A Brillian Deception

A witch owns a field containing many gold mines. She hires one man at a time to mine this gold for her. She promises 10% of what a man mines in a day, and he gives her the rest. Because she is blind, she has three magic bags who can talk. They report how much gold they held each day, and this is how she finds out if men are cheating her. 

Upon getting the job, each man agrees that if he isn't honest, then he will be turned into stone. So around the witch's mines, many statues lay! 

Now comes an honest man named Garry. He accepts the job gladly. 

The witch, who didn't trust him said, "If I wrongly accuse you of cheating me, then I'll be turned into stone."  

That night, Garry, having honestly done his first day's job, overheard the bags talking to the witch. He then formulated a plan... 

The next night, he submitted his gold, and kept 1.6 pounds of gold. Later, the witch talked with her bags.

The first bag said it held 16 pounds that day. The second one said it held 5 pounds. The third one said it held 2 pounds. 

Beaming, the witch confronted Garry. "You scoundrel, you think you could fool me. Now you shall turn into stone!" the witch cried. One second later, the witch was hard as a rock, and very grey-looking.

How did Garry brilliantly deceive the witch? 

Here is the Garry's Master Plan!
 

Mathematics Behind The Brilliant Deception!

What was the deception?

As per the honest man, he must have mined 16 Pounds of gold since he kept 1.6 Pounds (10% of 16) gold for himself.

And as per magical bags, since Bag no.1 said it had 16 Pounds, Bag no.2 said 5 Pounds and Bag no.3 said 2 Pounds the total gold mined 16 + 5 + 2 = 23 Pounds.

We know, honest man Garry would never do any fraud and neither of magical bag would lie. 

So, it's clear that some of pounds are counted multiple times by magical bags. There are 23 - 16 = 7 Pounds gold extra found by those bags.

Now, Bag No.3 must have 2 Pounds in real.

And to make count of Bag No.2 as 5, Garry must had put 3 Pound + Bag No.3 itself in Bag No.2. Hence, the Bag No.2 informed witch that it had total 5 Pound of gold.

Finally, to force Bag No.1 to tell it's count as 16, Garry must had put 
11 Pounds + Bag No.2 (5 Pounds = 3 + Bag No.1) = 11 + 5 = 16 Pounds.

In short, Garry put 2 pounds of gold in Bag No.3 and put that Bag No.3 in Bag No.2 where he had already added 3 Pounds of gold. After that, he put this Bag No.2 in Bag No.3 where he had already added 11 Pounds of gold (somewhat like below picture).

 

This way, 2 Pounds of gold in Bag No.3 are counted 2 extra times and 3 Pounds gold of Bag No.2 are counted 1 more extra time. That is 2 + 2 + 3 = 7 Pounds of extra gold found by bags.