Counterfeit United States currency

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Counterfeit warning printed on the reverse of a 4shilling Colonial currency in 1776 from Delaware Colony
American 18th-19th century iron counterfeit coin mold for making fake Spanish milled dollars and U.S. half dollars
Anti-counterfeiting features on an old U.S. $20 bill
The security strip of a U.S. $20 bill glows under black light as a safeguard against counterfeiting

Counterfeiting of the currency of the United States is widely attempted. According to the United States Department of Treasury, an estimated $70 million in counterfeit bills are in circulation, or approximately 1 note in counterfeits for every 10,000 in genuine currency, with an upper bound of $200 million counterfeit, or 1 counterfeit per 4,000 genuine notes.[1][2] However, these numbers are based on annual seizure rates on counterfeiting, and the actual stock of counterfeit money is uncertain because some counterfeit notes successfully circulate for a few transactions.

History

Shortly after the Civil War, it was estimated that one third to one half of the nation's currency was counterfeit. Due to this fact, counterfeit money posed a major threat to the economy and financial system in America.

In accordance, the Secret Service, founded in 1865, stated its primary task to be reducing counterfeit money in circulation. The current figure of American counterfeit bills is less than .01%.[3]

Several specific examples of groups counterfeiting United States currency have also been noted.

Operation Bernhard

During World War II Nazi Germany successfully produced high-quality counterfeits of American dollar and Bank of England pound notes although few ever were circulated thoroughly.

Superdollar

Superdollars, very high quality counterfeit one hundred-dollar bills, were some of the most widely distributed counterfeit American dollar bills and were still being produced after 2007. The Congressional Research Service has conducted a study and concluded with an accusation that North Korea was responsible for their production, but Pyongyang denied any involvement with Superdollar.[4]

Peru 2001 CB-B2 series $100 bill incident

In 2005, Peruvian Banks ceased to accept $100 bills from the 2001 series CB-B2, due to a detection in a series of counterfeit bills in Peruvian circulation. The Peruvian media reported that the notes were so well made that they were "perfect fakes". The differences between them and genuine bills were reportedly minuscule and difficult to detect.[5] According to Peruvian news reports, a printing plate from the Bureau of Engraving and Printing was stolen by a criminal, with possible links to al-Qaeda, and the plate was likely used to produce the counterfeit bills.[6]

Operation Gait $100 bills

Bills forged by Anatasios Arnaouti in the UK (2005).

"Federal Reserve Bonds"

In recent years, metal boxes of fraudulent Federal Reserve Notes in astronomically high denominations (often in $100 million, $500 million, or $1 billion) and often with coupons attached have turned up in various eastern countries such as the Philippines or Malaysia. In many cases, the notes are claimed to be part of a lost trove of secretly issued Federal Reserve Notes, and are special or not known to the public due to secrecy. Also, the bonds are sometimes treated to make them look old by getting them wet and moldy. However, the Federal Reserve has never issued notes in such denominations, and has issued warnings against them on its website.[7] Additionally, there are several errors in the bonds as well as the metal boxes, many of them anachronistic.[8] The Federal Reserve Bank of New York writes that

The Federal Reserve is aware of several scams involving high denomination Federal Reserve notes and bonds, often in denominations of 100 million or 500 million dollars, dating back to the 1930s, usually 1934. In each of these schemes, fraudulent instruments are claimed to be part of a long-lost supply of recently discovered Federal Reserve notes or bonds.

Fraudsters often falsely claim that the purported Federal Reserve notes or bonds that they hold are somehow very special and are not known to the public because they are so secret. Fraudsters have attempted to sell these worthless instruments, or to redeem or exchange them at banks and other financial institutions, or to secure loans or obtain lines of credit using the fictitious instruments as collateral.

[7]

There have been several instances where people have used the fraudulent notes as legitimate currency, often resulting in arrest. In March 2006, agents from ICE and the Secret Service seized 250 notes, each bearing a denomination of $1,000,000,000 (one billion dollars) from a West Hollywood apartment.[9] The suspect had previously been arrested on federal charges for attempting to smuggle more than $37,000 in currency into the U.S. following a trip to South Korea in 2002. Much of the artwork on the notes was duplicated from the real $1000 bill, including the portrait of Grover Cleveland.[10] Another incident involving similar notes bearing a denomination each of $500,000,000, occurred in Chiasso, Switzerland in June 2009.

Materials and Prevention

In the United States, counterfeiters in small operations develop the fake currency using tools which often include; printers, an iron, and green colored water.[11] Upon collecting bills, the Federal Reserve checks all notes, destroying any whose appearance fails to fit that of a federal bill.

