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Anti-Counterfeiting Bills Seek to Keep Abe Honest

Currency: New $5 and $10 notes are designed to foil high-tech fakes. But enforcement is increasingly difficult.

May 24, 2000|JOSH MEYER | TIMES STAFF WRITER

Continuing its elaborate cat-and-mouse game with high-tech counterfeiters, the U.S. Treasury Department will begin circulating new and improved $5 and $10 bills today.

Those bills, which come after new $100s, $50s and $20s in recent years, are designed to foil the rapidly expanding ranks of counterfeiters.

The number of counterfeiters arrested annually has doubled since the 1996 introduction of the first redesigned bills--the ones with the huge portraits of the presidents and a host of special security features.

But authorities concede that the increase in arrests--to 3,466 people last year--may be just another indication that technology has given the crooks such an edge that the feds are fighting an almost unwinnable war.

"It's a nightmare," said Donald Ray, a senior Secret Service agent who specializes in counterfeiting.

"In the past there was only a handful of people with the specialized knowledge to do it," said Ray, who works out of the Secret Service's Los Angeles field office. "Now, with the technology, high school kids--anybody--can do it. It all boils down to whether they like to play with computers or not."

Until just a few years ago, counterfeiting was an elaborate, expensive and time-consuming process--an art, even.

One needed to be a master printer, using offset typesetting, metal plates, ink and special paper to create bills that could be passed off as real.

But now, Ray said, anyone with a computer can get into the game.

"Digital counterfeiters," as they are called, use even the most basic computer equipment to scan the images of bills and churn out fake currency on desktop printers.

Some even download digitized images of fake bills circulating on the Internet to make "funny money."

The bills may not look as real, but there are so many of them out there that the Secret Service--which combats counterfeiting as a branch of the Treasury Department--is becoming overwhelmed.

Southern California is considered a hotbed of counterfeiting. Ray estimates that $75,000 a week in fake money is being successfully passed into the economy. "Some weeks," Ray said, "it's well over $100,000."

Authorities elsewhere in the United States report increases in counterfeiting, according to Secret Service statistics. They show that four years ago, only 1% of fake notes seized by federal agents came from the so-called digital methods, as opposed to old-fashioned printing presses. By last year, 40% of the seized bills were of the high-tech kind.

"About half the time now," said Secret Service spokesman Jim Mackin in Washington, "when we do a seizure, we seize a computer."

The explosion of high-tech counterfeiting has radically transformed the federal government's ability to track those committing the crimes.

In previous decades, the Secret Service's special counterfeiting experts became adept at noticing defects in particular bills. They traced them to the few known counterfeiters and the few printing presses available to underground moneymakers.

And federal agents scoured suppliers of the specialized inks and papers and printing equipment for any unusual purchases by the usual suspects.

Computers Make Counterfeiting Easier

Now the use of computers and printers has made such gumshoe techniques completely obsolete, said Michael Seigel, a former federal prosecutor who teaches criminal law at the University of Florida College of Law.

"It has completely changed the way the Secret Service operates," Seigel said. "The old techniques have gone by the board."

The old techniques were so expensive that counterfeiters had to make large batches of bills to offset costs. Authorities often found huge caches of fake bills. Now, the crooks only churn out as many bills as they need before hitting a few keystrokes and turning the computer equipment off.

Last year, about $14 million in counterfeit money was seized in the United States, down from $30 million the year before, although authorities uniformly say counterfeiting is on the upswing.

To combat the increasing use of digitized counterfeiting, the Treasury Department's Bureau of Engraving and Printing embarked on its ambitious--and expensive--redesign campaign.

At a cost of 4 cents per bill, the Treasury Department changed the look of the bills--and added at least six special features specifically aimed at making it harder to use computers and printers to churn out new money.

They include a special ink that changes color when light hits the money at different angles, and a special security thread embedded in the bills.

The federal government plans to print 640 million $5 notes and 492 million $10 bills. As commercial banks deposit their money back into the Federal Reserve System, it will work the new bills into circulation.

There has been an 85% changeover to the new $100 and $50 bills since they were introduced in 1996 and 1997, respectively. And there has been a 75% changeover to the new $20s, the most popular bill for counterfeiting, since the redesigned bills were introduced in the fall of 1998.

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