Reports of counterfeit Gobierno Provisional de México notes

This section lists various instances of counterfeiting. In the majority of cases the notes are referred to as Constitutionalist and probably refer to Gobierno Provisional de México notes, either Mexico or Veracruz issues, though some may be counterfeit Ejército Constitucionalista notes.

Instances in Mexico

Maximiliano Lobo Guerrero

In 1915 a Carrancista agent discovered a group of counterfeiters. Some military personnel were involved and coronel Lobo Guerrero was convicted by an extraordinary Consejo de Guerra and shot ^{General Francisco L. Urquizo, Recuerdo que …. However, El Pueblo (10 June 1915) states that Lobo Guerrero was accused of 'insubordination, usurpation of rank and functions, stealing $140,000 belonging to the Ejército Constitucionalista, and desertion while on campaign' so we might be accusing him unjustly}.

C. E. Bates

In June 1915 Bates, a cattleman of Nogales, was in jail at Carboca charged with introducing Carranza currency^{Tucson Daily Citizen, 22 June 1915}. He was ordered brought to Nogales, where Consul Simpich expected his release^{Tucson Daily Citizen, 25 June 1915}.

Federico González Barreda

On 30 June 1915 González Barreda, an employee of the O’Connor business house was arrested in Nuevo Laredo for possessing $800,000 in counterfeit Carrancista currency, with which he paid customs dues. González Barreda claimed that he bought the notes from Pilar García, brother of the Carrancista consul. The commonest counterfeit notes were for $100^{Prensa, 1 July 1915}.

Carlos E. Yerton

On 3 July 1915 the Inspector General de Policía in Tampico, Major Alberto M. Carranco reported that he had found $188,000 in counterfeit notes hidden in secret compartments in the luggage of the American Carlos E. Yerton^{ABarragán, caja I, exp. 8, f. 99 telegram Carranco to Carranza, 3 July 1915}.

J. W. Bars/Barnes and Eduardo Stari

On 13 July Carranco found $37,000 in counterfeit $10 notes on the Americans J. W. Bars and banker Eduardo Stari (sic)^{ABarragán, caja I, exp. 8, f. 102 telegram Carranco to Carranza, 13 July 1915}. Carranco had to hold Burns Stair (sic) incommunicado to prevent him warning others^{ABarragán, caja I, exp. 8, f. 104 telegram Carranco to Carranza, 28 July 1915}.

In July 1915 the jefe militar of Tampico asked the authorities in Brownsville to arrest an American who had put a large amount of counterfeit money into circulation in Tampico. The Americans declined, as there was no recognisable government in Mexico. Three Americans, one named Barnes, were arrested in Tampico for circulating counterfeit Carrancista currency^{Prensa, 23 July 1915}.