Notable American counterfeiters

  • Peter Alston, was the late 18th Century and early 19th Century counterfeiter and river pirate, who is believed to be Little Harpe's associate and partner in the murder of notorious outlaw leader Samuel Mason in 1803
  • Philip Alston, was an 18th-century counterfeiter both before and after the American Revolution in Virginia and the Carolinas before the war, and later in Kentucky and Illinois afterwards.
  • Edward Bonney, an alleged counterfeiter in northern Indiana, who escaped to Nauvoo, Illinois, was a bounty hunter and amateur detective, posed as a counterfeiter, to apprehend the murderers of Colonel George Davenport and infiltrate the Midwestern Banditti of the Prairie.
  • Abel Buell, American colonialist and republican who went from altering five-pound note engraving plates to publishing the first map of the new United States created by an American.
  • Mary Butterworth, a counterfeiter in colonial America.
  • Mike DeBardeleben, was sent to prison for counterfeiting the $20 bill
  • John Duff, was a counterfeiter, hunter, and soldier, who served in George Rogers Clark's campaign, to capture the Illinois country, for the Patriot American side, during the Revolutionary War.
  • David Farnsworth, was a British Loyalist American counterfeiter and spy, in the American Revolutionary War. He was hanged for his crimes, after George Washington had taken a personalised interest in his case.[12]
  • Edward Mueller, documented in Mister 880, he was possibly the longest uncaught counterfeiter in history.[13] For ten or more years he eluded government authorities while he printed and spent fake $1 bills in his New York neighborhood.[14]
  • John A. Murrell, a near-legendary bandit operating in the United States along the Mississippi River in the mid-nineteenth century. Convicted for his crimes in the Circuit Court of Madison County, Tennessee, Murrell was incarcerated in the Tennessee State Penitentiary, modeled after the Auburn penal system, from 1834 to 1844.
  • Sturdivant Gang, a multi-generational group of American counterfeiters whose criminal activities took place over a 50-year period from Colonial Connecticut to the Illinois frontier.
  • Albert Talton, was sent to prison for counterfeiting the United States one hundred-dollar bill and the United States twenty-dollar bill. Produced over 7 million dollars in counterfeit US currency using a standard inkjet printer, and was convicted and sent to prison in May 2009.
  • Samuel C. Upham, the first known counterfeiter of Confederate money during the American Civil War. His activities began or became known in early July 1862.
  • Arthur Williams, imprisoned in 2007 for counterfeiting the United States one hundred-dollar bill.

See also

References

  1. ^ "Press Release on Joint Report on Use and Counterfeiting of U.S. Currency Abroad". 2006-10-25. 
  2. ^ "7. Estimates of Counterfeiting", The Use and Counterfeiting of United States Currency Abroad, Part 3 (PDF), US Department of Treasury, Sep 2006, p. 70 
  3. ^ "FEDERAL RESERVE BANK OF SAN FRANCISCO: How much money in circulation is counterfeit?". October 13, 2013. 
  4. ^ "Congressional Research Service: North Korean Counterfeiting of U.S. Currency" (PDF). 12 October 2013. 
  5. ^ "U.S. Secret Service Trains Peruvians on Fake Bills (Update1)". Bloomberg. 12 April 2005. 
  6. ^ "Es imposible controlar la legitimidad del dólar". El Comercio. April 15, 2005. Archived from the original on May 28, 2007. [text–source integrity?]
  7. ^ a b "New York Fed Archived Fraud Alerts - FEDERAL RESERVE BANK of NEW YORK". www.newyorkfed.org. 
  8. ^ "USA 1934 Series Bonds". 1 January 2013. 
  9. ^ "Homeland Security Agents Seize "Billion Dollar" Bogus Federal Reserve Notes". Communitydispatch.com. Retrieved 2014-05-09. 
  10. ^ http://www.thesmokinggun.com/archive/0315062billion1.html Fake Billion Dollar Bills
  11. ^ https://amp.ksat.com/news/police-find-more-than-1000-in-counterfeit-cash-narcotics-at-ne-side-home
  12. ^ Cite error: The named reference ReferenceA was invoked but never defined (see the help page).
  13. ^ "Dine' Pride :: View topic - Bismarck Counterfeit Case". Dinepride.com. Retrieved 2012-10-18. 
  14. ^ [1] Archived May 12, 2008, at the Wayback Machine.

External links

  • The Economics of Counterfeiting. By Elena Quercioli and Lones Smith, Econometrica, May 2015.
  • Counterfeit Money. By Elena Quercioli and Lones Smith, Encyclopedia of Law and Economics, Edited by Juergen Backaus, Springer New York, 2014
  • Article by the Christian Science Monitor: "Made in South America: new breed of fake US dollars" Thu Apr 14, 4:00 AM ET
  • "The Use and Counterfeiting of United States Currency Abroad" United States Department of Treasury
  • Estimating the Volume of Counterfeit U.S. Currency in Circulation Worldwide: Data and Extrapolation. By Ruth Judson and Richard Porter, 1 March 2010.
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