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March 14, 2006

HOMELAND SECURITY AGENTS SEIZE "BILLION DOLLAR" BOGUS FEDERAL RESERVE NOTES
Investigators say schemes involving fraudulent financial instruments are on the rise

LOS ANGELES - Agents with U.S. Immigration and Customs Enforcement (ICE) and the U.S. Secret Service seized 250 counterfeit Federal Reserve notes last week from a Los Angeles area apartment, each bearing a $1 billion denomination.

The seizure stems from an investigation into Tekle Zigetta, who pleaded guilty yesterday to three federal counts for attempting to smuggle more than $37,000 in currency into the United States following a trip to Korea in 2002. The 45-year-old was arrested at Los Angeles International Airport (LAX) in January after ICE agents lured him back to the U.S. following a three-year absence. Zigetta, who remains in jail, is scheduled to be sentenced in June.

According to the search warrant affidavit filed in the case, the investigation into Zigetta's activities ultimately led agents to the apartment where they recovered the billion dollar bank notes. According to the affidavit, the elderly couple who live in the apartment told agents they received the counterfeit notes from Zigetta before he left the country three years ago. ICE agents say their investigation is ongoing and no charges have been filed in connection with the seized bank notes.

The notes, printed with a 1934 issue date and a portrait of President Grover Cleveland, had been treated to make them appear old. Investigators say that is just one of the ploys fraudsters use to convince investors that the fake financial instruments are real. In addition to the bogus bank notes, federal agents also recovered numerous other counterfeit financial instruments at the apartment.

The largest denomination of currency ever printed by the Bureau of Engraving and Printing was the $100,000 Series 1934 Gold Certificate featuring the portrait of President Wilson. These notes, which were printed from December 18, 1934 through January 9, 1935, were used only for official transactions between Federal Reserve Banks. They were never circulated among the general public.

ICE officials say cases of fictitious instrument fraud involving the sale or transfer of nonexistent securities appear to be on the rise. Scam artists typically try to sell the bogus securities at a discounted value or use them as collateral to secure loans or make purchases.

Investigating financial crime and fraud is the focus of Operation Cornerstone, ICE's comprehensive initiative to combat vulnerabilities in the nation's financial system. Such schemes can easily be exploited by criminal organizations to earn, move, and store illicit funds.

“The con artists who attempt to pass these bogus securities typically fabricate stories about their origins that are so detailed and compelling buyers often refuse to believe the instruments are fake,” said David Nehls, assistant special agent in charge for ICE's office of investigations at LAX. “For investors, the bottom line needs to be, if it sounds too good to be true, it probably is.”

“We receive calls on a regular basis from people who have acquired what turn out to be bogus Federal Reserve notes and are upset because the United States government refuses to redeem them,” said James Todak, deputy special agent in charge for the Secret Service in Los Angeles. “You would think the $1 billion denomination would be a give away that these notes are fakes, but some people are still taken in.”

ICE agents say last week's seizure is just the latest example of fictitious instrument fraud. ICE officials encourage those seeking to learn more about this type of fraud to visit the U.S. Bureau of Public Debt web site - www.treasuryscams.gov. The site features samples of various kinds of fictitious fraud instruments and provides information about the related financial schemes.


-- ICE --