They swindled world banks of millions from ‘a complete forgers’ den’

Press, 16 June 1978, Page 13

They swindled world banks of millions from ‘a complete forgers’ den’

Britain is no longer the offshore island of international crime. The conviction at the Central Criminal Court of the last member of the gang of international forgers known to the police as the Hungarian Circle, unveiled a web of fraud spun between Hungary, which acted as bolthole for most members, and what police believe are connections with several organised American gangs described jointly as the Mafia or the Syndicate. The case that was unfolded at Court 16 at the Old Bailey over five months contained elements as disparate as: 1. A system undetected for 20" years of defrauding the banks of the world using forged bank drafts — estimated conservatively by the British police to have cost the world banking system $2OO millions.

2. The discovery of the most sophisticated forger's workshop yet seen in Britain, producing bank drafts, any identity document necessary to exchange them safetly, and even currency so perfect that the Government of the country concerned — Spain — has shrunk from withdrawing it from circulation.

The Serious Crime Squad, under the control of Detective Chief Superintendent, now Commander Len Gillert, began an investigation which was to take detectives to the Middle East, the United States, the West Indies, and Europe, in December, 1975.

The squad operates from a four-storey building in Limehouse, placed deliberately to overawe the East End, breeding-ground for most major homegrown criminals.

It had completed another successful, longrunning investigation, relying heavily on “deep” surveillance into an arson case, which resulted in the conviction last year of Geoffrey Allen. But police officers who had followed Allen and his associates came under heavy cross-questioning by the defence at Norwich

Crown Court, which tried to establish that the officers could have been mistaken about crucial meetings and locations. Next time, it was decided, the squad would use cameras to nail the details securely. . The opportunity came when informants noticed an odd series of meetings being carried on in Wardour Street, Soho, between several known criminals and some unknown faces between noon and 1.30 p.m. on most weekdays. After three months, watching and photographing with fixed-tripod telephoto lens cameras strategically placed iff first-floor flats loaned by members of the public, the squad had come up with very little apart from a growing collection of h i g h-definition photographs. Then came the break, Henry Oberlander came into the frame. Sergeant Trevor Coughley followed him home, made inquiries at the local rates office, and established an identity. The nearest name listed by the Criminal Records Office at Scotland Yard was a file of Weisser, alias Orlander, convicted in Geneva of Customs offences — and an Interpol notice also in the name of Orlander of a wanted bank fraudsman.

The police then noticed an article in the West German magazine, “Stern,” about a gang of forgers called the Hungarian Circle, printing Oberlander’s picture under the name of Weisser. They discovered also that he had been changing a great deal of different currencies into dollars at one branch of Thomas Cook’s in London. In May, the police took pictures of Charlie Lowe, a criminal who later turned high-level police informer, taking part in the Wardour Street meetings.

Customs officials at Heathrow were asked to check the baggage of Oberlander and two companions, Emil Fleischmann and Louis de Saumarez Tufnell, when they flew out to Spain. Inside a red

document case the searchers found and photocopied false bank drafts and documents intended for use in an attempt to defraud a British businessman, Dr Peter Builder, in a fake land deal. The police squad team, led by ■Mr Gillert and coordinated by Inspector Jim Parker, now had wbat they wanted — a complete case in their hand. With the help of statements from Dr Builder, who in fact frightened the fraudsmen off by proposing to fly them himself to his bank in Switzerland to cash their forged S2M draft, there was now enough evidence to warrant raids on the men and addresses noted during the six-month surveillance.

On a Friday, August 13, at 6 a.m. 30 people were arrested in raids throughout London. Although the squad officers were expecting something very big, they were astonished by the range of the forging equipment and forged documents they uncovered, chiefly at 9 Vere Court, a seedy block of flats in Westbourne Grove, in Notting Hill.

