Scams Involving Treasury Securities
Find out more about the renting, leasing, or blocking of Treasury Securities in the content below.
Renting or Leasing
We often hear about solicitations to "rent" or "lease" Treasury securities. Many of these solicitations have originated in the United Kingdom, Greece, and South Africa. To date, we have yet to hear of a genuine renting or leasing arrangement. Usually, the securities offered either don't exist (for instance, the offer is for bearer securities in an amount that exceeds the amount that remains outstanding in bearer form for that CUSIP) or are not owned by the party making the offer.
If you ask a leasing scam artist to produce the securities or otherwise prove ownership, he or she will be unable to do so and will offer excuses such as "they are frozen at my bank," "a wealthy philanthropist has assigned them to us to assign to others for infrastructure or humanitarian purposes in third world countries and wishes to remain anonymous," and "bank secrecy laws of this country prevent such a verification." Also, the scam artist will use one or more of the following tricks to try to con you:
Misuse of Fiscal Service Forms as Evidence of Ownership
Scam artists often misuse Fiscal Service forms to try to prove ownership or to make the scam seem "official." The two forms that are commonly misused are:
(1) FS Form 1832 - Special Form of Assignment for U.S. Registered Definitive Securities
(2) FS Form 1071 - Certificate of Ownership of United States Bearer Securities
The FS Form 1832 and FS Form 1071 have nothing to do with book-entry bills, notes, or bonds. Unless there are securities physically attached to one of these forms, the form is meaningless and worthless. We only use FS Form 1832 in some cases to correct defective assignments of securities already in our possession. We also sometimes use it for the assignment of a large number of securities or where there is an assignment by two or more geographically separated owners. In all cases, the form is not valid unless the registered securities accompany the form.
We use FS Form 1071 to validate the ownership of bearer notes and bonds that are presented for redemption after they have become overdue. A bearer security becomes overdue after the lapse of between one and six months time from its face maturity date, depending on the original term of the security (such as, three months for a three-year note).
Scam artists try to use the forms as "evidence" that they hold the securities and claim that the forms can convey ownership or title to the securities listed on the forms. But, if you look at such a form you should see that the scam artist is misusing the form and cannot prove ownership of the securities listed. For instance, a typical misused FS Form 1071 will fail to list serial numbers for any bearer securities allegedly owned and will fail to provide information explaining why the securities were not presented for payment before they became overdue. (The latter occurs because the bearer securities allegedly owned have not reached maturity at the time the form is misused.) Note: FS Form 1071 used to be known as PDF 1071.
Misuse of CUSIP Numbers as Evidence of Ownership
Scam artists will also use a valid CUSIP number of a Treasury security that trades regularly in the market so a potential victim can get pricing information and confirm that we did issue the security. CUSIP is an acronym for the Committee on Uniform Securities Identification Procedures. Each security issue (stocks, corporate, municipal, or Treasury securities) has a unique CUSIP number. The CUSIP number is public information and it identifies an entire issue of a security. It does not identify any specific security, nor does mere use of it show ownership.
Claims That the Scam Has Been Certified by an Official Body
Scam artists may claim that an official body, such as the U.S. Embassy in London or the International Chamber of Commerce, has certified their fraudulent offering. They may also claim that we have created a special issue to the United Nations to pass on to other companies that were willing to do humanitarian and infrastructure projects in developing countries. All these claims are patently false.
Blocking of Assigned Treasury Securities
We periodically get requests to block off an amount of Treasury securities so the securities can be used to fund humanitarian or infrastructure projects in developing countries. This request is impossible for us to honor. We only sell securities at public auctions. We cannot block securities that we do not own.
View the Tentative Auction Schedule.
Currently Viewing: Scams Involving Treasury Securities (Subpage of: Frauds, Phonies, & Scams)
- Laws & Regulations
- Auction Regulations (UOC)
- Collateral Programs
- Commercial Book-Entry Regulations (TRADES)
- Frauds, Phonies, & Scams
- Government Securities Act (GSA) Regulations
- Large Position Reporting (LPR)
- Redemption Ops (Buyback) Rules
- Treasury Marketable Securities Regulations
- Savings Bond Regulations
- TreasuryDirect Regulations
- Links to Other Sites