The forgery that wasn’t

Afew years ago – in the early years of the 21st Century – Canada had a problem with forged money. Southern Ontario was hit with a large number of forged $100 bills. Bills good enough to pass an inspection by all but the most cautious. Eventually, some of these forged bills made it to many parts of the country. Wesley Weber and a group of teens and young adults had set up a home-based business using computer images and special paper to manufacture counterfeit currency. When they were finally caught, the situation had become so bad that the Canadian bills had to be redesigned with more security features.

In the 1920s, another forger in Portugal was able to flood the country with “real” money that caused an economic crisis. Alves dos Reis established his own “banks,” gave out millions in questionable loans to needy people and criminals, built lavish mansions and almost brought down the government.

He was not really a forger although he had tried hard to become one. The fake money he put in circulation was actually real money, printed using the same plates used to print the official currency and on the same paper. So he was not truly a forger. It was more a case of taking advantage of cracks in the system.

An established printer in England printed Portugal’s bank notes and the money of other countries. That printer, of course, used highly secured plates to print the currency. In practise, the Portuguese government issued orders for how much currency was to be printed of each denomination. At the time, Portugal claimed Angola as a colony. The money used in the colony was the same as was used in the mother country, overprinted for use in the colony. That gave Reis an opening to exploit.

Reis had worked successfully with a railroad in Angola, a job he got using a forged degree and resume. He was a bit too successful as he managed a side business that did very well indeed, although illegal. Things were looking up for Reis as his wealth grew.

Returning to Portugal, he tried to buy a mining company and using forged cheques. When discovered, he received a short time in jail but was released on a technicality. His next thought was to use a legal printer to make copies of the official currency. Armed with forged letters of introduction, a fellow conspirator approached a very reputable printer in Holland to ask if copies of the plates could be made for the colonial treasury to print money only for the colony. The printer declined, pointing to the complicated and intricate engraving on the real money and how much easier it would be to use the real plates. More than satisfied with the credentials of his customer, he kindly provided a sterling letter of introduction of the crook to the English printer who made the real stuff.

This was in the days when gentlemen accepted the word of other gentlemen, especially those with excellent reputations in the same trade. When the crook arrived in London, he presented the printer with his forged credentials and the real letter of introduction from Holland. That printer did send one letter of inquiry to the Bank of Portugal but unhappily it was apparently lost in the mail.

Satisfied with the credentials he had seen, the order was honoured and the money printed without the colonial markings. Now, how much money did the crook want printed? An amount was ordered, the presses turned, the money was sent to the crooks who paid the printer’s bill and who now had a large amount of fake money printed on the same official plates as the real money. The first order was followed by more and more orders all without raising any suspicion by the printer.

In Portugal, Reis was overjoyed. He even started a “bank” with several branches to give loans to just about anyone who could breathe at very low interest rates. When a branch ran short of currency, he simply ordered more. An outgoing chap, he became a Portuguese celebrity known for his lavish spending on jewelry, farms, cars, and just about everything else. Not content with his Portugal operation, he also did the same thing in Angola.

It became obvious to government officials that something was very, very wrong. The additional money flooding the country played havoc with the country’s economy. Every country controls the amount of currency in circulation, both then and now. With so much money in circulation, Portugal’s economy boomed – at least for a while. The topper was when Reis decided to buy the real Bank of Portugal. If this was successful, the whole affair could be easily swept under any convenient rug.

Privately held, shares in the real Bank were silently bought, giving Reis a substantial ownership position.

Something was bound to go wrong for Reis and it did.

Some of the Reis banknotes had been printed using the same serial numbers as the real banknotes properly issued by the Bank of Portugal, so proof of forgery would be finding two notes each with the same serial number. But there was so much real and “fake” money in circulation that would be like looking for a needle in a haystack. Rumours of something “funny” started to circulate and a few newspapers tried to uncover the truth. After all, how could the Reis bank give out so many loans when it did not even take in deposits?

The problem was that the Reis money, printed on the real plates on the same paper was not forged at all. No one thought to check with the English printer. Such an outlandish idea was impossible. That is until one person noticed that two banknotes had the same serial number and further investigation found many duplicate notes. The Reis scheme came tumbling down.

Finally, left with no other possible solution, the Bank of Portugal contacted the English printer and Reis’ scheme ground to a stop. He was arrested, tried, and convicted to a long prison sentence.

When the dust settled, the printer and his company collapsed and Bank of Portugal successfully sued the firm for damages. The Portuguese economy tumbled and the Salazar military dictatorship took control of the government for the following decades.

Our new plastic banknotes have many security features that make forgery difficult although some rather feeble attempts have already been tried and quickly exposed. No doubt in the future some enterprising group will make a bolder and better attempt as criminals always look for ways to turn new technology to their advantage.

As to digital currencies like Bitcoin, I think that sooner or later some enterprising person will find a way to take advantage – crooks always do and the computer skills of the young are increasing daily.

The Reis money scam depended upon the technology and the civility of the times.