There were 4500 items, including printing equipment, passport stamps, a whole tea-chest full of watermarked “security paper” used in making bank drafts, and thousands of forged drafts. There were also the documents needed to travel about the world freely under an assumed identity — driving

licences, credit cards, passports, cheque books, and so on. Mr Kenneth Richardson, the chief prosecuting Treasury counsel, and a man not given to exaggeration, said in court that there was regrettably no other way to describe it than as “a complete forgers’ den.” The police had cut a segment out of a floating conspiracy, consisting of an unknown number of separate cells operating all over the world. It had been operating, the Serious Crime Squad believes, for about 20 years, and was staffed largely by Hungarian and other East European refugees, many of them Jewish, who had escaped into the softer world of the capitalist

West either in the early 1950 s or when the prisons were opened during the 1956 Hungarian uprising.

Many members of the gang travelled over the Hungarian border regularly with great ease. Unchallenged and corroborative evidence was given during the trial that Oberlander, at a very early stage, when he was smuggling Jewish refugees out of Russian-occupied Hungary, had good relations with the occupying power — he dressed as an armed Russian soldier on the escape train, carried all the refugees’ documents with him, yet was in frequent contact with the Russian officers running the train.

There is evidence that apart from its relationship with Eastern Europe, the Hungarian Circle also had strong connections with the Mafia. This is not merely inferential — no bank fraud of this size could have operated without Mafia knowledge — but circumstantial. But this is still largely in the shadows. What the British police brought into the daylight was a system for defrauding the world's banks which relied on the most perfect forgeries yet seen in this country and was designed to take advantage of the weakest points of the system.

A bank draft is a sort of international postal order. Drawn on any bank anywhere, in any currency, it can be cashed with equal freedom, subject to individual banks’ security checks.

Almost all of the forgeries produced by the Hungarian Circle were dollar drafts, drawn on a New York bank, cashed or exchanged in the Middle East. Tens of millions in dollar drafts pass through the New York banks every day.

There is a theoretical system, agreed by 90 per cent of the world’s banks, that issuing branches send a slip through to all other branches, giving details of drafts to act as a check when the drafts are presented. But pressure of work effectively kills this. The gang would pass forged drafts in the certain knowledge that it would take three to four weeks for the bank involved to balance up its dollar account. Under present banking practice it would be impossible to set up proper checks. Detective Sergeant Roger Dixon, of the City Fraud Squad, who was seconded to the Serious Crime Squad for this operation, so impressed a gathering of the head bankers of Kuwait last year of the dangers that they agreed unanimously not to accept drafts of more than 500 dollars.

Within three days this had broken down because of pressure of business. Agents of the Circle would take a trip through the Middle East, passing about half a dozen forged drafts, varying between $5OOO and $15,000 — never any more, to avoid comment. Not all would be put through banks. The Middle East is a free market in currencies and gold, and moneychangers in various bazaars and souks have taken drafts for what they thought was a good profit, only to find them worthless. The police and the banks believe that it is absolutely impossible to assess how much the conspiracy took out of the banks of the West in its 20 years of operation. Biro and Oberlander alone took S6OM out of the North American banks before coming to Europe, Scotland Yard believes. Drafts ready to go found during the August 13 raid totalled SI6M, and others worth much more were in preparation. And the British police had no time even to begin investigating the ring’s proven use of forged letters of credit. It is known that in one such fraud the Canadian Imperial Bank was taken for $900,000 in three days.

Yet with all the vast sums involved, the only money traced directly to the conspirators was $350 in a Lugano branch of the Credit Suisse. The account was in the name of Markowitz, one of Oberlander’s aliases. The British police discovered it because the bank had been cheated of S2M by the Circle’s forged drafts and was unusually ready to co-operate. Ironically, the defence in the five-month trial, and during the long committal leading up to it, was conducted on legal aid. The police work involved and the trial itself cost about $3.7M — probably one of the most expensive prosecutions conducted in a criminal trial in Britain.

By

ALEX HARTLEY,

, “Guardian”