Chris Estrella, a Filipino social worker, says he led a troop of five porters out of a Mindanao jungle in January 2000 with a weather-beaten iron and leather box crammed with $25 billion of U.S. government bearer bonds.

“The elders of the Umayamnon tribe told me an American plane crashed in their river in the 1930s,” Estrella, 47, says by mobile phone from a footpath between the tribal village and Davao, the largest city on the Philippine island. “The river dried up in the 1990s, and the natives went into the plane and found 12 boxes that contained $300 billion in bonds.”

Each box, emblazoned with the Great Seal of the United States and the words “Federal Reserved Bond,” held five gold coins struck with a portrait of George Washington on one side, Estrella says. They rested atop stacks of certificates purporting to have been issued by the Federal Reserve Bank of Atlanta in 1934 and redeemable in gold bullion. The notes bore the signature of then Treasury Secretary Henry Morgenthau Jr.

Such fixed-income instruments, also known as coupon bonds, belong to whoever holds them, rather than to a registered owner. Vouchers representing interest payments were attached to the 30- year bonds that were denominated in amounts of as much as $100 million. Estrella says he later brought three other similarly filled chests out of the jungle.

Exotic Attack

What happened next led to the unraveling of what Scott Winslow, a financial-instrument specialist, bond collector and founder of Professional Authentication Services & Standards Co. in Bedford, New Hampshire, calls an episode of “remarkably unique” deception. It secured Estrella’s place in what the U.S. Secret Service says is one of the most sustained and exotic attacks ever mounted against U.S. currency, and it illustrates how even sophisticated businessmen can be duped.

“Chris brought two boxes to the Apo View Hotel in Davao, and I gave him $46,280, above what I usually give him to buy provisions for the Umayamnons,” says Ronaldo Quiwa, 68, a Mindanao construction executive who serves on the board of the insurance subsidiary of Manila-based Landbank of the Philippines and is a member of its risk-management committee.

“Then we took them to Peping’s house,” Quiwa says.

That would be former Philippine Congressman Jose “Peping” Cojuangco, the 77-year-old brother of former President Corazon Aquino, who helped topple the regime of Ferdinand Marcos, and uncle of current President Benigno Aquino III. The Cojuangco clan also includes Peping’s cousin, Eduardo Cojuangco, chairman of San Miguel Corp., the country’s largest listed company, which has interests in beer, power and telecommunications.

Manila Closet

“We opened two trunks in my living room,” Jose Cojuangco says by phone from his home in Manila. “I wanted to believe what was inside because after Marcos was overthrown the governor of Mindanao found gold bullion hidden in the jungle. During the 1990s, Manila’s hotels were filled with foreign treasure hunters. I met people who had 40, 50 boxes of bonds, and I looked at them. They were different from ours. What a mystery.”

Nonetheless, both men say they brought no urgency to solving the puzzle. Quiwa says he let the loot sit in a Manila closet for two years.

In the summer of 2002, Quiwa took the two boxes of bonds across the Pacific to Garden Grove, California, for review by Kurt Schwalbe & Associates, a document-examination firm. Schwalbe’s signed one-page report dated Aug. 18, 2002, says he examined “250 Federal Reserve notes with 33 interest coupons attached from box 9494” and “determined them to be genuine as to date and origin.”

Quiwa says the analysis didn’t satisfy him.

“Schwalbe’s report was not complete enough,” he says.

The phone number on the report is no longer working, and further efforts to locate Schwalbe proved unsuccessful.

Demon Horse

From California, the chests went to New York, where they were stashed in a closet in an apartment in the Rego Park section of Queens belonging to Quiwa’s brother, a pediatrician.

“We were nervous,” Ronaldo Quiwa says, sipping sweetened coffee in the kitchen above his brother’s clinic. “We could never firmly establish whether the bonds were real or fake, or if somebody was trying to set us up.”

Jose Cojuangco contacted Bloomberg News last month.

“There’s $50 billion in U.S. Treasury bearer bonds we’d like you to take a look at,” he said. “Would you mind?”

Cojuangco said he still wanted to believe the bonds were real. After all, they came from Mindanao, an island regularly ravaged by typhoons and inhabited by the demon horse Tikbalang, the vampire Aswang and armed insurgents who have made kidnapping an industry. As Quiwa says, it’s a place where there’s nothing extraordinary about a tropical rain forest chieftain trying to figure out U.S. Treasury bond coupon yields.

Ponte Chiasso

It wasn’t the first time a cache of bogus U.S. bonds emerged from the Philippines.

“We were matching wits with the underworld on an op in southern Italy when the call came in,” says U.S. Secret Service Special Agent Robert Gombar, head of the agency’s Rome office.

The date was June 16, 2009, and Gombar, 65, recalls rolling his eyes at the news delivered by Italy’s Guardia di Finanza fiscal police via his liaison officer in Rome.

“The Guardia caught two Japanese guys secreting U.S. Treasury bonds in the false bottom of a suitcase aboard a freight train about to cross into Switzerland,” Gombar says, twirling a pencil behind his desk inside the U.S. Embassy in Rome. “It was suspicious, so we jumped an express north.”

What Gombar found in the border village of Ponte Chiasso was a stack of 1934 U.S. Treasury bearer bonds with a face value of $134 billion, making the two suspects the U.S. government’s fourth-biggest creditor at the time, behind Russia with $138 billion of U.S. debt and ahead of the U.K. with $128 billion.

Hybrid Counterfeits

Although a local magistrate released the suspects because of a lack of evidence of intent to sell or proof the pair was involved in the manufacture of what turned out to be a suitcase of sham bonds, the incident marked the sixth time Italian authorities had called upon Gombar to authenticate a haul of what looked to be smuggled U.S. securities. Like most of the other cases, this one pointed to Asia: The two Japanese suspects had arrived in Italy from the Philippines, Gombar says.

“We call these bonds hybrid counterfeit instruments because there’s no such thing as a $500 million Treasury bond,” explains Gombar, who has chased global funny-money rings from the Secret Service’s Rome outpost since 1998. “It’s like counterfeiting a $3 bill, something that doesn’t exist.”

Although Treasury securities were shifted from paper to electronic form in the 1980s and the government stopped issuing bearer bonds in 1982, Gombar says the pre-World War II provenance of the bogus bonds, stamped with Morgenthau’s forged signature, remains a lure in the con artist’s tackle box.

Fictitious Instruments

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