Counterfeit Case Dismissed Against County Resident

The U.S. attorney’s office has dropped charges against an accountant accused of masterminding a plan to flood South America with $2.5 billion in bogus U.S. bills.

Officials refused to say why they had dismissed the case against Gary K. McMurtry, 46, of La Habra.

“Basically, it came down to office policy,” Assistant U.S. Atty. Lawrence Middleton said Wednesday. “I can’t comment beyond that.”

Phil Bronson, McMurtry’s attorney, said his client appears to have been led on by the U.S. Secret Service.

“It looks from the preliminary facts that I’ve seen that there could have been an entrapment defense if this had gone to trial,” Bronson said.

McMurtry, who had been imprisoned without bail as a flight risk, declined comment.

On June 6, at a news conference, Secret Service agents displayed the $10 million in high-quality, counterfeit $100 bills that they claimed belonged to McMurtry. Eleven days later, the charges were dropped.

The bills, which ranked among the agency’s top seizures, had been printed by an undercover agent in a shop funded by the agency.

Two other agents acted as his partners for two years. Eight to 10 other members of the alleged ring have never been arrested or identified by the agency.

Clint Howard, the agent in charge of the Los Angeles office, was caught by surprise.

“I can’t imagine why they would dismiss it prior to indictment,” he said.

Jim Miller, Howard’s assistant, said the Secret Service stands behind its investigation.

“As far as we’re concerned, the case is prosecutable. We used proper investigative techniques. I have no idea why they (federal prosecutors) do not want to go forward. They must think the case is not winnable,” Miller said.

A confidential informant told the Secret Service in June, 1989, that McMurtry planned to print counterfeit money in Panama, according to court documents.

The informant later met with McMurtry again and secretly tape-recorded their conversation. Two undercover agents then established a relationship with McMurtry, allegedly agreeing to assist him in the Panama operation.