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Who wants to be a trillionaire? News ^ | 28 October 2003 | Paul Vallely

Posted on 10/28/2003 3:46:37 AM PST by Robert Drobot

Graham Halksworth's neighbours knew him as a pillar of his community: a family man and a trustee of the local golf club. They didn't realise that he was quietly plotting one of the most audacious scams in history.

Every Monday morning, 69-year-old Graham Halksworth would bid farewell to his wife Margaret, 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 briefcase, he would negotiate the steps down from their unprepossessing brick-built semi, whose only sign of pretension was its windows, leaded with an unlikely escutcheon in the stained glass.

The house was set about with privet, and its owner, too, seemed the model of respectability - a portly man, the pattern of whose life appeared entirely conventional as he walked unhurriedly to the station for the weekly commute to his London office.

Life must have seemed good. Behind him stood the protective shoulders of the great hills capped with great swaths of moorland heather. Across the ridge to his left was the golf club where he had been a member all his life, as his father had been before him, and where he was - if not liked - at least well-respected. To his right, the earth fell away spectacularly to a clear-watered beck surrounded by beech and sycamore, among which little wrens darted.

It was a rural idyll. And yet it did not lack the commonplace comforts of a little northern community. Down the hill on his weekly journey he passed the local chippie, the Asian corner shop and the Bridge - the pub from which he commenced the steep, calf-aching climb to the station where the first train to London leaves at 6.49am, changing at Manchester Piccadilly.

Mossley is a homely place, the kind of community whose idea of crime - to judge by shop window notices about "truants, litter louts and vandals" - is, shall we say, modest. It is a place where news travels fast: "If you do owt at t'bottom of Mossley, the news gets to them up at t'top before you get there yersel'," as they say locally.

Few, then, could have suspected that inside Mr 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 $2,500,000,000,000 (that is, £1.5 trillion).

Deep in the vaults of a London bank lay 22 cases stamped with the American golden eagle. They were crammed with US Treasury bonds whose face value was so high that if anyone tried to cash them it would virtually bankrupt the US government.

An extraordinary story was 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 safekeeping, his supporters sent 125,000 tons of Chinese gold to America and, in a covert deal with the president Franklin D 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.

Too far-fetched? That's what the City of London police thought when they stumbled across the history of the affair after a report by a sharp-eyed Mountie in Toronto (of which more shortly). But when they approached 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".

When Halksworth was a boy in Oldham he dreamed of being a chemist. After leaving grammar school in Hyde, he joined the Dunlop Rubber Company in Cambridge Street, Manchester. But it turned out he was allergic to rubber, forcing him to switch to a career in specialist printing. Fifteen years later, he had made a speciality of the science of printing and became a member of the Forensic Science Society. "He were a clever young man," recalls a drinker in the Bridge who had once run the now defunct Co-op the young Halksworth used. "His family were lah-di-dah, but very nice."

In his early thirties, Halksworth was offered a secondment which was to change his life. He went on attachment to the Home Office where he was involved in inventing a new fingerprinting system for New Scotland Yard in 1967. He joined a small company, providing forensic science equipment to police forces around the world, and authenticating thousands of historical documents for clients who included the Chinese and German governments. He helped issue bonds for the Bank of England and commercial banks. He became involved in approving United States Federal Reserve bonds for Saudi princes, evangelical churches and Native American tribes.

They were experiences which exercised two complementary, but equally unhealthy, influences on him. For years he nursed a resentment about his work on the Scotland Yard fingerprinting system; he was central to it, he complained, and yet the chance to make money on it was taken away from him. "It was a missed opportunity that makes me sick to this day," he said recently. At the same time, Halksworth's work as an examiner of historical documents exposed him to a bizarre world of strange and colourful characters, each with their own money-making scheme. They set him an example that he finally found impossible to resist.

It was a member of the Royal Canadian Mounted Police who did for respectable Mr Halksworth. Two years ago, two men - a Korean living in Japan and a Canadian - walked into the Imperial Bank of Commerce's main branch in downtown Toronto and tried to cash $25m (£15m) 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're fakes when 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 $2.5 trillion debt. There was, 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 were no genuine Federal Reserve notes from 1934.

But there were some pieces of evidence to which Halksworth had no answer. He and Slamaj, the man who had ostensibly received the bonds from the Mindanao tribesmen, claimed that Chiang Kai-Shek had given the Americans 125,000 tons 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 tons by 1950. Even more damning, the documents contained zip codes which the US postal service introduced only in 1963 - and a Treasury Seal which was too modern. Furthermore, analysis showed that some of bonds had been produced on an inkjet printer.

All of this has set tongues wagging in Mossley. "Apparently he did it because he wanted the cash for a pension," says the man in the chippie. "Some pension." Actually, although it was a multi-trillion-dollar fraud, the forensic scientist only made £69,000 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 £10 for each additional bond thereafter.)

"Still," says the bloke supping Tetley's Smooth in the Bridge, "£70,000 is better than a poke in the eye."

"You can't imagine it would be him," says the local newsagent. "I was shocked," says the pharmacist in the chemist's across the road from the station. "Looking at his house you couldn't say he has lived high on the hog on the profits of a life of crime," says a punter at the bookie's. "It looks like he succumbed to temptation at the very end."

