaned forward. “If Jacobson was on his way to see us, and didn’t want to go to the New York Field Office for some reason, I’m thinking we should handle this quietly, and from here. You know what I mean?”
“At least until we have a better grasp of the situation?”
“Exactly.”
Jake smiled. He was excited to be involved in an investigation again.
* * *
Jake picked up Agent Ken Bartholomew from the Secret Service office on his way to the airport. Ken was the Secret Service’s top document expert. He was African-American, skinny as a rail with short-cropped hair and a struggling mustache.
“Thanks for the invite,” Ken said. “You said gold bearer bonds?”
“Yep, ten of ‘em. I’ve never seen one before. I’m hoping you have.”
“Oh yeah,” Ken replied. “If they are what I think they are, you’re in for an education.”
“That good?”
“That good. Rare as hen’s teeth.”
Jake looked over at him and chuckled.
Going through security at the airport reminded Jake of the watch in his coat pocket. He placed it in the gray plastic tray with his other belongings. The fact that he had two watches went un-noticed by the TSA.
Being a federal agent probably prompted a lower level of scrutiny.
He decided that wearing the watch was the safest place for it, even though it meant having two watches on his left wrist, his own, for telling time, and the other, running backwards, counting down to some mysterious event.
They caught the U S Airways 11:00 a.m. shuttle from Dulles to La Guardia. Jake had known Ken for eight years now. Ken was an Ole Miss grad with a degree in Accountancy and a minor in Art History. His attention to detail and uncanny ability to spot fakes drew the attention of not only the Secret Service, but the FBI, as well. In the end, Ken had selected the Secret Service instead of the FBI.
Too bad
.
Ken would have made a great agent.
It was 12:20 p.m. when they reached the Customs Office.
“Secret Service?” the Customs officer asked when they showed their credentials. “I thought you guys protected the President.”
“Some of us do,” Ken replied. “The Secret Service also investigates all crimes involving currency and counterfeit financial documents.”
“Huh,” the officer replied.
“The two Chinese nationals. What’s their story?” Jake asked.
“They haven’t said much,” the officer said. “They handed their passports to us and said they were here on business. They said they had nothing to declare. A quick check of the briefcase produced these.” He showed Jake and Ken the bearer bonds. “That’s when we took them into custody. They haven’t said a word since.”
“May I?” Ken asked, reaching for the bearer bonds.
“Yep,” the officer replied. “We don’t even know if the bonds are real. We need a determination before they can be charged.”
“That’s why I’m here,” Ken said.
“The bonds look old,” Jake noted.
Ken picked one up and held it to the light. “Is there a room we could use to examine the bonds?”
“Sure, right in here.” The officer led them across the hall to a small office.
“This could take a while,” Ken said. “We’ll let you know what we find.”
The officer seemed put off, but turned and left. Ken pulled a jeweler’s loop from his pocket and began to examine the bond in detail. Twenty minutes later he had looked at all ten bonds.
“Well, what do you think?” Jake asked.
Ken took a quick look around the room, checking for a listening device or camera. “Okay, here’s the deal. I’ve seen some of these bonds before. The story is that when the Japanese army was invading China in the run-up to World War II, wealthy families were being murdered and their possessions were plundered by the Japanese Army—Gold, jewels, artwork, anything of value. Many of the families in China had their gold shipped to the Federal Reserve Bank in New York for safe-keeping. After the war, wealthy Japanese families did the same thing. The bank issued gold bearer bonds as a receipt for the gold. The bearer bonds could be redeemed by anyone possessing the bond, supposedly, no questions asked.”
“Okay, so what’s the problem?” Jake asked.
“Take a look right here.”
Jake looked at the bond closely. “The word annual is misspelled.”
“Right, and over here…”
“That isn’t even a real word. This is a fake.”
Ken held the bond up to the light. “And this do-hicky?”
“It’s a watermark,” Jake said.
“Yes, it is. The watermark and the paper are authentic.”
“That doesn’t make any sense. You’d think if someone went to the trouble of using authentic paper and creating the watermark, they would have spelled the words correctly.”
“You’re looking at one of the darker sides of our country’s history,” Ken said quietly. “The bearer bonds are authentic, issued by the Federal Reserve Bank of New York, on the date specified. The bank officials created the bonds with the mistakes in them, thinking the foreigners wouldn’t notice, and they didn’t. Decades later, when the bonds were presented, the bank officials simply claimed the bonds were forgeries, and refused to return the gold.”
“And because of the mistakes in the text of the bond, no one can prove the bonds are real,” Jake said.
“Precisely,” Ken replied. “In addition, the signatures on the bonds are fictitious, no one by those names ever worked for the Federal Reserve.”
“So you’re telling me the Federal Reserve Bank intentionally swindled these people out of ten tons of gold?”
“Nope,” Ken replied. “I’m saying the bank swindled them out of twenty-two thousand tons of gold.”
