Posted on 11/03/2006 10:31:30 AM PST by KeyLargo
George Knapp, Investigative Reporter Supernotes: A New Generation of Counterfeit Money
Nov 3, 2006 09:31 AM
Las Vegas casinos have always been a target for counterfeiters who think they can slip a few homemade bills into the mix and no one will notice. Most of the bills are detected. But not anymore.
A new generation of so-called "supernotes" has been slipping past the most advanced detection systems. That's because the alleged counterfeiter is a foreign government.
It can be argued that any government that counterfeits the currency of another nation has committed an act of war. In the case of the supernotes, the prime suspect is North Korea, which is also believed to be engaged in other criminal acts, including large-scale methamphetamine production, not to mention its brazen nuclear weapons program.
The fact that not even Las Vegas casinos can spot the phony money is proof enough that these counterfeits are as good as the real deal.
Satellite photos can't tell us what goes on inside a non-descript building in the North Korean capital of Pyongyang, but it's believed that the so-called "Office 39" is the hub of a counterfeiting operation that produces an estimated $100 million a year in bogus American currency. In particular, $100 bills that are so perfect they've been dubbed "supernotes."
The bills have been circulating internationally for more than a decade and have helped to prop up North Korea's rogue government, including its nuclear weapons program. The U.S. Secret Service has nabbed close to $50 million worth of supernotes, which are distributed through compliant banks in Macau by North Korean diplomats, Asian crime lords, even Islamic terrorists. It was probably inevitable the supernotes would end up on the streets of Las Vegas.
Paul Masto, acting director of the Las Vegas office of the Secret Service, said, "There's so much money in play, it stands to reason the counterfeiters come to town and figure they're going to blend in."
The United States Secret Service's History of Counterfeiting
Masto can't talk about supernotes. He can't even use the term. The situation with North Korea is so volatile that officials in Washington have told the Secret Service to refrain from further comment. Masto can only speak about it in generalities.
"We believe it is state-sponsored. We have an ongoing investigation for several years now. It poses extra problems for us because the grade and quality is so good and it goes through the initial steps of detection," he continued.
Masto can't say how many of the supernotes have been found here, but it's more than anywhere else in the U.S. Las Vegas always ranks at or near the top of cities where counterfeiters pass their phony bills. The Secret Service here receives up to $70,000 per week in funny money.
Each of the phony bills gets catalogued and packed in an evidence vault. All of the bills that arrive here were passed somewhere -- through a casino or business -- even though a lot of the counterfeits are very low quality. The Secret Service holds regular seminars to teach locals how to spot funny money, which makes Las Vegas one of the toughest places anywhere to pass a counterfeit.
But supernotes are different. Casinos the I-Team contacted don't want to talk about it on the record, but industry sources say the bill validators used in most gaming machines do not catch the supernotes. Masto acknowledges that most aren't spotted until they get to the Federal Reserve, which has advanced equipment.
For anyone but the government, it's pretty much impossible to tell the difference, even under magnification. The security strips and watermarks are the same and the paper is the same. The counterfeiter even used the same high-tech press that our government uses.
Megan Ross, U.S. Secret Service employee, said, "If I was at a bank and put it under a UV light and looked rather quickly at it, I would assume that's genuine."
In some ways, the supernotes are even better than the real thing. For instance, on the back of the bill the hands on the clock of Independence Hall are sharper than on a genuine one hundred dollar bill.
More than 170 people have been arrested worldwide for distributing the supernotes, including one suspect busted in Las Vegas last year. Defectors from North Korea have described the counterfeiting operation in general terms, but no one knows for sure how many of these sublime fakes are out there in circulation. If you turn one in and it turns out to be phony, you eat it unless it can be traced to the source.
Paul Masto said, "The high quality notes, it's more difficult to go back and find out who passed it."
Next year, the Bureau of Engraving and Printing will issue a brand new version of the $100 bill. It will mean the counterfeiters will have to spend hundreds of millions of dollars for new high-tech presses.
One other note, about 10-percent of the bills sent to the Secret Service in Las Vegas as possible counterfeits turn out to be genuine. They are returned to the person who sent them in.
The Secret Service field offices hold many seminars for locals on how to spot phony money.
Visit the Secret Service's "How to Detect Counterfeit Money" Web page to learn about some telltale signs.
Send your comments to Investigative Reporter George Knapp at gknapp@klastv.com
You know the area I'm talking about right? On what I refer to as class E counters I can see the pixalation from arms length. The class A's I have to hold the bill 5 inches from my eye. I have a one dollar bill I save because it is "probably" real...just as a keepsake.
Just slapping whopping big values on gold and silver would make all our electronic equipment pretty darn expensive, seeing as how we use things like gold and silver to make these products.
Perhaps we should just go back to the ancient cocao bean monetary system.
Nah...It'll just be chips for everyone. All electronic. First with the criminals then with the welfare, finally with everyone else. It's the only way since people refuse to look closely at currency.
The whole point of the $35 an ounce gold standard was that the amount of gold that a dollar represented never floated, it was always fixed over time, and the paper note was always redeemable for real gold.
The reason we're off the gold standard was during the Depression FDR made it illegal for US Citizens to own gold, other than jewelery. He stopped the minting of gold coins, and ended the private redemption of paper notes for gold or silver.
We still maintained the $35 an ounce gold exchange with foreign governments, but in the early 70's there was a run on our gold reserves by Great Britian and others who wanted to exchange their dollars for gold. There simply wasn't enough gold in Fort Knox to cover all the foreign held notes, so Nixon ended the foreign exchange of gold, putting us on a fiat currency.
If the amount of gold that a dollar represented were allowed to float, and were not convertable in the manner you assume, the dollar remains a fiat currency and the "gold standard" as you describe would be a myth.
Sorry you misunderstood my suggestion. Actually a "floating gold standard" exists to some extent because the abilty to buy , hold and sell gold is again allowed in the USA. And there are multiple electronic gold exchanges for electronic digital gold, like e-Gold.
My suggestion was simply to point out that there *IS* enough gold to go back on the gold standard, it's just a matter of picking the fix. I would not advocate allowing it to float, once it was set. That as you point out doesn't accomplish the goal.
What you would propose is that once the amount of gold behind each dollar is fixed, it must forever remain so. So in the future as our economy expands, we would have to either acquire more hard gold from other sources, or not grow the money supply, which is a sure-fire recipe for disaster.
Since the rest of the world would not be on the same gold standard, if the price of gold went up, foreign governments and individuals could present paper dollars to our treasury for redemption in gold. We would either have to take even more dollars out of circulation, or else find more gold from somewhere else. (If you couldn't redeem paper notes for gold upon demand, then the whole concept of a "gold standard" becomes a sham.)
There is not a single major currency in the world that isn't a fiat currency. Returning to a gold standard for the United States is a sure fire recipe to destroy not only our own economy, but send the entire world into another depression that would make 1929 look like a good year.
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