National Geographic News: NATIONALGEOGRAPHIC.COM/NEWS
 

 

U.S. Secret Service's Other Job: Fighting Fake Money

Stefan Lovgren in Los Angeles
for National Geographic News
October 22, 2004
 
The U.S. Secret Service is best known for guarding the President of the United States. Most of us have seen the agents in dark glasses shadowing the President, scanning the surroundings for any possible threats.

But few people may know that the U.S. Secret Service was created to combat counterfeiting. And it may come as a surprise that half of the Secret Service staff today is dedicated to investigating counterfeit currency.



The job, naturally, has changed. When the agency was established after the Civil War, in 1865, up to half of the U.S. money supply was fake. The Secret Service was charged with restoring public confidence in the currency.

Today only about $200 million U.S. dollars—out of the $500 billion dollars in circulation—is believed to be counterfeit. But the counterfeit currency today is far more difficult to trace than in the past.

Foreign crime syndicates print much of the fake currency abroad, using traditional offset printing methods, everyday technology, like scanners and color copiers, has enabled virtually anyone at home to become a counterfeiter.

"We have seen a reinvention of how a counterfeit is made," said Brian L. Stafford, who was the director of the U.S. Secret Service from 1999 to 2003. "Before, you needed skilled engravers and printers to make a passable counterfeit. Today we have children doing it."

Mastermind

Along with New York and Miami, Los Angeles is a hot spot for counterfeit activity. On average, $100,000 in fake currency is detected every week in the Los Angeles area.

The Secret Service recently busted a counterfeit ring in North Hollywood in which $700,000 was passed to the public. The mastermind, a young man with computer graphics expertise, was using Mac laptops to print the counterfeits.

"This gentleman was about as good as they come in the reproduction of the new series of notes," said Brian Hunter, an assistant to the special agent in charge at the U.S. Secret Service office in Los Angeles. Hunter is also the head of the counterfeit unit in the L.A. bureau.

The North Hollywood operation was destroyed only after the investigators caught a lucky break. When local police pulled a car over for a traffic violation, they found an envelope on the front seat containing freshly printed $20 bills. There was still green ink on the envelope.

Investigators can often establish how close a person is to the printer by how much that person paid for the bills. The printer may sell the bills for 10 cents on the dollar, while the person who actually uses the bill to buy something may have paid 50 cents on the dollar.

The driver, as it turns out, was a minor character in a network of 25 people, including the printer, middlemen, and passers of the fake currency. Secret Service agents traced the network back to the mastermind, who was arrested while printing the counterfeits.

"We always want to take the plant down and kill it," Hunter said. "That is the head of the snake. But usually we end up grabbing the tail first."

No Boundaries

Since there is more U.S. currency circulated abroad than inside the United States, it comes as no surprise that much of the counterfeit business is also located abroad.

"This has grown into an international crime that has no boundaries," said Anthony M. Chapa, the special agent in charge in Los Angeles. "The tentacles are around the world. The same [people] who produce counterfeits that show up in Los Angeles produce the counterfeits that are being passed in Madrid, Spain, or Quito, Ecuador."

Since the international trade in counterfeits is closely linked to the drug and arms trades, it comes as no surprise that the number one foreign source of counterfeits in Los Angeles is Colombia.

The Colombian counterfeits are usually produced by offset printers.

"If it's done via inkjet technology, off the desktop computer, it's basically domestic," Hunter said. "If we get offset notes, from traditional printing methods, it's likely coming from overseas."

Several Latin American countries have adopted the U.S. currency as their own, something that agents warn could make their work even trickier.

"It's a whole new market for counterfeit money," Chapa said.

Already the U.S. currency is considered world tender.

"When Saddam Hussein emerged out of a hole in Iraq, you didn't see Mexican pesos coming out in suitcases, you saw $100 federal reserve notes," Hunter said.

One major concern of the U.S. Secret Service is that some financially corrupt governments may produce U.S. currency notes to prop up their economy.

Innocent Victims

In smaller operations notes are often passed to the public one by one. Passers usually look for dimly lit or busy environments.

"If you go to McDonald's at 12:15 in the said afternoon, you'll have a line out the door," Hunter. "The cashier won't pay that much attention to the money. It's a quick exchange."

Secret Service agents spend a considerable amount of time educating merchants on how to make sure currency is real.

"Counterfeit currency is a real problem for the mom-and-pop store," Stafford said. "If they accept a fake $100 bill, they can't exchange it for a real one."

To combat counterfeiting, the U.S. government regularly issues new bills with increasingly sophisticated security features. The paper that the money is printed on is not created from a wood product but made of cotton fiber.

The most recent bills contain new security threads and other features specifically designed to prevent color copying.

That, however, hasn't deterred counterfeiters. Two and a half weeks after the new $50 note was introduced, Hunter came across his first fake fifties.

"They weren't good reproductions," he said. "But they were good enough to pass at a local Texaco station."

Next week look for a National Geographic News report on how the Secret Service protects U.S. presidential candidates. Inside the U.S. Secret Service will be repeated on the National Geographic Channel on October 30. Check the TV schedule for details.

Don't Miss a Discovery
Sign up for the free Inside National Geographic newsletter. Every two weeks we'll send you our top news stories by e-mail.

For more U.S. government stories, scroll to bottom.
 

© 1996-2008 National Geographic Society. All rights reserved.