Investigators Buck Trend in Counterfeiting

Armed with little more than home computers and $100 scanners, a generation of amateur counterfeiters is sending reams of bogus currency into the marketplace.

Though less than 1% of the counterfeit cash seized nationally in 1995 was computer-generated, about 40% is today, according to U.S. Secret Service figures. In Orange County, the figure is 60%.

The ease of producing paper notes in a small space also is changing the profile of the counterfeiter, from career criminal using a printing press to desktop dabbler doing it in his or her spare time. Among recent cases: a Yorba Linda real estate appraiser worried about his finances who set up shop in his garage; two college freshmen in Kentucky accused of printing bills in their dorm; and a Simi Valley man charged with producing more than $1,000 in phony $20 notes on his company’s personal computer.

“What we’re seeing now is not just counterfeiters with criminal histories, but regular people,” said Robert Brenner, the agent in charge of the Santa Ana office of the Secret Service. These newly minted counterfeiters have been the force behind a near doubling in the amount of counterfeit money passed over the past five years.

Federal officials responded to the problem last month by introducing a new $20 bill, the most commonly counterfeited note in the United States.

The most obvious change in the new $20 is its larger portrait of Andrew Jackson. But more important, it has been made more difficult to duplicate, with additions such as faint identifying markers embedded in the paper itself.

Similar redesigns have helped stem counterfeiting of larger denominations over the past three years.

Southern California, where a large segment of the population is computer-savvy and -equipped, has become a hot spot for the production of fake bills. Los Angeles routinely holds the first or second spot on the Secret Service’s weekly list of the nation’s leading producers of counterfeit money. Orange County consistently makes the top 10 and often the top five.

In Los Angeles, $4.2 million was passed in 1997, compared with $2.7 million four years before; in Orange County, the number more than doubled during that time, from $288,000 to $765,000.

In the fiscal year that ended in July, 105 people were arrested in 10 separate cases of money counterfeiting in Los Angeles. Every case involved use of either a computer or an office copier.

Nationwide, more than $31 million in counterfeit money found its way into circulation last year, most of it caught by banks. By that time, the person who last had the bill--usually a shop owner--is stuck with the loss.

Real estate appraiser Kevin Metcalf, hurting after the loss of a major client, decided to set up shop in his Yorba Linda garage with the goal of printing bogus $20 bills that he and a cohort planned on spending in Las Vegas. He succeeded in passing several phony notes at fast-food restaurants in the San Fernando Valley, prosecutors later said, but an anonymous tip led to a sting operation and subsequent conviction that could land him in prison.

Brock Christner of Simi Valley was arrested with two cohorts last year after police raided the Moorpark company at which he worked. Police said the 20-year-old man used a personal computer at the company to print fake $20 bills on heavy printer paper. Eventually he pleaded guilty and served four months in jail, a sheriff’s spokesman said.

And a Florida man was arrested, also in 1997, after authorities confiscated a personal computer and $117,000 in bogus $20s, $50s and $100s from his Simi Valley storage locker.

The inkjet counterfeiting jobs are generally lower in quality than those produced through the more elaborate and expensive offset printing operations. The paper is usually thinner or stiffer than the real thing, the printing fuzzier and the colors slightly off. White areas are filled with tiny dots instead of the minuscule red and blue security fibers found in government-issued money.

“If people just took the time to look at each individual bill rather than accept it, they can usually see the difference,” Brenner said.

Steven McGonigal, head cook at Rumours Cafe in Long Beach’s Belmont Shore, said counterfeit $20s and $50s recently cost his store $300 in a single week. “One Saturday we had four of them,” he said. “It was really discouraging.”

Heidi Miller, owner of a small boutique in Costa Mesa’s South Coast Plaza, said she encountered only two counterfeit bills during the first six years she was in business. This year--her seventh--she has already seen three, all of them $100 notes.

“It’s like someone reaching right into my purse and stealing the money,” Miller said. “It always hurts. It digs right into the rent and my ability to pay my bills.”

Working with the Secret Service, many store owners and managers are conducting seminars to teach employees how to detect bogus bills. Imperial Bank, based in Inglewood, holds regular training sessions for tellers on what to look for. And at South Coast Plaza, shopkeepers are kept informed of the latest counterfeiting finds and preventive techniques through regular memos from the mall’s security department.

Generally, retail workers are taught to examine currency for unusual markings or textures. Some merchants have special pens treated with a chemical that turns brown on contact with genuine currency because of the paper’s content.

The federal government is hoping the new $20 bill will make those pens less important. The new currency follows redesigned versions of the $100 note in 1996 and the $50 bill last year.