This led to a US court case in 1919 in which the State National Bank sued the East Coast Oil Co.^{"The State National Bank of San Antonio sued the East Coast Oil Company, as maker, and J. W. Barnes, James Segler, and C. H. Bown, as indorsers, of a bill or draft, which reads: `Good for $1,799.00 gold. Tampico, Mexico, June 30, 1915. At sight you will please pay to the order of J. W. Barnes the sum of one thousand seven hundred ninety-nine and 00/100 dollars, for value received, which you will charge with or without advice of yours truly. To C. B. Udell, Treasurer East Coast Oil Co., S. A., No. 171. Houston. Texas, U.S. A. East Coast Oil Co., S. A., T. R. Batte, Jr., Superintendent.' Indorsed: `Pay to the order of James Segler. J. W. Barnes. James Segler. C. H. Bown.'
"Plaintiff pleaded that it purchased the draft in due course, for value, without notice, and before maturity.
"Defendant Oil Company answered that the draft was given by it to Barnes in consideration of 25,700 pesos Mexican currency bought by it of Barnes, subject to approval thereof as genuine by the Mexican authorities at Tampico, Mexico, where said transaction occurred, and for no other consideration; that the currency so bought was not genuine but counterfeit, and that all of it (except 600 pesos) was confiscated as counterfeit by the Mexican authorities at Tampico, and was a total loss; that there was fraud in the inception of the draft, and that the consideration therefor had failed, as stated; that Segler somehow obtained possession of the draft from Barnes while they were in jail together for dealing in counterfeit money, and that he obtained same with notice and without consideration; that Segler afterwards came to San Antonio and got hold of Bown and procured Bown to introduce him at the bank and assist him in disposing of said draft, with the fraudulent intention of appropriating same and the proceeds thereof to his own use and benefit; that Bown undertook to help Segler carry out his said fraudulent purpose; that the pretended transfer and assignment of said draft by Segler and Bown to plaintiff was made in January, 1916, about six months after the draft was issued; that the draft was not presented for payment within a reasonable time, and that the holders thereof were inexcusably negligent in not sooner presenting same, and that it was not presented sooner because those holding it knew of said fraud and failure of consideration; that plaintiff did not acquire the draft in due course; that plaintiff, in taking the draft, acted with gross negligence amounting to bad faith and was not an innocent purchaser without notice; that plaintiff did not purchase the draft outright, but simply advanced some money to Segler and Bown and took the draft with the understanding that it would present same to the oil company for payment and that if same was not paid on presentation Segler and Bown would repay to plaintiff the money so advanced to them; that plaintiff had reason to believe, and did believe, that the oil company might have valid defenses to the draft, and therefore *Page 191 did not buy and take title thereto, but only undertook to handle same for said Segler and Bown in order to assist them in collecting it; that the circumstances attending the acquisition of the draft by plaintiff were sufficient to put it upon notice that there was fraud in some re-spect in connection therewith, and to require plaintiff, in the exercise of good faith, to make inquiry into the matter; and that such inquiry, if made in good faith and pursued with the slightest diligence, would have led to knowledge of the fraud and failure of consideration.
"Plaintiff dismissed as to Segler. Barnes and Bown defaulted.
"The case was tried before a jury. When the evidence was in, the court instructed the jury to return a verdict for plaintiff against Barnes and Bown for the full amount of the draft, and against the oil company for $42 (the value of the 600 pesos not confiscated) and interest. The verdict was returned as directed, and judgment entered accordingly.
"The plaintiff has appealed from the judgment in its favor against the oil company because same was not for the full amount of the draft."
The first assignment assails the peremptory instruction given the jury. Appellant's proposition is that the negotiable draft drawn by appellant upon itself payable at sight was not overdue when purchased by the appellant bank, because the draft had not been presented to the drawee for payment.
Under the facts of this record, the draft was obtained from the drawer by the fraud of the payee therein and could not be enforced against the drawer. Without detailing other facts, it may be conceded for this assignment that, if the appellant purchased the draft before maturity, it would have been protected by the rule of law favoring a bona fide purchaser for value in due course of trade without notice.
The only question raised by the assignment is whether the sight draft became overdue only after presentation to the drawee for payment.
The only difference between the date of maturity of a paper payable "at sight" and one payable on demand is that in the former it is a recognized custom to allow three days of grace, while a demand paper has no three days of grace. Waggoner v. Gray, 165 S.W. 925: Brown v. Chancellor,61 Tex. 437.
The Supreme Court of Texas, followed by several of our Courts of Civil Appeals, has unequivocally announced the rule that a paper payable on demand is due when executed, and thereafter is overdue. Cook v. Cook,19 Tex. 434; Eborn v. Zimpelman, 47 Tex. 503, 26 Am.Rep. 315; Pitschki v. Anderson, 49 Tex. 1; Swift v. Trotti, 52 Tex. 498; Kampmann v. Williams,70 Tex. 568, 8 S.W. 310; Henry v. Roe, 83 Tex. 446, 18 S.W. 806; Sam v. Ludtke, 203 S.W. 98; Pollard v. Allen, 171 S.W. 530.
The courts of many other states have announced the rule that a "demand" or "sight" paper does not mature until a reasonable time after its execution. And some states have the rule that a sight draft matures only after presentation for payment. Those courts holding the reasonable time doctrine are enumerated in note 90, vol. 8, Corpus Juris, p. 408; 1 Daniel on Neg. Ins. (6th Ed.) § 783. Those decisions holding that presentation only matures the sight draft are collated in 8 Corpus Juris, p. 409, § 605, and note 6.
We must follow the rule announced by the Supreme Court of Texas without inquiring into the relative value of the rationale of the three rules, and hold that the sight draft before us was past due when purchased by the appellant bank, more than six months after the execution and delivery of said draft. Since the draft was overdue when purchased by the appellant, it was subject to the defense of fraud which the drawer had against the payee named in the draft. This offset is expressly authorized by the statute of Texas. Vernon's Sayles' R. C. St. art. 582.
The third assignment presents the same proposition as the first. Both the first and third assignments are overruled.
The second and fourth assignments urge that the sight draft for purposes of transfer did not become overdue until the lapse of a reasonable time after the execution and delivery of the sight draft. As stated in our discussion of the first assignment, the courts of many states sustain appellant's proposition; but the appellate courts of Texas fix the date of maturity of the sight draft as of the date of execution. If the question were an open one in, this state, the writer hereof is of the opinion that a demand or sight draft should be past due only after presentation for payment. Such seems to express the intention of the parties. The liability of the drawer is not matured until after presentation to the drawee, and prior to presentation the drawee has no liability. It therefore seems more reasonable to fix the date of maturity of the sight draft after presentation for payment, at which time the liability of all parties connected with the draft, such as drawer, drawee, payee, and indorsers, become certain. It may be that, if this question had been presented upon facts similar to those of this case, our courts would have qualified the rule as herein suggested. However, in deference to the decisions of our appellate courts, we hold that the sight draft was past due when purchased by the appellant more than six months after the sight draft was drawn.
The second and fourth assignments are overruled.
The judgment is affirmed. ( (208 S.W. 190, 1919 Tex. App. LEXIS 81). ( https://www.courtlistener.com/opinion/4185985/state-nat-bank-v-east-coast-oil-co)}.