“What?” Jake said. “You can’t be serious.”
“I
am
serious. At today’s prices, I make that 844.8 billion dollars.”
“And nobody was charged and prosecuted?”
“No real proof,” Ken said. “The Secret Service audited the bank’s records, which indicated 218 tons of gold had been received from Asian families, all of which had been redeemed by the families after the war. The bank claimed that no gold bearer bonds have ever been issued by a Federal Reserve System bank.”
“But here they are—ten of them. You said they’re authentic.”
“I know they are—but I can’t prove it. The Secret Service has been following various gold bearer bonds for decades. Everyone who examines the bonds comes to the same conclusion you did−that the bonds are fake.”
“I don’t understand,” Jake said. “We have ten bearer bonds that are real, but were made to look like fakes. Are there fake bonds that look real?”
“Of course there are.”
“So how do you tell them apart?”
“Sometimes, you can’t. We divide counterfeit financial specimens into three tiers. The quality of tier 1 specimens is so good that you can’t tell them from the real thing. With tier 2, an expert can tell the difference, and tier 3, with a few simple tests, the cashier at your local grocery store can tell the difference.”
“This sounds like we’re talking about currency instead of bonds,” Jake said.
“Counterfeiting isn’t just about currency. It involves every form of financial instrument, from a five dollar bill to stocks and bonds, mortgages and derivatives. If it involves money, it’s being counterfeited.”
Jake picked up one of the gold bearer bonds. “The bank told you no Federal Reserve Bank has ever issued a gold bearer bond?”
“That’s what they said. It’s actually a clever defense. Under federal law, only the US Treasury Department can issue bonds such as these. The Federal Reserve System has no legal authority to issue bonds. They buy US Treasury Bonds, which are debt instruments. That’s how the federal government borrows money—we print and issue the bonds, and the Federal Reserve buys them. We get the money, and the bank gets the debt instrument, which is added to the National Debt.”
“Then why would anyone attempt to counterfeit something that doesn’t exist?”
“They wouldn’t,” Ken replied. “That’s one of the things that lead me to believe the gold bearer bonds are real.”
“Okay, I’m going to have to think about that for a while. What are we going to do about the two Chinese nationals in custody? If we determine that the bonds are real, they’re guilty of not declaring financial instruments, or if we determine the bonds are counterfeit, they’re guilty of possession of counterfeit financial instruments. So which charge is it going to be?”
Ken smiled. “Since you’re a newbie to this dance, just watch and see what happens.”
They walked back across the hall to where the two men were being held. The Customs officer was waiting for them. So was another man.
“This is Mr. Wong,” the Customs officer said. “He is from the Chinese Embassy.”
Mr. Wong showed Jake and Ken his identification. “Mr. Zhang and Mr. Li actually have diplomatic immunity.”
“They didn’t have diplomatic passports,” Ken responded.
“A simple oversight,” Mr. Wong said. “We apologize for any inconvenience. They will also need the documents back, which you now have in your possession. Those documents are the property of the People’s Republic of China. Your cooperation is appreciated.”
Jake slowly handed the briefcase across the table. As he did so, the watch was exposed from under his shirt sleeve. Mr. Zhang looked at the watch and nudged Mr. Li with his elbow. Mr. Li extended his left hand across the table and glanced down at his own watch. Jake followed his gaze. Li wore a watch identical to the one Jake received from Daniel Jacobson.
Thinking quickly, Jake said, “Please inform your people that the man you came to see has passed away.”
Both men bowed slightly as they took possession of the briefcase.
* * *
Jake and Ken sat in an airport coffee shop, waiting for their 3:00 p.m. flight back to Washington, D.C. They sat at a small black metal patio table with uncomfortable black metal chairs.
“You want to tell me what that fuss was all about?” Ken asked.
“My first lead in a murder case,” Jake replied. “And it’s international money laundering.” He took his cell phone out and called his boss.
“Briggs.”
“Daniel Jacobson, vehicular homicide from this morning. We have a possible connection to New York and a definite connection to China. International connection makes it FBI jurisdiction. I want this case.”
“Pending approval from Dr. Rosen allowing you to return to duty, I can do that.”
“I also need high level electronic surveillance on the two businessmen from China I came here to see. You have their passports and cell phone numbers in the system. I also need ears inside the Federal Reserve Bank of New York, specifically at the International Funds Transfer Desk.”
“You know we’re not going to get a warrant for that.”
“I need you to find a way. This is something critical.”
“Solid lead or hunch?”
Jake looked down at the watch. “Somewhere in between.”
“Okay, I’ll see what I can do.”
Jake put his cell phone away.
“So you want to clue me in to what’s going on?” Ken asked.
Jake brought him up to speed on the death of the bank VP.
“And your sympathetic approach regarding the death of Daniel Jacobson?”