Up on the Huddersfield Road at Stamford Golf Club, where they know Halksworth better, there was less of a sense of shock. The forensic scientist may have been a pillar of the club for more than 50 years - he is currently one of the club's trustees - but he is, as one golfer diplomatically puts it, "not everyone's cup of tea. Some," he added, "might call him a little superior." Detective Inspector Roger Cook, who led the investigation against Halksworth, seconds this view, describing him as "an arrogant man, but too intelligent to believe some of the weird and wonderful stories he was coming out with." In the club house, his photograph hangs with all the other past captains from the picture rail. "Not a jailbird among 'em... as far as we know," jibes one member.

He has "taken some ribbing about it all," the man behind the counter in the golf shop says. At the Captain's Dinner in August, during the court case but before the verdict, the main speaker, joshing about the diversity of the club's membership, said it embraced everyone from those who had very little to those who had trillions. Halksworth turned to the member next to him and said: "Just you wait. It will all come out. You'll see I'm innocent."

But when the verdict came, he wasn't. After 18 hours of deliberations, a jury of seven men and five women cleared 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. Halksworth wept when the verdict was read out.

Judge William Birtles ordered a "thorough investigation" of his financial position - and that of Slamaj, who was also found guilty of possessing fake bonds - with a view to making them contribute towards the cost of the 11-week trial, which is thought to have cost more than £500,000. Because of ill-health, Halksworth was not remanded in custody but given bail to return to court for sentencing on 31 October.

He cut a sorry figure when he shambled to answer the door this week. A fat man, with a belt tied tight around his middle as though he were a sack of oats, balding, with a hearing aid behind his ear, wearing an incongruous sports top and slacks, he looked like someone who would not thrive in prison. The judge has warned him that he faces "a substantial custodial sentence".

"I've got nothing I want to say," the forensic scientist said wearily at the door of his little house.

The same could not be said of the people of the little town of Mossley.

TOPICS: Business/Economy; Canada; Crime/Corruption; Front Page News; News/Current Events; United Kingdom
KEYWORDS: 000tonsofgold; 125; banks; chiangkaishek; dumbscam; fortknox; goldstandard; philippines; treasure; usbonds
There are two revelations in this story that are mysteries in and of themselves :

"....Deep in the vaults of a London bank lay 22 cases stamped with the American golden eagle. They were crammed with US Treasury bonds whose face value was so high that if anyone tried to cash them it would virtually bankrupt the US government...."

The author doesn't indicate the source of this information, or if there was an independently verified accounting of the existence of the twenty-two cases of US Treasury bonds.

Also, this information conflicts with another part of the story in which the author relies upon a police review of the London Bullion Market records. It is claimed that the total of all gold mined and recorded in all of history - through to 1950 - was 63,500 tons.

If in fact the London Bullion Market tracks world-wide gold accumulation, how that institution requires every source in the world to divulge their wealth isn't examined by the author.

These two loose ends are critical aspects of this story, and as such I would suggest this story was heavily censored before going to print.

The shame about information processing is the intentional filtering put into place to deny readers a clear understanding of an issue. Of course, limiting the public's ability to arrive at an informed and independently formulated opinion gives the manipulators an almost absolute control of a community or nation's opinion.

Can't follow the money if the trail is intentionally obscured.

1 posted on 10/28/2003 3:46:38 AM PST by Robert Drobot
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To: Robert Drobot
The author doesn't indicate the source of this information, or if there was an independently verified accounting of the existence of the twenty-two cases of US Treasury bonds

you've missed the point- the author doesn't independently confirm the existence the purported criminal- how do we even know the club to which he is a member even exists? how that institution requires every source in the world to divulge their wealth isn't examined by the author.

most non conspiratorial minded types would assume they use techniques similar to those that are used to estimate the extraction of iron, coal, etc.. While the numbers may not be spot on, it's hard to imagine they would be off to the point that a country like taiwan could amass twice the known reserves of the rest of the world.

then again, those masons are tricky fellows. /sarcasm

2 posted on 10/28/2003 5:34:01 AM PST by fourdeuce82d
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To: fourdeuce82d
then again, those masons are tricky fellows.

Nah, this is the work of the Build-a-burgers.

3 posted on 10/28/2003 6:48:00 AM PST by razorback-bert (A dime is a coin once used for money.)
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To: fourdeuce82d
most non conspiratorial minded types would assume they use techniques similar to those that are used to estimate the extraction of iron, coal, etc..

Indeed, and just to expand a bit, gold traders on the London markets have a vested interest in knowing as accurately as possible how much gold is out there floating around, since that directly affects the price of the gold they're trading. Do they know how much is produced, down to the last ounce? Of course not, but they spend a lot of time and a lot of money trying to get the best estimates they can - their livelihood depends on that kind of information. I also highly doubt that they somehow missed half of the world's gold supply before 1950.

4 posted on 10/28/2003 6:58:03 AM PST by general_re ("I am Torgo. I take care of the place while the Master is away.")
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To: Robert Drobot
This is a very strange story. Agree that what is left out is crucial. As written it is very difficult to follow...the logical trail rather than the money trail.

Strangely it dimly echoes part of the plot of Neal Stephenson's wildly popular The Cryptonomicon (deservedly popular IMHO)...


5 posted on 10/28/2003 7:07:07 AM PST by boris (The deadliest Weapon of Mass Destruction in History is a Leftist With a Word Processor)
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To: Robert Drobot
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 deadline was met, and the first B-29 mission was flown from India on June 5, 1944, against Japanese-held Bangkok."

I guess the B-29 that they were using took ten years [1934] to make it from the U.S. to the Philippines... ;-)

6 posted on 10/28/2003 9:48:51 AM PST by an amused spectator
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