in Mexico City

In July it was reported that during the occupation of Mexico City the Convention authorities issued a very large amount of counterfeit Constitutionalist currency. Investigation revealed
(1) that the counterfeit notes were printed in an American printing office in Mexico City;
(2) they were taken to Pachuca in the automobile of the Brazilian minister; and
(3) from Pachuca they were taken to Veracruz by the refugees who left for the United States on the American transport Buford.
The authorities discovered the numbers of the counterfeit currency and issued a notice warning the public against accepting it^{ABarragán, caja I, exp. 7, f. 46 Bureau Información-Weeks to Burns, Galveston, 15 July 1915: Dallas Morning News, 17 July 1915. Was the notice in fact the circular núm. 31 on the notes that the Convention had printed?}.

Vaton y Socios

On 29 July Carranco named Vaton y Socios as importers of counterfeit currency^{ABarragán, caja I, exp. 8, f. 104 telegram Carranco to Carranza, 28 July 1915}.

Iñigo Noreiga, Roberto Cárdenas, Refugio and Florencio Riquelme, Ernesto Cabrera

Special agents of General Provost J. Patiño had been closely watching Refugio C. de Cárdenas, who was accused of being an enemy of the Constitutionalist cause, and arrested her on 26 August 1915. At her home they found two copper plates for printing perfectly good $10 Gobierno Provisional (Veracruz) notes, and this led to the arrest of Refugio C. de Cárdenas, Mauricio Cárdenas, Roberto Cárdenas, Refugio Riquelme, Florencio Riquelme, Isabel Romero, Ernesto Cabrera, Iñigo Noriega, nephew of the Spanish millionaire of the same name, Elias Garcia, Luz Alonso and Ezequial Fernández. As soon as the arrests were made the prisoners were consigned to Provost General J. Patiño.

Roberto Cárdenas, the son of Señora Cárdenas and step son of Mauricio Cárdenas, who had already tried his hand at forging notes on previous occasions, was the one who conceived the idea of again counterfeiting paper money, and approached Florencio Riquelme, an engraver, whom he finally induced to join with the offer of magnificent profits. They then asked several people who refused to have anything to do in the matter. Among the parties approached was a photographer named Ernesto Cabrera, who, deceived by Cárdenas and Riquelme, took a photograph of a ten peso bill from which the clichés were made.

