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Monday, May 20, 2024 | Back issues
Courthouse News Service Courthouse News Service

Strange Tale of Billions in U.S. Bonds

PHILADELPHIA (CN) - A man from suburban Philadelphia claims to have 735 $1 billion Federal Reserve Bonds stashed in a bank outside the city, and that 15 more have yet to be returned to him by a scheming agent from the Department of Homeland Security.

Joseph Riad claims the 15 bonds came from three ultra-rare "sealed and certified bronze boxes," each of which contains 245 $1 billion 1934 Federal Reserve Bonds.

Riad sued the United States for $15 billion, in Federal Court.

The billion-dollar bonds allegedly were used by the government for debt-management purposes in the 1930s when physically moving lower-denomination currency or gold was impractical.

While there have been reports of fake billion-dollar bonds turning up in the past, Riad claims his bonds are genuine, and that several experts support that contention.

But no federal agency will redeem them, he says, despite "extensive and exhaustive proof of the authenticity of the Bonds."

According to what he calls an Affidavit of Procurement, filed as an exhibit to his complaint, Riad claims the boxes became his collateral for more than $76,000 in loans he made to a "mandate to the South African government."

That man failed to repay the loan, so Riad sued him in state court, according to the affidavit.

Riad says he discovered the bonds after his attorney at the time "recommended opening the boxes to determine if there was anything of value in them," according to the affidavit.

In June 2009, it was reported that 10 so-called billion-dollar "Kennedy Bonds" seized by Italian police were fakes.

Those bonds were reportedly part of a larger bogus bundle of $134 billion in fake federal bonds said to have been seized from Japanese smugglers on the Italian-Swiss border.

But Riad says his bonds are the real deal, and that the Secret Service has indicated as much.

He contacted that agency in mid-2008, then met with two Secret Service agents at his then-lawyer's Houston law office, according to his complaint.

The agents referred him to an official at the Bureau of Public Debt (BPD), but when Riad contacted BPD official Donna Ayers, she "categorically denied the existence of bonds such as plaintiff's bonds," according to the complaint.

Ayers bounced him back to the agents, who "inspected plaintiff's bonds, reviewed the accompanying expert reports, and performed their own evaluations and tests so as to render their own opinion as to the authenticity of plaintiff's bonds," Riad says.

The agents then contacted Ayers "and informed her that plaintiff had completed the appropriate and required examination and authentication of the Bonds and that the redemption of said bonds did fall under the purview of the BPD, since the Bonds were outstanding government issued securities/debts," according to the complaint.

Finding no luck with the BPD, Riad says he continued his quest of "repatriating the bonds to the U.S. Treasury, with his intent being to assist in reducing outstanding U.S. debts."

During his quest he encountered Nickolaus Jones, an agent for the Department of Homeland Security, who was bent on "fraudulently" obtaining the bonds, Riad says in his complaint.

Riad says he learned about Agent Jones through a man who called himself Neil Gibson.


Gibson was "an alleged British financial consultant who claimed to have experience in the repatriation of high-denomination U.S. government bonds, and who represented to plaintiff that he had a contract with the U.S. government to complete such transactions and that he had successfully handled such projects on behalf of the U.S. government in the past," according to the complaint.

It adds: "Plaintiff was able to contact Agent Jones and he confirmed to plaintiff his ability and his specific, government-granted authority as a DHS agent to handle matters involving the repatriation of high-denomination gold bonds such as plaintiff's. Although later determined to be a bald-faced lie, Agent Jones confirmed that he and Mr. Gibson enjoyed an effective working relationship with the agency for the previous five (5) years. Agent Jones continued his deception by advising Plaintiff specifically that he had prior experience with such high-denomination, gold-backed bonds, and that those individuals whom he had assisted in the past had received the standard 'reward' for repatriating such bonds. Agent Jones advised plaintiff that, based upon his experience, said reward amount was between three (3) and five (5) percent of the face value of the bonds and would be paid by the U.S. Treasury.

"Throughout the various and repeated telephone and email communications with plaintiff, Agent Jones confirmed the existence of various high-denomination, gold-backed bonds such as plaintiff's, and went so far as to state that plaintiff's initial description of his bonds was strikingly similar to the high-denomination, gold-backed bonds Agent Jones knew existed and that he, therefore, wanted to learn more about plaintiff's bonds."

Riad says he had a three-hour meeting with Jones at Jones's Irvine, Calif. government office in March 2009.

"At said meeting, Agent Jones again confirmed that he was a U.S. agent with the DHS and displayed his identification badge and provided his business card to plaintiff," the complaint states.

"A second individual, ostensibly a DHS colleague of Agent Jones, was present at said meeting; however, neither he nor Agent Jones would provide an identification badge or business card of this other person, despite the fact that plaintiff [and his then-attorney] ... made multiple and specific requests for said identification. ...

