Low-Profile L.A. Printing Firm Is a Literal Moneymaker

When Bolivia’s inflation rate climbed above 10,000% a year in late 1984, the government could not print money fast enough to meet its payrolls. So Bolivian central bank officials called a Los Angeles financial printing firm and ordered a rush job on millions of counterfeit-proof official IOUs to use until the country could find a new supply of currency.

It was one of the more unusual printing jobs that Jeffries Banknote Co. has undertaken during its 92-year existence. Over the years, the firm has printed scrip for China, postage stamps for Panama and tickets for the 1932 and 1984 Olympics.

Today, however, the company’s bread and butter is printing municipal bonds and travelers checks, of which it is the second-largest producer in the world. It is one of the country’s top firms in an exclusive business that requires top-flight engravers, expensive intaglio printing presses and the utmost in security and confidentiality. Jeffries Banknote operates out of a single 130,000-square-foot facility in downtown Los Angeles. The company’s name is familiar to thousands of commuters who pass the building alongside the Harbor Freeway every day. However, by design, what goes on inside the plant is known to only a few.

On any given day, the firm will produce negotiable travelers checks worth hundreds of millions of dollars for American Express, Visa, Bank of America, Citibank and Barclay’s Bank. It might also churn out stock certificates and municipal bonds with a total face value in the billions of dollars. It might ship a few million lottery tickets or food stamps or department store gift certificates that are as good as cash.

Jeffries President Hugh J. McDonald is understandably reticent about discussing security measures at the firm. He will not give a dollar value for travelers checks printed or stored at the plant, for example. He will not identify the armored car companies that the firm uses. The names and addresses of his engravers are closely guarded secrets.

Some of the security measures are obvious, however. The plant is surrounded by a tall barbed-wire-topped fence. The ground floor windows are false, backed by solid brick. The parking lot and all entrances are under constant video surveillance. Access to the interior of the plant is as tightly controlled as at a Federal Reserve vault or a U.S. mint. Interior doors are controlled by combination locks or buzzers, or both.

All 430 employees, including McDonald, wear plastic identification badges at all times. The plant is patrolled by uniformed and plainclothes guards; one of every 10 workers is involved in security. Every briefcase and lunch bucket is searched on arrival and departure.

“Our greatest exposure, obviously, is to an employee bagging something,” McDonald said.

There are other protective steps in force at the plant, McDonald said, but no one person, not even the company’s security chief, knows the entire setup.

The company performs a variety of financial printing jobs, including annual reports, filings for regulatory agencies and prospectuses for new stock issues. Such jobs require uncompromised confidentiality; a number of financial printing firms have been implicated in insider-trading scandals for revealing secret corporate data.

But it is the so-called security printing functions that set Jeffries apart from all but a handful of American printing firms.

Craftsmanship, Technology

The printing of bank notes, stock certificates, money orders and other negotiable pieces of paper requires both old-world craftsmanship and modern technology. The notes must be all but impossible to counterfeit, able to withstand years of handling and aesthetically pleasing.

To accomplish all these aims, governments and financial printing firms employ highly skilled and highly paid engravers who work both by hand and by a mechanical process known as the Guilloche method, which uses a geometric lathe with a diamond tip to do intricate designs for borders, corners and scrollwork.

The Guilloche designs are impossible to duplicate by hand or even with another Guilloche machine without knowing the exact settings of the lathe. These computations are kept secret and are used only once.

Jeffries employs five engravers who are among the elite of their craft. Only a few dozen engravers of their skill level are at work in the United States today, many of them employed by the U.S. Department of Printing and Engraving, which designs and prints U.S. currency, stamps and other valuable documents. Such engravers are much in demand, and their pay can approach $100,000 a year.

Once the engravers have completed the cutting and polishing of the metal printing plate, the plate is attached to an intaglio press, which uses extremely high pressure to transfer ink to the paper, leaving a raised impression that cannot be achieved using cheaper lithograph or letterpress printing methods.

Other anti-counterfeiting measures are employed as well. Papers are special 100% rag with watermarks and security threads, which can be metalized, colored or fluorescent. Inks are used that appear or disappear under different light or temperature conditions. Special colors are employed that either do not reproduce photographically or change colors when photocopied.

Jeffries’ Bolivian notes, for example, used a heat-sensitive ink that disappears when held for a few seconds between thumb and forefinger.

Workers keep track of every sheet of paper from the moment it arrives at the plant until the finished product is delivered to the customer. Flawed documents are destroyed by a process of shredding, soaking and pulverizing that leaves them looking like wads of Kleenex that have been through the washer and dryer.

Shares Data With Interpol

McDonald said the company, by necessity, collects data on the latest counterfeiting methods and shares it with Interpol and other police agencies. He said advances in photocopying technology have made it necessary to devise ever more complex strategies to thwart counterfeiters.

Sometimes the firm engraves into printed designs tiny codes or broken lines visible only under a microscope. Its technicians constantly create new hard-to-duplicate iridescent inks that can be seen only under ultraviolet light. And the intaglio printing process creates a third dimension--depth--on a two-dimensional document that is easily identifiable by feel.

McDonald said that, as far as he knows, no engraver has left Jeffries to strike out on his own in the money-printing business. The company did lose $45,000 a few years ago in a theft that involved a group of people, including one Jeffries employee. McDonald said the firm’s success in avoiding theft and fraud is due to a combination of luck, employee loyalty and careful screening of prospective workers.

“We’ve just been very fortunate,” McDonald said.