Counterfeiting of American Currency

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Counterfeiting of American Currency

• Christine Pederson
• and
• Nicole Farlee

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Definition

• A counterfeit is an imitation that is made with
  the intent to deceptively represent its content
  or origins. The word counterfeit most frequently
  describes forged money or documents, but can also
  describe clothing, software, pharmaceuticals, or
  any other manufactured item

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Definition

• Legal Tender Section 102 of the Coinage Act of
  1965 (Title 31 United States Code, Section 392)
  provides in part " All coins and currencies of
  the United States, regardless of when coined or
  issued, shall be legal tender for all debts,
  public and private, public charges, taxes, duties
  and dues."

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History

• Counterfeiting is one of the oldest crimes in
  history
• Native Americans used wampum, beaded string, as
  their currency to use as a form of exchange
• The Europeans counterfeited wampum using their
  iron tools, this led to inflation and the
  devaluing of this type of currency
• During the American Revolution, the British
  counterfeited US currency in such large amounts
  that it became worthless
• During the Civil War, one-third to one-half of
  currency was counterfeit
• It was a serious problem when each bank was
  issuing its own currency
• There were over 1500 banks printing their own
  notes
• It was very difficult to determine which bills
  were counterfeit because there were 7000
  varieties of genuine notes and 4000 counterfeit
  varieties

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History

• A national currency was adopted in 1863 to help
  solve the counterfeiting problem
• This was soon counterfeited in such large amounts
  that the government established the Secret
  Service to detect and track these notes
• One of the first anti-counterfeiting measures
  applied to money was making coins uniformly round
  and with milled edges
• In 1929, portraits were standardized and red and
  blue fibers were embedded in currency
• The green color was chosen because it was found
  to be high in its resistance to chemical and
  physical changes and was psychologically
  identified with the strong and stable credit of
  the government

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Goodwin- author of Greenback

• Paper money was the social contract in motion, a
  signal of value that presumed upon the trust of a
  community. Paper money cost nothing to produce
  it was just a promise, like America.

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Average counterfeiter

• Almost always male
• Younger (20s, early 30s)
• Comfortable with technology
• Above-average intelligence
• Often have a degree in law or business
• The main ethnic groups involved in counterfeiting
  include Nigerian, Asian, Russian, Armenian, and
  Mexican groups
• Make relatively small amounts of counterfeit
  money, good enough to be passed at retail outlets

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Jail time

• Manufacturing counterfeit currency or altering
  genuine currency to increase its value is
  punishable by a fine of up to 5,000, or 15 years
  imprisonment, or both (Title 18, Section 471)
• Possession of counterfeit US currency with
  fraudulent intent is punishable by a fine of up
  to 15,000, or 15 years imprisonment, or both
  (Title 18, Section 472)
• Anyone who manufactures a counterfeit US coin in
  any denomination above 5 cents is subject to the
  same penalties as all other counterfeiters
• Anyone who alters a genuine coin to increase its
  value is punishable by a fine of up to 2,000, or
  5 years imprisonment, or both (Title 18, Section
  331)

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Jail Time

• Forging, altering, or trafficking in US
  Government checks or bonds is punishable by up to
  10,000 fine, or 10 years imprisonment, or both
  (Title 18, Section 510)
• Printed reproductions, including photographs of
  paper currency, checks, bonds and postage stamps
  are punishable by a fine of up to 5,000, 15
  years imprisonment, or both (Title 18, Section
  474)

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Counterfeit Laws

• Rules for the printing or publication of color
  illustrations of US currency (Chapter 25, Title
  18) Counterfeit Detection Act of 1992
• The illustration must be of a size less than
  three-fourths or more than one-half
• The illustration must be one-sided
• All negatives, plates, graphic files, and any
  other thing used in the making of an illustration
  must be destroyed after final use

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Damaged Money

• Worn notes are destroyed during processing and
  replaced with new bills
• The life expectancy of a 1 bill is 18 months and
  larger bills last longer
• The Treasury Department will replace a bill if
  more than half of the original remains
• Damaged or mutilated notes should be taken to a
  bank for redemption

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Coin counterfeiting

• Most coin counterfeiting is done to simulate rare
  coins
• This often involves adding, removing, or altering
  a feature of a genuine coin
• The most effective way to detect a counterfeit
  coin is by weight

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Effect on Society

• Undermines the confidence the public puts in
  real money
• Causes more money to be circulated in the economy
  leading to a general rise in prices, inflation
• The value of money is determined by its
  acceptability, acceptance as legal tender, and
  relative scarcity counterfeiting undermines
  these values
• Companies are forced to increase prices due to
  counterfeits because they are not reimbursed

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What one man can do, another can copy

• Counterfeit bills have increased with new
  technology
• Instruments of production are more readily
  available
• Capabilities of the machines continue to improve
• Techniques are more readily understood by an
  increasingly larger segment of the population

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Evaluation of Currency

• Appearance
• Look and feel of the paper
• Red and blue fibers
• Color shifting ink
• Watermark

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Detection defenses

• People are first, if people took the time to
  really look at their money 90 of counterfeiting
  could be detected
• Next is the bank, bank tellers have programs to
  determine counterfeits
• Next, bills go through machines at the Federal
  Reserve where machinery and human eyes detect
  counterfeits

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What to do if you think you have a counterfeit

• Write your initials and date on back of the bill
  and on the white border areas
• On a separate sheet of paper record how you
  received the bill, who gave it to you, where you
  got it, and when you got it
• Handle it as little as possible to preserve any
  fingerprints
• Contact nearest secret service office or local
  police
• You are not reimbursed for turning in counterfeit
  bills

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Foreign counterfeiting

• Approximately 2/3 of American currency in
  circulation exists outside of the U.S.
• 64 of all counterfeit currency is produced
  abroad
• Some of the best counterfeits come from Colombia
• The Secret Service estimates that up to one-third
  of all counterfeit money in circulation
  domestically is Columbian in origin
• The 100 dollar bill is the most commonly
  counterfeited bill outside the US (domestically
  it is the 20 bill)

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Random Facts

• Counterfeit circulating in the U.S. is only 3/100
  of 1 of the total currency
• In 1999, counterfeiters produced an estimated
  180 million dollars in fake money
• About 90 of all known counterfeit currency is
  seized before it reaches the public
• In 1995 less than 1 of counterfeit notes
  detected in the U.S. were digitally produced. By
  2002 that number had grown to nearly 40
• Counterfeits account for about 1 to 2 notes in
  every 10,000 genuine notes

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More random facts..

• Bureau of Engraving and Printing produces 7 to 9
  billion banknotes per year worth over 80 billion
  for the Federal Reserve system
• At the Federal Reserve of Boston approximately
  20-40 counterfeit notes are detected each day

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Treasury Secretary John W. Snow

• "We continue to improve our currency and resist
  efforts by counterfeiters the world over to
  produce and pass counterfeit U.S. notes," said
  Treasury Secretary John W. Snow. "Only by such
  efforts can we guarantee that our currency will
  continue to remain a symbol of American strength
  and stability."

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The End