The business of counterfeiting
Deep in the summer of our national recession, television “money honeys” and financial gurus are still rattling off thrift tips including freezing credit cards and bartering goods and services.
“Print your own money” never makes the lists, of course.
Counterfeiting (and forgery) ranks as the most common financial crime prosecuted by the feds, according to researchers at Syracuse University.
One of the oldest and most premeditated of American crimes, counterfeiting is not as traumatic as say, an armed robbery in New Orleans.
Yet, the illegal art begs the same question – what’s in your wallet?
If you don’t know, don’t care and accept the cash you’re handed at face value then you probably have more confidence in your currency than those cashiers who keep holding your money up to the light.
You are also an ideal victim.
To most criminals, a perfect crime goes unreported. Counterfeiters want to be undetected.
Counterfeiting is a federal crime now punishable by up to 15 years in prison, thanks to tougher penalties provided by the anti-terrorist Patriot Act.
Passed after the 9/11 attacks, the Patriot Act also gives U.S. Treasury agents broader authority to assist local authorities in investigating counterfeiting operations by terrorists, major drug traffickers – and small-time criminals.
In addition, the U.S. Fifth Circuit Court of Appeals in New Orleans recently warned of stricter sentencing guidelines for anyone who tries to upwardly alter the value of existing federal currency via such processes as “bleaching,” Photoshop, or that amazing color printer in the back of the office.
There will probably always be those who say the counterfeiting laws do not apply to them.
A few may be right.
In fact, four admittedly guilty defendants from Shreveport recently appealed their counterfeiting sentences to the 5th Circuit– one of the most conservative appellate courts in the nation.
Surprisingly, they won.
In a rare setback for U.S. Treasury agents, a three-judge panel of the 5th Circuit threw out the sentences of all four Shreveporters, who argued that the trial judge misapplied federal sentencing guidelines.
The 5th Circuit ordered U.S. District Judge Tom Stagg of Shreveport to re-sentence the defendants under more lenient criteria.
The 5th Circuit ruling United States of America v. Alicia A. Dison, et al (No. 08-30045) also indicates that defense attorney Joseph S. Woodley displayed more attention to detail than his clients.
A Shreveport insurance defense lawyer, Woodley says he never handled a criminal counterfeiting case, previously.
Citing similar cases in other federal jurisdictions, Woodley argued that his clients were convicted of bleaching the ink off of legitimate but smaller denominations which they then reprinted as $100 bills, using a Hewlett Packard printer.
The defendants didn’t counterfeit or “falsely manufacture” their phony money supply from scratch, an offense that merits harsher punishment under federal sentencing guidelines, the defense lawyer argued.
Caught up in a routine rural drug raid in 2007, his clients – whose bogus bills couldn’t pass inspection by cashiers at Wal-Mart and McDonald’s – pleaded guilty to conspiracy to distribute counterfeit money.
Alicia A. Dison was sentenced to 15 months. Her three male co-defendants – Ryan D. Walters, Adam A. Harris and Geoffrey G. Vice – all got 2 years each, Woodley recalls.
With the 5th Circuit reversal, all four may soon be out of prison.
“I feel good,” Woodley says. “It was the right ruling. All (the 5th Circuit) said was that the sentencing guideline was ambiguous.”
The U.S. Sentencing Commission has acknowledged the “difficulty” courts face when trying to reconcile conflicting guidelines for convicted counterfeiters and those who illegally “bleach” legitimate currency, the 5th Circuit ruling states.
Barring congressional legislation to the contrary, the Commission on Nov. 1 will enact new guidelines to clarify confusing sentencing guidelines for “bleachers” and the more egregious offense of “counterfeiting.” (Bleached bills can be returned to the Treasury Department.)
Special Agent Darron Kraft of the U.S. Secret Service described the bleaching process in the Shreveport case. The defendants created counterfeit $100 bills by soaking legitimate $1 and $5 dollar bills in a glass peanut butter jar filled with ammonia, the agent said.
“The bills would be taken out periodically to scrub off ink,” the 5th Circuit recalled. “They would then be hung to dry in front of a window air conditioning unit.”
After all the ink was removed, the defendants then used the HP printer to transfer the image of $100 bill onto bleached notes of lower denominations. The altered money retained both the security thread and the original “watermark.” Both features are designed to thwart counterfeiters.
For example, hold a new $5 bill (with a large purple “5” on the back) to a bright light. You should see a large numeral “5” watermark in the blank space to right of Abraham Lincoln. To the left of the president is a second watermark, a vertical column of three number “5”s, according to a Treasury Web site (www.moneyfactory.gov).
Thanks to technology, counterfeiting is one of those rare crimes where authorities may actually be ahead of the offender.
Stephen Mihm, a professor of history at the University of Georgia and author of A Nation of Counterfeiters (Harvard, 2007) has predicted that only the most sophisticated counterfeiters will be able to keep pace with improved counter-measures by Treasury. “It’s much more difficult than it was than a century and a half ago,” Mihm told The New York Times in a 2007 interview.
Before the Civil War, thousands of private banks, chartered by individual states, printed their own money, Mihm said. There were 10,000 different kinds of currency; counterfeiting flourished. In 1865, the Secret Service formed exclusively to stop the practice.
Today, identity theft, credit card fraud and online computer scams seem far less labor-intensive than manufacturing and circulating phony bills.
But who can tell?
The nonprofit Transactional Records Access Clearinghouse at Syracuse University (trac.syr.edu) may be a good place to start.
TRAC reported 129 new prosecutions of federal regulatory offenses and financial crimes in January 2009 – a nine-year low.
Of the 129 cases, counterfeiting/ forgery (39 percent) exceeded other crimes such as money laundering, custom duty violations and energy pricing fraud, TRAC reported.
Overall, “government regulatory prosecutions” in January were down 16 percent from the same time 5 years ago. Kick out federal misdemeanors and prosecutions plunged by 36 percent over 5 years, according to TRAC.
It will be interesting to see how federal prosecutions of financial crimes “trend” during the new Obama Administration.
In the summer of our recession, will Louisiana’s three U.S. attorneys prosecute the worst of our white-collar crooks – using the sweeping powers of the Bush-era Patriot Act?
As for the “Shreveport 4,” the 5th Circuit ruling did not specify if the defendants each must re-pay a $100 fine after re-sentencing. Court records of their sentencing last year did not indicate if the counterfeiting defendants paid by check – or cash.
Woodley chuckles, saying he cannot recall.