Counterfeiting—A Worldwide Problem

Until the late 18th century, in France men were boiled alive for the offense. From 1697 to 1832, it was a capital crime in England, and the act was considered to be treason. More than 300 Englishmen died at the end of a rope because of it, while untold numbers were exiled to the penal colony in Australia to work at hard labor as punishment for it.

FOR over 130 years, the U.S. government has been putting those guilty of it behind bars in federal prisons for up to 15 years. Additionally, thousands of dollars in fines have been added to the punishment. Even today it is still punishable by death in Russia and China.

In spite of the serious punishments decreed for it by many nations, the crime continues. Even the fear of death has not been enough to thwart the get-rich-quick schemes of those with the needed technical skills. Officials of governments are perplexed. “A good deterrent will be hard to find,” they say, “as it has been for centuries.”

Counterfeiting! One of the oldest crimes in history. Late in this 20th century, it has become a worldwide problem and continues to escalate. Robert H. Jackson, associate justice of the U.S. Supreme Court, said concerning it: “Counterfeiting is an offense never committed by accident, nor by ignorance, nor in the heat of passion, nor in the extreme of poverty. It is a crime expertly designed by one who possesses technical skill and lays out substantial sums for equipment.”

American currency, for example, is being illegally reproduced around the world and in greater quantity than ever before. “The U.S. currency,” said one Treasury Department spokesman, “is not only the most desirable currency in the world. It is also the most easily counterfeited.” What has perplexed the American government is that most of the bogus bills are being produced outside the United States.

Consider: In 1992, $30 million worth of counterfeit dollars were seized overseas, reported Time magazine. “Last year the total hit $120 million, and it is expected to break that record in 1994. Many times that amount circulates without being traced,” the magazine reported. These figures tell only part of the story. It is believed by experts on counterfeiting that realistically the number of spurious dollars in circulation outside the United States could be as high as ten billion dollars.

Since American currency is much sought after by many countries—even over their own currency—and less complicated to duplicate, many nations and underworld elements are cashing in on it. In South America, Colombian drug cartels have been counterfeiting American currency for years to augment their illegal income. Now some Middle Eastern countries are also becoming major players in the global counterfeiting business, reported U.S.News & World Report. The magazine added that one of those countries “is said to be employing sophisticated printing processes that mimic those used by the U.S. Treasury Department. As a result, [it] can produce virtually undetectable fake $100 bills, known as ‘super bills.’”

People in Russia, China, and other Asian countries are also getting into bogus-money production—mostly U.S. currency. It is suspected that 50 percent of the U.S. currency circulating in Moscow today is counterfeit.

After the Gulf War, in 1991, when there was a circulation of hundreds of millions of U.S. dollars, “international bankers were shocked to find that some 40 percent of the $100 bills were counterfeits,” said Reader’s Digest.

France has its own money problems, as is the case with many other European countries. Counterfeiting money is not an American problem alone, as other nations around the globe can testify.

Counterfeiting Made Easy

Up until a few years ago, it took clandestine artisans—artists, master engravers, etchers, and printers—long hours of painstaking work to duplicate currency of any nation, resulting in, at best, a poor facsimile of the model. Today, however, with high-tech multicolor copiers, two-sided laser printers, and scanners available in offices and homes, it is technically possible for almost anyone to duplicate the currency of his choice.

The era of desktop counterfeiting is here! What once demanded the skills of professional engravers and printers is now within the reach of office workers and at-home computer operators. Personal-computer-based printing systems that cost less than $5,000 can now produce counterfeit currency that even trained experts may find difficult to detect. This could mean that someone who is pinched for cash might forgo a trip to the nearest automatic teller by printing his own currency—and in the denomination that would satisfy his needs! Already these systems are potent weapons in the hands of today’s counterfeiters. “In the process, these ingenious criminals are scoring repeated victories over law enforcement authorities and could someday pose a threat to the world’s major currencies,” wrote U.S.News & World Report.

In France, for example, 18 percent of the Fr30 million ($5 million, U.S.) in counterfeit money seized in 1992 was produced on office machines. One official of the Banque de France views this as a threat not only to the economic system but to public trust as well. “When they learn that you can imitate a good banknote with technology available to much of the population, there can be a loss of confidence,” he lamented.

As part of the effort to combat the flood of counterfeit currency in America and other countries, new designs of bank notes are in the developing stage, and in some countries new notes are already in circulation. On American currency, for example, the portrait of Benjamin Franklin on the $100 bill will be increased by half in size and will be shifted three quarters of an inch to the left. “Fourteen other alterations in engraving and covert security features will also be introduced,” reported Reader’s Digest. A host of other changes, such as watermarks and inks that change color when viewed from different angles, are also being considered.

For some time France has been including new deterrents in its design of bank notes that, it is hoped, will to some extent thwart counterfeiters. A spokesman for the Banque de France admits, however, that “there is still no technically foolproof method for foiling potential counterfeiters, but,” he added, “we are now able to combine so many obstacles into the banknote itself that it is a [difficult] job, and very expensive.” He describes these obstacles as “the first line of defence against counterfeiting.”

