Frauds Related to Public Bonds

National Treasury warns about Fraud with Old/Prescribed/False Government Securities

The National Treasury has received frequent consultations regarding the validity of National Treasury Letters – LTN in paper-form (supposedly issued in the 1970s)  and about the possibility of redemption, exchange, conversion (in NTN-A or other securities), payment of tax debts or various transactions involving old bonds supposedly issued by the Treasury. None of these options are possible, as detailed below:

Counterfeit Government Bonds

The National Treasury reports that there has never been "purple", "green", "blue" or "diamond" LTN bonds, with series "H, I, J, K... Z" or with any other attribute of color or letter, even if accompanied by documents and / or certificates supposedly signed by government officials from the National Treasury. The National Treasury does not and has never issued such documents. These so-called "securities" were also never "renegotiated", "restructured", "revalidated", "CETIPADOS" or "SELICADOS".  There are no paper-form LTN, that are valid. All paper-form LTNs issued in the 1970s had a maximum term of 365 days and were redeemed at their respective maturities. Therefore, be aware of these documents and be wary of generous proposals with “promises of significant gains”, because it is an attempt of fraud.

Tax Fraud

LTN and other Federal Public Debt securities are often offered to third parties (individuals/legal entities) by organizations, individuals, lawyers and consultancies, with the false promise that they may be used in the suspension and/or extinction of tax debts, as well as used as collateral in tax executions. The possibility given by art. 6 of Law No. 10,179/2001 is limited to the securities specifically mentioned (LFT, LTN and NTN) that have been issued in dematerialized format and that have matured. As there are no matured LTN, LFT or NTN that have not already been liquidated, in practice there is no possibility of using such securities for the payment of taxes.

In general, the offer of these securities for this purpose is accompanied by expert reports without any validity in an attempt to attest to the authenticity of said securities (which are false). They are also commonly accompanied by calculations attributing very high values to them, arising from alleged monetary and/or exchange rate corrections that do not apply. The attached documentation and the requirements are usually confusing, referring to several pieces of legislation that are conveniently selected and inserted in the requests, making quotations out of context with the purpose of creating situations and procedures that do not exist in order to try to give it airs of legality, when in reality there is no legal support.

The National Treasury also frequently receives requests related to Brazilian securities issued at the beginning of the last century in foreign markets. These requests demand the payment of the corresponding amount in national currency, or the exchange for domestic securities and / or to use these bonds for payment of taxes to the Brazilian Federal Revenue Office - RFB. The National Treasury emphasizes that none of these options is possible due to lack of legal basis. These securities, issued on external markets and sold to foreign investors, were also subject to the legislation of the countries where they were issued. It should be noted that even if these bonds were valid, they do not meet the requirements mentioned in Article 6º of Law Nº. 10,179/2001.

Requests or applications to this effect received by the National Treasury are summarily rejected for lack of legal support. They are also forwarded to the Federal Revenue Office, for the purpose of collecting due taxes, and any false documents that have been sent will be forwarded to the Brazilian Federal Police for investigations.

Attempted fraud with alleged "assets", "credits" and "credit rights" against the Federal Government

The National Treasury – TN has received requests for information regarding alleged "credits", "credit rights", "assets" or "obligations" from the National Government or the National Treasury owned by private agents interested in negotiating them in private transactions. These  so-called "assets", "credits" and "credit rights" have been offered to third parties (individuals/legal entities) by organizations, individuals, lawyers and tax consultancies that demonstrate the (non-existing) possibility of  using them in exchange for public securities issued by the National Treasury or in the payment/compensation of tax debts. We emphasize that none of these operations have legal support.

These applications filed in the National Treasury by private agents (individuals or companies) request the recognition that they are owners / holders of these alleged credits, as well as the confirmation of the receipt of amounts due and permission to exchange and / or use in payment of taxes. These alleged "Credit Rights" have origin in lawsuits in various instances in the country, involving state companies, public banks (Caixa and Banco do Brasil) or state governments. We clarify that these institutions have legal personality and autonomy to deal with these matters under their responsibility and, therefore, there is no participation or obligations from the National Treasury in ongoing lawsuits involving other governmental entities.

The National Treasury of Brazil warns of the risks, financial damage and possible crimes that may be linked to these operations, as they are derived from forged documents, containing false and unrecognized statements and procedures by combining fragments of legislation to create the desired claim. They refer to specific sections of the legislation to produce airs of legality, suggesting and inducing apparently attractive business opportunities, but which at no time are recognized by the Brazilian Federal Government and can lead participants to significant financial losses.

Statements by the holders of these alleged rights against the Brazilian Federal Government, contracts and transactions registered in notaries and reported in Income Tax Returns do not ensure the validity and legality of these transactions. The negotiation of these alleged claims between individuals constitutes a private transaction which is not recognized by the Brazilian Federal Government or the National Treasury.

The National Treasury warns that when identifying false documents in the applications and documents submitted by the plaintiffs, they are formally sent to the competent authorities for investigations, subjecting the participants to provide clarification, without prejudice of criminal investigations for attempting to harm public coffers.

Therefore, be aware of proposals with "advantageous and significant gains" involving the situations mentioned above, as they can be fraudulent and have disastrous consequences for the buyer.

Learn more

Examples of frequently used fake documents related to Brazilian bonds

Booklet: Prevention of Tax Fraud with Brazilian Old Government Bonds

The National Treasury informs that Brazilian public securities issued in the domestic market that are currently valid are those issued through public offerings and are listed here

For additional information, please send a message to: brazildebt@tesouro.gov.br.