The (Nearly) Perfect Counterfeiting Scheme.

 

On 17 November, 1922 , the Banco de Portugal released into circulation a new issue of 500-escudo notes - at the time each with a face value of about $15 U.S. But a couple of years later, they were to be "counterfeited" - if notes printed on the same banknote paper, from the original plates, by the original printer and with the same serial numbers can be considered "fakes". Perhaps an "unauthorized reprinting" is closer to the mark.

The mastermind was Arthur Virgilio Alves Reis, an official of the Portuguese Colonial Office. He was also an accomplished forger of documents, obtaining employment as an engineer in Angola on the strength of a diploma from the "Oxford University Polytechnic", an institution that did not exist.

Back in Portugal , Reis discovered two facts about the new 500-escudo notes: they were printed by the British firm of Waterlow & Sons and Waterlow had no procedure in place to check for duplicate notes. On this seemingly flimsy basis, he laid his plan which was almost ingenious in its working. With care he chose his confederates (two of whom were little more than dupes). One of the latter was Karel Marang van Ysselveere, a Dutch merchant; the other was José Bandeira, brother of the Portuguese Minister to the Hague . The last was a not-so-innocent Gustav Hennies, a German businessman.

 

Banco de Portugal. 500 "gold escudos", 1922.

Using his position in the Colonial Department, Reis managed to purloin various letterheads, appropriate blank forms, signature samples and the proper procedures to be

followed. Meeting with his confederates, he showed them documents and contracts signed by the High Commissioner of Angola and the Portuguese Minister of Finance (all excellent forgeries). The story was: Angola wished to raise a substantial loan (100-million escudos) but was afraid that if this became known to the business community, the already indifferent credit rating of the colony's bond issues would fall. Therefore the ministry supposedly concocted the scheme that it should take the form of special banknotes for Angola fully backed by Portugal and therefore not a bond issue at all. Accordingly, secrecy was paramount and Reis was made project manager with fairly wide latitude in its successful execution - even to acting through "trusted intermediaries" (which the ministry suggested). From Angola was a "secret note" to the effect that Reis would be paid a substantial commission for successful completion - and this Reis was willing to share with his "trusted partners". On the basis of these forgeries, all three agreed to come on side and once they were part of this financial "black op.", Reis was ensured of both their silence and continued compliance.

Karel Marang was chosen as the negotiator for the note issue with Waterlow & Sons, arriving in London with a letter of introduction from Bandeira's brother. He explained to Sir William Waterlow that the printing had to be kept secret "for political reasons" (nothing new for banknote printing companies) and asked for a quote. For reasons of "convenience" (read "cheaper"), the "Portuguese" had decided that the issue would be a duplication of the previous Portuguese 500-escudo issue, even down to the same serial numbers, and that they would be overprinted "Angola" when sent to the colony to avoid confusion. However, since the exact wording of the overprint was not yet decided, it would be done by the Portuguese ministry on sheets of the notes supplied by Waterlow's. The company readily agreed, pending the usual authorization from the Governor of the Bank of Portugal and the Portuguese government. Marang assured him that the appropriate papers would be dispatched from Lisbon at once.

And they were. Authorization from the Bank Governor - as well as several prominent Portuguese banks - plus contracts from the High Commissioner of Angola and covering letters of instruction from the Ministry of Finance. Marang was named exclusive agent for the note issue, responsible for overseeing production, receiving the shipment and settling the bill. Waterlow's was cautioned to have the receipt made out to the Portuguese Ministry of Finance, a nice little fillip of bureaucratese that must have added to the cachet of authenticity. All brilliant forgeries.

With no new plates to be made, the issue went ahead swiftly and soon delivered into Marang's hands, who passed Waterlow's a cashier's cheque on the Bank of England for the exact amount with funds supplied by Reis and received the requested receipt. So far as Waterlow's was concerned, the project was at an end, all clean and tidy. Marang had no trouble carrying the sheets of banknotes into Portugal , since he was also Consul-General of Persia(!) at the Hague and had diplomatic immunity. With the sheets delivered to Reis, Marang's participation was at and end - or so he thought.

The notes, of course, were never overprinted. Reis had them cut into blocks and partly with the help of Hennies, distributed them thoughout the economies of Portugal and the rest of Europe . Having cost a fraction of a penny per note to have printed, he now had a warchest of some $3,000,000 U.S. and this at a time when cash meant fast service and good deals. Banks throughout Portugal were gratified to find business accounts being opened (although the funds were soon disbursed by cheque); blocks of the notes were paid into investment firms for blue-chip stocks, bonds and debentures; yet other blocks went to foreign exchange houses where they were converted into pounds, dollars, francs, etc. Within months, Reis had a financial empire and opened his own bank - The Bank of Angola and Metropole - to oversee it. He then found he had another talent beside forgery: he was a very good financier and the profits rolled in.

But by June 1925, it was noticed that there seemed to be away too many 500-escudo notes around and rumours of counterfeiting began to circulate. The Bank of Portugal undertook a quiet investigation but in spot-checking the notes, found that all were genuine. Then the inevitable happened: two notes with the same serial number showed up, both of them genuine. Now the Bank was forced to a suspicion of the unbelievable - that there was counterfeiting and that it was carried out by Waterlow's! Discrete inquiry soon revealed the truth when Waterlow's freely informed Portugal that, yes, aside from the printing of 1922 there had been an additional one ordered by them in 1924 for use in Angola ; copies of the pertinent documents enclosed. Now suspicion fell on the Ministry of Finance and it wasn't long before they noted that a recent employee, Arthur Reis, was now the financial wizard who owned his own bank (of Angola !). In a police raid, it was found that packets of notes in the bank had the same serial numbers as others in circulation.

Although arrested, the jig was not quite up for Reis. Other forged documents seemed to lay the blame on the Governor of the Bank of Portugal and its directors while Reis was the victim of a political plot. They were convincing enough as to delay his trial until May, 1930 at which time, with all his avenues cut off, Reis was forced to admit his guilt. During this time, Portugal was walking a tightrope, prosecuting Reis for "simple counterfeiting" while covering up the fact that half the 500-escudo notes in circulation were fakes. But they did , punctiliously paying out gold for any such notes tendered.

Both Reis and Bandiera received sentences of 20 years. Marang was tried in the Hague and received 11 months for "receiving stolen property". Hennies fled to Germany where he died in 1936. Reis was released in 1945 and died ten years later in abject poverty. As for Portugal: well, in confiscating Reis' financial empire as "the proceeds of crime", it was found that, due to his stewartship, it was actually worth somewhat more than the notes he "stole". Sometimes crime does pay. For somebody.

Wayne Jacobs is a numismatic expert. Currently secretary and editor of the "Mid-Island Coin Club Numismatic Journal"of Nanaimo, Vancouver Island , British Columbia, he is the award winning author of numerous articles. The MICC journal are hosted here: MICC webpages Copyright 2006 Wayne Jacobs. This article may be reprinted freely for non commercial purpose only if the resource box is left intact, linking back to us.