When talking about the federal government's dealing with cold hard cash, a common lament amongst those who are more fiscally conservative is the tried and true "where does all the money go anyway?"

A recent story in the Washington Post asks that same question, not of bloated budgets and federal entitlements however, but rather of something much simpler... the actual money. You know, the "dead presidents" as the kids say.

The Bureau of Engraving and Printing, in addition to being one of the most underrated tours any 4-H Club can take during a field trip to Washington (seriously, the lines are way shorter than at the Smithsonian), is the federal office in charge of examining and reimbursing business and individuals for their damaged or mutilated money.

According to the Treasury Department, which oversees the Bureau of Engraving and Printing, "each year the bureau handles about 30,000 transactions involving mutilated currency worth $30 million." A statement by the Treasury explains that "mutilated currency can be exchanged at face value if 1) more than 50% of a currency note is present and identifiable; or 2) 50% or less of a currency note is present and the submitted evidence justifies the method of mutilation and the U.S. Treasury is satisfied that all missing portions of the currency note have been totally destroyed."

Treasury officials told the Post that most of the currency handled through the program has been severely damaged in incidents such as floods and fires. While these are some fairly mundane reasons, there have apparently been much more elaborate tales behind the origin of some of the bruised Benjamins in question.

Both the Post and the Associated Press have stumbled upon the curious case of one Franz Fehlbar, who shockingly enough is not a villain from a bad James Bond movie but rather a very real person... who happened to walk through the front door of the Treasury Department with a briefcase stuffed with $5.2 million in decomposing cash and quite a story to go along with it.

Fishy stories that have yet to be disproved

Fehlbar, a Texas-based customs broker, first surfaced around 2005 when he and two relatives appeared at the El Paso Federal Reserve bank with $120,000 in water damaged currency that he claimed were found buried underneath a Mexican building. After receiving reimbursement in the form of a Treasury check things began to get a little fishy.

Fehlbar began exchanging more damaged money at various El Paso banks, sometimes he would tell bank employees that he had found the money while digging up an old tree, or that he and a friend had discovered it buried in an old suitcase, or that it was an inheritance from a wealthy relative.

By 2007 Fehlbar took to traveling directly to Washington, to the Treasury's national headquarters, with millions in damaged currency in hand. By this time he was telling suspicious (yes, it only took them 2 years to begin to get a little suspicious) federal authorities that the money belonged to Fehlbar's uncle in Mexico. At this point Treasury officers had heard enough and seized Fehlbar's sloppy assets and filed paperwork in federal court seeking the money's forfeiture.

After much deliberation it turned out that, as far as the federal government was concerned anyway, Fehlbar's tall tales were all true. The Post reports that the dirty (literally) money is legitimate, or at least they have been unable to prove that it was in anyway illegally acquired. According to the Post, the U.S. Attorney in charge of the case, Barry Wiegand, "disclosed in court documents that the government had reached a monetary settlement to end the litigation." So not only will Fehlbar be fully reimbursed for his waterlogged legal tender, whatever its origin may be, but for the legal cost of defending his questionable haul.

The mutilated currency exchange program is one of those government oddities whose virtues can be debated, but whose potential for pure entertainment value is almost limitless. Where else in the entire federal bureaucracy can you discuss briefcases full of buried treasure without even a hint of irony?

So the next time someone asks you where the federal government plans on getting the money to fund everything from two active wars to healthcare reform, just ask them if they've looked underneath any Mexican warehouses lately. It may sound a little odd, but it isn't anymore outlandish than, oh lets just say, a freezer literally full of cold hard cash.