Great frauds in history... George Bidwell’s fake bills

George Bidwell was born in Bloomfield, New York, in 1835. From the age of six he helped his father in the family shop before eventually going into partnership with him as a merchant. However, a conman tricked them out a large amount of money, destroying their firm and encouraging George to drift into crime. By the age of 30 George had been imprisoned for fraud in West Virginia. Having escaped from jail and fled to New York, he and his brother Austin met up with a gang of forgers, and they decided to try their luck in Europe in 1871, with George “Mac” MacDonnell and Edwin Noyes Hills.

What was the scam?

By 1872 the gang had moved to England, quickly discovering an opportunity with bills of exchange: promises to pay a certain amount of money in the near future. They were bought and sold at a discount by the Bank of England. They therefore opened business accounts under two different names at the Bank of England and the Continental Bank with legitimate bills of exchange. After a period of shuffling money between the accounts, they started selling forged bills, dated three months in the future, to the Bank of England, using the other account to launder the proceeds.

What happened next?

Initially, the fraud worked well, as the Bank of England accepted the bills without asking any questions. This persuaded the gang to print an additional batch of false bills. However, they accidentally omitted the due date on two of their bills from this run. A clerk at the Bank of England noticed the discrepancy and contacted the person who had supposedly issued the bill, uncovering the fraud. Noyes Hills was eventually arrested trying to cash a cheque for £20,000, while the three others were eventually traced. All four received long sentences.

Lessons for Investors

Before they were caught, the gang sold £102,217 in bills (£9.3m today) from the Bank of England, though some of the money was recovered when New York police seized a large chest containing $220,500 in US bonds that they had bought with the proceeds. Jewellery and gold was also found. The scam could have been avoided had the

Bank of England contacted the issuer to check that the bills were genuine before buying them – as was standard practice on Wall Street at the time. Doing proper due diligence is crucial.