It appears that Noriega financed the scheme. Refugio Riquelme, Florencio Riquelme and his wife Isabel Romero, an elderly Spanish woman, were the ones who finally induced Noriega to join them in their enterprise. In an attempt to escape punishment Refugio Riquelme tried to throw the blame on his wife, whom he said induced him to commit the crime, but she denied this and claimed to have done everything in her power to prevent her husband from entering the scheme. Mauricio Cardenas, Señora Refugio C. de Cárdenas, Elias Garcia, Lux Alonso and Ezequial Fernández were declared innocent.

Provost General Patiño passed on his finding to General Pablo González who sentenced Noriega, Refugio and Florencio Riquelme and Roberto Cárdenas to death^{The Mexican Herald, 10 September 1915}. The Delegado General of the Spanish Red Cross wrote to González, pleading for clemency for Refugio and Florencio Riquelme and Noriega^{APGG, leg. 12, exp. 106}.

Florenco Riquelme, Roberto Cárdenas and Iñigo Noriega travelled by tram to the Escuela de Tiro

On 10 September Noriega, Florencio Riquelme and Roberto Cárdenas, were executed at the Escuela de Tiro in San Lazaro. A stay of execution was granted to Ernesto Cabrera^{The Mexican Herald, 11 September 1915; Prensa, 22 September 1915} and he was later sentenced to 20 years in prison^{APGG, leg. 2 Bis, exp. 10 letter J. Luis Patiño to Pablo González, 13 September 1916}.

Carlos B. Bringas

In Puebla several individuals tried to exchange some notes which were found to be counterfeits in the offices of the Jefatura de Hacienda. General Carlos Bringas himself had tried to change a $100 note, numbered 199361, and two $50 notes, numbered 59923 and 59938 (probably Type 3), all of which had the legend “DECRETO DE 10 DE SEPTIEMBRE DE 1914”. On 27 August Angel W. Cabrera, the Administrador Principal del Timbre, held an investigation and the Administración Principal del Timbre reported that its consignment to the Jefatura de Hacienda on 31 July included $6,300 of the same type, which it must have changed for Bringas^{CEHM, Fondo XXI Venustiano Carranza, carpeta 50, legajo 5560}.

Two agents of the special police were able to deceive one of the counterfeiters by trying to deal with him for the purchase of notes, and eventually was able to introduce him to Señora Paz R. de Garcia, wife of the secretary of the state government, who gave the assumed name of Maria Guerra, and professed to be a sympathizer of the Villistas. Señora Garcia began to deal with the forgers and ordered a large amount in spurious notes. She made an appointment with the man at her house, where they were caught by the police in the act of selling the notes to her. Those arrested were Luis Vargas (who died on his way to the penitentiary), Miguel Rojas and Manuel León. A few moments afterwards, Adrian Reynaud, a member of the French colony who had a business house in Puebla, was arrested charged with being connected with the counterfeiters. Further investigations resulted in the discovery of the other suspected parties and orders were issued for the arrest of General Bringas and his son, a major also called Carlos.

Bringas’ wife, Luz Belti de Bringas was arrested and a sum of $47,000.00 in false notes was taken from her person, as well as $74,000 in false revalidado altos, and $5,500 in specie, as well as a large amount in gold. The amounts taken from General Bringas were reported as $64,000 in new revalidados altos of one hundred pesos denomination; $14,000 in notes of fifty pesos denomination; $47,000 in revalidados altos of five pesos denomination and $17,000 in dos caritas^{The Mexican Herald, 4 September 1915: The Mexican Herald, 6 September 1915: El Pueblo, 6 September 1915. Slightly different figures are given in AT, Fondo Histórico, Sección Revolución Régimen Obregonista, Serie Hacienda y Guerra, caja 55, exp. 50, namely $47,000 in counterfeit notes, a strongbox with $74,000 in counterfeit notes and revalidados, $6,300 in silver and a quantity of gold from Bringas' wife and $64,000 in new $100 revalidados altos, $18,300 in counterfeit $50 notes, $47,000 in $5 revalidados altos and $17,000 in dos caritas from Bringas' accomplices.}.

