Currency, counterfeiters continuing evolution

Tuesday, Oct. 5, 2004 | 10:54 a.m.

With last week's release of the new $50 bill, local law enforcement officials say they are bracing for a spike in counterfeit cash as criminals attempt to deceive cash handlers still unfamiliar with the new bills.

New $50 bills -- like the new $20 bills issued a year ago -- bear a host of features designed to make it nearly impossible to counterfeit. Those include ink that changes color when the bills are turned, watermarks bearing names and images when held up to a light and security threads that spell out words and numerals in microscopic ink that glows under ultraviolet light.

These whizbang features of the new bills aren't stopping counterfeiters from plying their trade as part of organized groups or makeshift enterprises, said Paul Masto, assistant special agent in charge of the Las Vegas field office of the U.S. Secret Service.

"These crooks evolve," he said. "They're like a virus."

Masto, who spoke as part of a panel discussion at the Global Gaming Expo in Las Vegas on Monday, said criminals are still finding ways to pass off fake bills in casinos.

About 75 percent to 80 percent of the roughly $40,000 worth of fake bills confiscated by the Las Vegas field office each week come from casinos or other gaming establishments, said Masto, who manages a counterfeit and identity theft task force across the southwest.

Some crafty cheats are bleaching $5 bills in order to obtain the right kind of paper with embedded security features, he said. Those bills may "feel" right but look wrong, he said.

Computer generated bills can mimic the look of a bill with striking precision but feel wrong because they are often printed on stiff paper, he said.

Those computer generated bills have been known to pass by casino cage employees until they are finally detected by count room workers who are skilled enough money handlers to be able to feel out the fake money without even looking at it, he added.

Bill acceptor manufacturers, casinos and other cash-rich businesses have been working closely with the U.S. Bureau of Engraving and Printing and the Federal Reserve for about a decade to try to head off counterfeit enterprises.

JCM American Corp. of Las Vegas, which makes validators for slot machines, received prototype $50 bills about six months in advance of their release in order to develop software to accept the bills and reject fakes.

Las Vegas casinos and other markets with JCM products were able to accept the new bills well in advance of their release, said David Kubajak, JCM American's director of customer service.

The process works so well now that it is probably easier to pass off fake bills to casino employees rather than stick them into a slot machine for a quick reward, Kubajak said.

It wasn't always that hard.

In 1995, the Secret Service nabbed a counterfeit ring linked with Russian mobsters that had managed to pass up to $650,000 in fake cash through casinos in Las Vegas and Atlantic City over about four months. A member had discovered that slot machine bill validators would accept fake $100 bills, Masto said.

Counterfeiters are devising new fakes as fast as the government can come up with new security features, said Eugenie Foster, cash project leader for the Federal Reserve Board.

"It's a game of leapfrog," said Foster, who also oversaw the first series of anti-counterfeit bills in 1996. "We can't stop what we're doing."

What used to be known as a specialized craft has become a do-it-yourself industry, she said.

Of the $38 million worth of counterfeit money distributed nationwide in 1998, only 10 percent was created digitally, Foster said. In 2001, about 40 percent of the $48 million worth of counterfeit cash was created with computer technology, she said.

Counterfeiters come in all stripes, from enterprising students to hardened criminals and drug addicts, Masto said.

Today's cheats are diversifying into other areas of crime such as drug-making, weapons-running and identity theft, he said. Agents are discovering methamphetamine labs with counterfeit money or identity theft kits nearby, he said.

While counterfeiting remains a constant problem, it's still only a "spit in the ocean" when compared to the billions of dollars of cash that are passed through Nevada casinos each year, Masto said.

In 2003, fewer than one counterfeit note was found for every $25,000 in circulation, Foster said.

About a year from now, the Federal Reserve will distribute a new $10 bill based on the same technology as the $20 and $50 bills. A new $100 bill will follow sometime thereafter. The government won't redesign $1 and $2 bills because there's a relatively small chance that cheats will fake smaller denomination bills, though the $5 bill may be redesigned at some point, Foster said.