"During said meeting, Agent Jones stated to plaintiff ... that, upon seeing plaintiff's bonds, he recognized the similarity between plaintiff's bonds and the type of bonds that were being sought for repatriation by the government. He further stated that if plaintiff's bonds were the same, they would qualify for the redemption program that was allegedly in place at that time at the FRBSF [Federal Reserve Bank of San Francisco]. Agent Jones further claimed to have a direct connection to said redemption program, as well as experience in handling transactions in the past with the FRBSF through their Los Angeles office. ...


"Based upon Agent Jones' stated and apparent authority to act on behalf of the U.S. Government as a DHS agent [and] ... based upon the fact that Agent Jones repeatedly and unequivocally told plaintiff and Mr. Oxford [his then-attorney] of his ability and authority to assist plaintiff with the repatriation of his bonds ... plaintiff provided Agent Jones with fifteen (15) of the at-issue Bonds: five (5) original bonds from each of the three (3) metal containers, as well as the treasury-produced authentication documents. ...

"Surprisingly, Agent Jones refused to sign ... [an] inventory, and he refused to issue a general receipt to plaintiff indicating that he received the bonds from plaintiff. However, in that meeting, Agent Jones assured plaintiff and Mr. Oxford that he would return the bonds to plaintiff after he completed his investigation into the authenticity of the Bonds, and that said investigation would take approximately one week to complete. Because they were meeting in DHS offices and given that Agent Jones had provided valid identification and appeared to be a legitimate member of the Irvine, CA DHS staff, plaintiff, upon advice of counsel, reluctantly provided the bond samples to Agent Jones."

However, Riad says: "Approximately one week after his meeting with plaintiff ... Agent Jones contacted plaintiff via email and advised him that his bonds were not authentic, despite Plaintiff's extensive and exhaustive proof of the authenticity of the Bonds and despite the fact that the Secret Service had already directed plaintiff to the BPD so as to repatriate his bonds. Agent Jones offered no evidence to corroborate his position that the bonds were not authentic, nor did he offer an explanation as to how he was able to so extensively and definitively examine the Bonds for authenticity within such a short period of time when it had taken plaintiff's experts several months to complete their inspections and render their opinions as to the authenticity of plaintiff's bonds. ...

"Upon receiving notice from Agent Jones that his bonds were allegedly not authentic or valuable, plaintiff immediately requested that his bonds be returned to him. Contrary to plaintiff's expectations, however, Agent Jones, without reason, refused to return the bonds.

"Plaintiff again requested the return of the bonds to him, informing Agent Jones that he had no authority to keep the bonds. Agent Jones then informed plaintiff that he couldn't return the bonds to plaintiff because, despite having no apparent or actual authority to do so, he had destroyed plaintiff's bonds."

Riad says Jones told him that he could share his analysis of the bonds only with a federal agent possessing a sufficiently high clearance level, which, "fortuitously," Riad's bond expert, Kermit Harmon, a former security director for the Dallas Federal Reserve Bank, did have.

"Agent Jones was informed of Mr. Harmon's credentials, and a face to face meeting between Jones and Harmon was demanded by plaintiff for the specific purpose of reviewing the alleged results of Agent Jones' inspection of plaintiff's bonds. Despite having stated that he would meet with a qualified individual with '18 XXX' authority, upon learning that plaintiff had produced such an individual, Agent Jones then refused to meet with plaintiff and Mr. Harmon. From that time forward, Agent Jones refused to further discuss the matter with plaintiff and/or Mr. Oxford," according to the complaint.

The complaint continues: "At or about this same time, Agent Jones sent plaintiff and Mr. Oxford emails, demanding that plaintiff's three (3) bronze boxes and the remaining seven hundred thirty-five (735) bonds and supportive documents be surrendered to him immediately. Agent Jones also threatened plaintiff that he would be prosecuted under federal law for refusing to turn over the bonds, citing specific U.S. Code provisions as authority for his threats. However, due to the unethical and uncertain circumstances surrounding Agent Jones, it appeared to plaintiff and Mr. Oxford that Agent Jones was attempting to scare plaintiff in order to secure personal possession of the bonds and the bronze boxes. Upon the advice of Mr. Oxford, plaintiff ignored Agent Jones' demands and threats. ...

"Plaintiff believes that Agent Jones is currently in physical possession of plaintiff's missing bonds, or that he has transferred possession of said bonds to a third party."

Riad says the shady characters he met in his journey were tools "in Agent Jones' scheme to dispossess plaintiff of his bonds."

"Retrospectively, it is clear that Agent Jones, while operating under the actual and apparent authority that is inherent to his position as a U.S. agent with the DHS, provided plaintiff with false and/or misleading documents and information with the intent to illegally obtain the Bonds from plaintiff," possibly with the help of others, Riad says.

Riad sued the United States under the Federal Tort Claims Act, alleging trespass, conversion and intentional misrepresentation.

He is represented by Albert Iacocca of West Chester, Pa.

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