Bringas and his son were transferred to Mexico City, where they were tried by a Consejo de Guerra, found guilty, and shot in the Escuela de Tiro on 23 September ^{El Noroeste, Epoca I, Año I, Núm. 39, 25 September 1915}. The editor of The Mexican Herald, Luis Simmonds, reported to the States that the execution had been the result of intrigue, as the others were not punished as severely^{CEHM, Fondo XXI Venustiano Carranza, carpeta [    ], legajo 6649 Of the other accused Manuel D. León and Miguel Rojas were sentenced to twelve years in prison whilst Bringas’s wife, Luz Belti de Bringas, Subteniente Arturo García, Francisco de la Portilla and José Garduño were acquited (El Pueblo, Año II, Tomo II, Núm. 351, 24 September 1915)}.

On 12 October the Jefatura de Hacienda in Puebla reported to the Secretaria de Hacienda that it had taken $6,300 in false Bringas notes from the Administración del Timbre, and on 8 November had sent $8,450 to the Tesorería General for incineration^{Oficios 1154, 12 October 1915, and 1470, 8 November 1915. Report of the Secretaría to Pablo González . D-6579, 24 November 1915 (APGonzález, leg. 2, exp. 114) (roll 5)}.

Estanislao Gutiérrez

On 21 September 1915 Gutiérrez was charged in Piedras Negras with circulating counterfeit money. He had a $20 Gobierno Provisional de Veracruz, serial number 322334 and $10 Gobierno Provisional de Veracruz, serial number 346936, and another $200^{ACOAH, Fondo Siglo XX, 1915, caja 24, folleto 3, exp. 4}.

Constantino Méndez and Vicente Gómez

These were arrested in Veracruz on 30 September 1915. Méndez, who had a ticket to leave on the American steamer 'México', made some purchases in the shop of Juan Arau, paying with notes that were brand new and with consecutive numbers. A suspicious Arau notified the police who found a large quantity of similar counterfeit notes in Méndez’ cases. Bogus $5, $10 and $20 notes were discovered in a trunk in Mendéz’ hotel room. Vicente Gómez was detained as an accomplice^{El Pueblo, 1 October 1915}.

Juan Gómez

On 29 October Coronel P. Morales Elizondo, Juez Instructor Militar of the Cuerpo de Ejército del Noreste in Monterrey, acknowleged receipt of $4,295 in Constitutionalist notes of different values, that were believed to be counterfeit, taken from Juan Gómez^{AMM, Colección Civil, volumen 462, exp. 12}.

José Woo

Woo, the Chinese owner of the Hotel Central, in San Luis Potosí, and six other Chinese were arrested in October 1915. The authorities were keen to execute them but the French vice-consul and American consul managed to secure their release^{Prensa, 31 October 1915}.

Edilberto Valdés

was arrested in Saltillo on 20 November 1915, and found to have 425 counterfeit $5 Gobierno Provisional notes^{ACOAH, Fondo Siglo XX, 1915, caja 39, folleto 5, exp.1}.

Antonio Bauza

For several weeks Mayor Barrera, Jefe de la Policía of the Cuartel General of the Cuerpo de Ejército de Oriente, had been aware that quantities of counterfeit, mainly $10, notes were being distributed to various part of Mexico. His agents, Oniveros and Reventer, kept a watch on several Spaniards, Antonio Bauza, his brother Vicente Bauza, Manuel Lamadrid, and José Castro. Antonio Bauza was the owner of a grocery store named “Nico y San Rafael”, in the calzada de San Antonio Abad, where the others met.

When arrested Bauza tried to get rid of $270 in counterfeit notes that he had on him. The police then captured Manuel Vega, Manuel González Eguen, Manuel Casisedo, Juan C. Moreno, José González, José Arredendo and a German called Pul Teushner^{El Demócrata, 29 February 1916}.

