Printer to Plead Guilty in $10-Million Counterfeit Scheme

In what authorities called one of the biggest single counterfeiting schemes in U.S. history, a Costa Mesa printer agreed Thursday to plead guilty to forging almost $10 million in currency that had begun to turn up around the Southland.

Hal J. Stepanich, 33, who was scheduled to go on trial in federal court in Santa Ana next Tuesday, instead will enter a guilty plea in exchange for certain concessions by prosecutors that could help him at the time of his sentencing, federal public defender H. Dean Steward said Thursday.

Authorities had traced a trail of phony bills--printed in denominations of $20, $50, and $100--in recent months in Orange, Los Angeles and Riverside counties and elsewhere, eventually leading back to Stepanich and another Orange County man, who was arrested recently in Houston, federal prosecutors said.

Working out of his ex-wife’s garage near Palm Springs, Stepanich and partner Richard L. Wattel, 62, made the counterfeit bills on about $10,000 worth of printing equipment that they had bought, federal prosecutors charged. Stepanich, a printer by training who worked as a pressman at a Costa Mesa print shop until February, was arrested by federal officials in April.

Over about a week in March of this year, the two men allegedly churned out $10 million to $12 million in fake currency, most of which federal agents believe never was circulated.

After his arrest, authorities said Stepanich led investigators to a cache of about $7 million in fake bills hidden in a Huntington Beach storage area. Stepanich had divided the forged cash with Wattel, a longtime friend of Stepanich’s father.

Federal officials say counterfeiting cases have been on the rise in recent years, with a record $110 million in fake currency seized last year nationwide. Fully a quarter of that total came from Southern California.

Richard Griffin, who heads the U.S. Secret Service office in Los Angeles, said the Stepanich case probably ranks among the top 10 largest counterfeit busts in U.S. history. The record of $22.6 million was set last year in another Orange County seizure, he said.

Assistant U.S. Atty. Karin Immergut, who is prosecuting the case, refused comment on the result of talks on Thursday with the public defender’s office, citing the active status of the case.

But Steward said his client agreed to plead guilty next Tuesday before U.S. District Judge J. Spencer Letts on the condition that prosecutors acknowledge in court Stepanich’s cooperation in seven areas of their investigation--including letting them search his van and leading them to the hidden $7 million.

Under federal sentencing guidelines, Stepanich could expect a sentence of 27 to 36 months in prison for pleading guilty to the charge of counterfeiting a total of $9.76 million. But Steward said he expects that Letts may recognize the defendant’s “substantial cooperation” in the case and render a lesser sentence.

“Stepanich is really a nice guy, a generally law-abiding citizen who got into (financial) trouble and did something really foolish,” Steward said. “He was an excellent printer and a lousy businessman.”

The federal investigation in the Stepanich case was apparently sparked when officials at a Palm Springs branch of Bank of America spotted a fake $100 bill as it was being deposited by an apartment rental firm in April, according to documents in the case, filed in U.S. District Court in Santa Ana.

“I didn’t notice anything funny about (the bill), but then again, I don’t usually check for those kinds of things,” apartment manager Debbie Stewart of Palm Springs said in an interview Thursday.

Stewart told authorities after the forgery was detected that she had gotten the bill from a tenant as rent money. That trail--along with others around Orange and Los Angeles counties--eventually led authorities to Stepanich.

Before getting to Stepanich, however, authorities found a group of Long Beach men whom they suspected of passing the fake money. Among them was one man who said he had received $1.5 million from Stepanich but had destroyed it.

Using the Long Beach man as bait, authorities had him contact Stepanich in a tape-recorded conversation and arrange to buy an additional $150,000 in fake currency for 10 cents on the dollar, court documents show.

Federal authorities then arrested Stepanich on suspicion of forgery on April 28, seizing printing plates, negatives and $15,890 in forged cash from his home and van, and later the $7 million from the Huntington Beach storage site.

While federal officials did not trace all of the millions allegedly produced by Stepanich and Wattel, Steward asserted that his client spent little of his share of the forged bills and that almost all of it was seized by federal agents at the time of his arrest. “There is really no missing money here,” he said.

Described by his parents as a high-school track star with good grades, Stepanich got a degree from Cal State Fullerton in printing and began working in that field. He also had served in the Navy and has two children from separate failed marriages, his parents said.

A pressman at Press West Print Shop in Costa Mesa for several months, “Hal was seen by most people as a very likable guy,” firm manager Dan Melton said in an interview. He said he had heard about an agreement reached Thursday, but declined further comment on the former employee.

His parents, Al and Betty Stepanich of Desert Hot Springs in Riverside County, said that they were “flabbergasted” to learn of his arrest and suggested that if he had in fact counterfeited money, he may have been misled by Wattel, who until recently had lived in Irvine. Al Stepanich said he and Wattel had been friends for three decades and exchanged annual Christmas greetings.

Wattel is now awaiting trial on counterfeiting charges in federal court in Texas, where he was arrested, officials said.