2002-07-30 -- Metzler, David Martin et. al -- Charge -- News Release

Five Arrested in Foiled Scheme to Pass $125 Billion in Phony U.S. Reserve Notes

NEWARK - Five people were arrested today and charged in federal criminal Complaints with conspiracy to pass $125 billion in counterfeit Federal Reserve Notes and other U.S. government instruments, U.S. Attorney Christopher J. Christie announced.

David Martin Metzler, 55, of Lees Summit, Missouri; Hector Felton, 50, of, Tucson, Ariz.; Alain Cuny, a French national; Huan Shan, a citizen of the Ivory Coast; and Jose Jury, 64, of Mexico, were charged in separate Complaints alleging their joint participation in the scheme, according to Assistant U.S. Attorney Michele Brown.

The defendants were arrested early today at a hotel in Secaucus as part of an FBI undercover investigation. The defendants arrived at the hotel with cases containing the purported Federal Reserve Notes. Samples of the Notes provided to the undercover agents while the fraudulent deal was being offered by the defendants proved to be counterfeit.

The defendants appeared today before U.S. Magistrate Judge Madeline Cox Arleo, who ordered them held until bail hearings Thursday at 2 p.m.

"This was an absurdly creative fraud," Christie said. "If ever there was a deal too good to be true, this was it. We and the FBI are always happy to stop these types of frauds before the suspects can hatch new ones and carry them through."

According to the Complaints, beginning in March 2002, Metzler and the other participants were engaged in a scheme to obtain a $650 million line of credit from a U.S. brokerage house, the proceeds of which the defendants said would be used for global humanitarian needs. According to the defendants' plan, as described in the Complaints, the line of credit would be secured by Federal Reserve Notes they held inside an authentic-looking pre-World War II Federal Reserve briefcase. The transaction would be arranged through an individual they believed to be a brokerage house agent, who was in fact an FBI agent.

The defendants represented that inside the Federal Reserve briefcase were approximately $125 billion in notes in denominations up to $100 million per note, or other U.S. securities, such as gold certificates, in denominations up to $50 million per certificate. In an attempt to obtain the line of credit, the defendants also represented that the financial instruments were officially issued by the Federal Reserve and were moved out of the United States in the 1930s.

During one meeting in May, Jose Jury provided the brokerage house agent with a photocopy of a Federal Reserve Note with a face value of $100 million and stated that the Note was taken from another case that had been used as collateral in another financial transaction. The Complaints describe that the denomination was misspelled on the Note as "One Hundred Million Dollar."

Over the course of several weeks, Metzler and others represented that the case was one of many within their control, and that all their contents were genuine, authentic, and verified by third parties, according to the Complaints. They also provided the brokerage house agent with photographs of the one particular case, which showed a hard-sided case, rectangular in shape, dark in color, imprinted with a serial number and what appeared to be the seal of the United States.

According to the Complaints, the defendants claimed that the cases had been brought into the United States through diplomatic channels after being found in the Phillippines, and Huan Shan confirmed that she personally witnessed the discovery of the cases in the Phillippines. At various times, the defendants also claimed to have entered into other successful financial transactions, using the contents of the other cases as collateral.

Central to the transaction was the defendants' claim that the cases could not be opened for inspection until after the financial line of credit transaction was consummated. Metzler asserted that it was a precaution in the event that the deal did not close, claiming that once the seal was broken on the case, the case would be invalidated with any future lenders or with the Federal Reserve, according to the Complaints.

Metzler, Jury and Felton allegedly acted as brokers in the transaction, while Cuny and Shan claimed to be employed by a charitable organization based in the Ivory Coast. The purported charitable organization was to be in possession of the cases. According to Cuny and Shan, the funds raised through the transactions would be funneled into humanitarian works, the Complaints state.

According to the Complaints, an official of the United States Department of the Treasury, Bureau of Public Debt who examined the photocopied $100 million Note and $50 million gold certificate found them to be entirely fictitious.

According to the Treasury official, the United States Federal Reserve has never issued Federal Reserve Notes in a denomination higher than $100,000, nor has it ever issued a misspelled $100 million Federal Reserve Note. The official also stated that the Federal Reserve has never issued sealed cases bearing the Federal Reserve emblem and containing Federal Reserve Notes.

The defendants each face a maximum prison sentence of five years and a $250,000 fine.

Christie credited Special Agents of the Federal Bureau of Investigation, under the director of Louie F. Allen, with bringing the case against the defendants.

The prosecutions are being handled by Assistant U.S. Attorney Brown of the U.S. Attorney's Commercial Crimes Unit in Newark.

-end-

Defense Counsel:

Metzler: Lorraine Gauli-Rufo, Esq. Federal Public Defender's Office, Newark

Felton: Robert A. Obler, Esq. Trenton

Cuny: David Schroth, Esq. Trenton

Shan: Josh Markowitz, Esq. Lawrenceville

Jury: John Holliday, Esq. Trenton