In August 1916 Manuel Lamadrid wrote to the Spanish legation complaining that he had been in prison since 14 February, sentenced, though innocent, to six months imprisonment and a $1,000 fine (converted into another 100 days for non-payment) for attempted bribery (tentativa de cohecho). It was he who had denounced the counterfeiters, and he had not been judged by any court but by General Pablo González. On 21 August Alejandro Padilla, the Spanish Minister, wrote to González asking for Lamadrid to be let off the fine and González replied that he had no objection but as the competent authority was the Gobierno del Distrito, he was passing on the request to Carranza^{APGG, leg. 6, exp. 8}.

Instances in the United States

The American attitude to the counterfeiting of Mexican currency during this period is discussed here.

In July 1915 Ramón P. de Negri, the consular agent in San Francisco wrote to Eliseo Arrendondo, Carranza’s confidential agent in Washington, “I have discovered the person who is printing counterfeit paper currency, to whom it has been sent and who is selling it. They are today printing notes of the latest Carrancista and Villista issues. I yesterday sent a secret agent and he was told that they could sell as many as fifty millions daily that they print. Authorities here have declared themselves powerless to prosecute crime. I beg you to use your good offices with authorities over there so that they may help me to have these malefactors brought to justice.”. Arrendondo wrote to Robert Lansing, the Secretary of State^{SD papers, 812.5157/89 letter Arrendondo to Lansing, 13 July 1915}. On 15 July de Negri informed Arrendondo that he had discovered that three individuals were engaged in the printing of false notes and that by the next Saturday he expected to lay his hands on one million of them^{SD papers, 812.5157/91}.Two days later he reported that state officials considered themselves powerless to punish this crime in accordance with the law, and wanted the cooperation of the federal authorities^{SD papers, 812.5157/94}.

On 29 July 1915 Francisco R. Jiménez reported that a few days before a gentleman had arrived from Chihuahua. He claimed to have been Villa’s Agente de Fomento and had exact knowledge that Villa had ordered 210 million counterfeit Constitutionalist notes from the firm Morris, of Washington (surely Norris Peters), of which Villa already had 150 million^{ABarragán, caja II, exp. 12, f 17 Francisco R. Jiménez, to Carranza, Veracruz,. 29 July 1915}.

in St. Louis

On 15 September 1915 Jose J. Pesqueira, Carrancista consul in St. Louis, asked the Assistant United States District Attorney to order the arrest of five Mexicans in the city who, he said, were counterfeiting Carranza money, and sending it to Mexico. The latter replied he could not act as the Carranza Government had not been recognized by the United States. Pesqueira said that millions of dollars in Carranza currency had been counterfeited in Chicago and St. Louis, and that as a result of the flood of counterfeits sent to Mexico, the genuine Carranza money has depreciated. The case was turned over to a secret service operative^{Dallas Morning News, 16 September 1915}.

Carlos Flores García, Russek, Jacobo Harootian

In September 1915 Luis Cabrera wrote to Carranza from New York that the counterfeiters in Texas had organised a distribution network throughout the States, Cuba and Guatemala. The leader in San Antonio was Carlos Flores García,an ex army paymaster, in El Paso Russek, while the Federal ex-general, Jacobo Harootian, managed distribution in Havana. The press was in Kansas City and they were preparing to counterfeit the new issue^{CEHM, Fondo XXI, carpeta , legajo 5815 letter Luis Cabrera, Nueva York, to Carranza, 24 September 1915}.

in El Paso

In late October 1915 police in El Paso unearthed a factory producing counterfeit Constitucionalist currency. Among those arrested were ten Chinese, staying at the Central Hotel, who had been exchanging currency. They were fined but released^{El Demócrata, Guadalajara, 2 November 1915}.

in Los Angeles

In early August 1916, Secret Service Agent Hazen of the United States Treasury Department stopped a firm of printers in Los Angeles, who, not understanding the status of Mexican currency, had arranged to print $300,000 worth of Carranza paper money. As Carranza had been recognised by President Wilson, this was believed to be an implication that acts of counterfeiting would finally be prosecuted^{Los Angeles Times, 5 August 1916}.

In September 1916 three defendants were set for trial in the Federal Court in Los Angeles, for having counterfeit Carranza money in their possession that they sold in large quantities^{Los Angeles Times, 5 August 1916}.