Redesigns Aim to Counter Counterfeits

The newly designed $100 bill has had a major dampening effect on counterfeiting abroad, where it is generally the favorite denomination of currency criminals. In 1995, before the new note was introduced, more than $231 million in bogus U.S. money was passed internationally; by last year, that amount had plunged to slightly more than $64 million.

Government officials hope that the new $20 bill will have the same effect domestically.

“It’s the note we most readily use,” said Jim Mackin, a spokesman for the Secret Service. “It’s the bill of choice--the most used note after the $1 bill.”

Among the new bill’s features are a subtle watermark next to the portrait of Jackson and a polymer thread visible only when the bill is held up to light. Both are embedded in the paper.

The paper is one of the few elements of fake-money production that desktop counterfeiters are hard pressed to duplicate.

Most buy high-quality paper similar to that used for actual currency, which can be purchased legally from the manufacturer. But alert salesclerks generally can feel the difference.

Other than the paper, the process of making money is amazingly simple.

Counterfeiters scan the copy of a real bill onto the hard drives of their computers, using software that can be purchased from most computer stores. Then they print copies with an inkjet printer--three to a page. By carefully noting the placement of the bills on the paper, they can turn the paper over, return it to the printer and produce the other side of the bill.

Southern California isn’t the only place it’s happening-- counterfeiters throughout the country are getting into the act at very young ages.

In one typical case, two freshmen at Western Kentucky University were indicted earlier this year on charges of making and passing more than $800 in phony $20 bills at local convenience stores. According to the indictment, the two had produced the notes on a personal computer in the campus dormitory.

Authorities in Bay City, Mich., recently traced counterfeit $10 bills to the home of a 15-year-old boy who had bragged to classmates about producing them on his computer.

And last year police in Weston, Mass., uncovered a counterfeiting scheme involving five teenagers after finding electronic images of $20 bills on their high school computers. Although no charges were filed, the students were disciplined and the school tightened its policies regarding student use of scanners.

Not all counterfeiters are able to avoid legal consequences, however. In Yorba Linda, real estate appraiser Metcalf awaits sentencing in November following his conviction on five counts of conspiring to pass and possess counterfeit currency and securities. Metcalf, a married father of two who had no prior police record, faces a maximum of 65 years in prison, according to James W. Spertus, the assistant U.S. attorney who prosecuted the case.

He will probably serve considerably less time than that, according to experts in the field. John Barton, Metcalf’s lawyer, would not comment on specifics of the case. He has represented others accused of counterfeiting, however, and says that the law is little deterrent.

“The penalties for counterfeiting are substantially less than for bank robbery,” Barton said. “You’d have to be a fool on drugs to go rob a bank--it’s a lot easier to manufacture money than to steal it.”

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The $20 Makeover

The new $20 bills issued last week represent the latest attempt by the federal government to make currency harder to counterfeit. Southern California is a leading producer of “funny money”-- most of it being $20s, $50s and $100s. New-look $100 bills were issued in 1996 and new $50s last year. Here are some of the features incorporated into the new 20s to discourage counterfeiters:

Portrait: Enlarged with added detail to make duplication harder; moved off-center to make room for watermark.

Watermark: Identical to portrait but visible only when held up to light; actually in the paper, not printed on it.

Color-shifted ink: Number in lower right front appears green viewed straight on, black at an angle.

Fine print: Lines behind portrait hard to duplicate.

Microprinting: Extraordinary small words (“USA 2)” within the lower left corner number, “United States of America” along lower edge ornamentation of portrait) are hard to duplicate.

Thread: Thin thread running from top to bottom to the left of the portrait visible only when held up to a light source and glows green under ultraviolet light: “USA TWENTY” and U.S. flag appear on both sides of bill; thread is embedded in paper.

Dealing With Bogus Bills

If you suspect you have received a counterfeit bill, look for the features shown here. Compare it against a bill you know to be authentic and look for differences. The texture of the paper should feel familiar. Beyond that:

* Keep the bill from the passer.

* Delay passer with an excuse, if possible.

* Call police.

* Note passer’s description and that of any companion or vehicle used.

* Write your initials and the date on the bill; surrender it only to the police or U.S. Secret Service.

Computer Aided

Advanced computers have proved to be such great tools that now nearly half of counterfeit money is generated by keyboard.

Counterfeit money generated by computer nationwide:

‘98: 40%

*

Amount of counterfeit money passed in Orange County:

by fiscal year, in thousands

‘97: $765.2

Source: U.S. Secret Service; Researched by DAVID HALDANE / Los Angeles Times