Germany and Great Britain have been making safety changes in their currency for some time now by adding security threads that make duplicating their currency more difficult. Canada’s $20 bill has a small shiny square called an optical security device, which cannot be replicated on copiers. Australia started printing plastic bank notes in 1988 to incorporate security features not possible with paper. Finland and Austria use diffraction foils on paper currency. These shimmer and change color the way a hologram does. Government authorities fear, however, that counterfeiters will not be far behind in making the needed adjustments to continue their criminal activity—that no matter what corrective steps are taken, their innovative efforts may ultimately fall short as they have in the past. “It’s like the old saying,” said one Treasury Department official, “you build an 8-foot wall, and the bad guys build a 10-foot ladder.”

Printing bogus money is only one facet of the counterfeiter’s mind in action, as the next articles will show.

Credit Cards and Payroll Checks—Real or Fake?

HOW convenient they are! So small, so easy to carry. They fit so nicely into a man’s wallet or a woman’s purse. Without a cent in your pocket, you are able to purchase so many things. The use of a credit card is encouraged and advertised by airlines, steamship companies, hotels, and resorts the world over. People are advised: “Don’t leave home without it.” Some businesses would rather accept them than cash. Unlike cash, if they are stolen or lost, they can be replaced. It is your own personalized money, with your name and exclusive account number embossed across the front.

You know them as plastic money—credit and charge cards. In 1985 some banks introduced their own sophisticated, laser-created holograms, which appear to be three-dimensional, and other security features, ranging from special codes in the magnetic strip across the back to an invisible mark that shows up under ultraviolet light. All this as a deterrent to counterfeiting! It is estimated that over 600 million credit cards are in circulation around the globe.

It is thought that worldwide losses from various forms of credit-card fraud in the early 1990’s were at least one billion dollars. Of those various forms, counterfeiting is reported to be the fastest growing—at least 10 percent of the total losses.

In 1993, for example, counterfeiting cost member banks of one of the largest credit-card companies $133.8 million, a 75-percent increase over the previous year. Another leading credit-card company, international in size, also reported staggering losses due to counterfeiting. “That makes card counterfeiting a big problem not only for the banks, card companies and merchants who honour them but also for consumers around the world,” wrote one New Zealand newspaper. While legitimate cardholders are not responsible for the losses, the costs are inevitably passed on to the consumers.

What about the built-in security features that stood as a roadblock to counterfeiters—such as laser-created holograms and special coded magnetic strips? Within a year after these features were introduced, the first crude counterfeits began to appear. Shortly thereafter, all security features were copied or compromised. “You’ve always got to improve,” said one Hong Kong bank official. “The crooks are always trying to get ahead of you.”

Interestingly, half of all losses from card counterfeiting in the early 1990’s took place in Asia, according to experts, and nearly half of these were traced to Hong Kong. “Hong Kong is to counterfeit credit cards what Paris is to haute couture,” declared one expert. Others have accused Hong Kong of being the world capital of credit counterfeiting—“a crossroads of the ‘plastic triangle’ of credit card fraud that also includes Thailand, Malaysia and now southern China.” “Hong Kong police say local syndicates linked to Chinese organized crime triads engrave, emboss and encode fake cards using numbers provided by corrupt retailers. They then simply send the counterfeit cards overseas,” reported the New Zealand newspaper.

“A credit-card embossing machine, purchased [in Canada] by Asian gang members, is now being used to make fake credit cards. The machine prints 250 credit cards an hour, and police believe it has been used in a multi-million-dollar fraud,” reported Canada’s Globe & Mail newspaper. In the last few years, Hong Kong Chinese have been arrested using forged credit cards in at least 22 countries from Austria to Australia, including Guam, Malaysia, and Switzerland. Japanese credit cards are especially sought after, since they extend the highest spending limits to their users.

The surge in credit-card scams and counterfeiting means that “issuers are forced to spread around the cost of a growing amount of fraud,” said one Canadian banking official. And so it goes. A credit card may indeed be a convenience and a lifesaver when the user is without adequate cash. Remember, however, that all the counterfeiters need is your account number and card expiration date and they are in business. “It’s plastic money,” warned a regional security chief for American Express International, “but people have yet to treat it with the same prudence they do cash.”

“The system is riddled with weaknesses,” said one police superintendent. “And the villains have found every one. And boy, they have exploited them ruthlessly,” he said of counterfeiters.

Check Counterfeiting

With the coming of desktop printing that could virtually duplicate any paper currency flawlessly, what soon followed was inevitable. Forgers could now duplicate a wide range of documents: passports, birth certificates, immigration cards, stock certificates, purchase orders, drug prescriptions, and a host of others. But the greatest dividend would be reaped from the duplication of payroll checks.

The technique is remarkably simple. Once a payroll check from a large company with millions of dollars on deposit in local or statewide banks finds its way into the hands of a counterfeiter, he is in business. With his desktop printer, optical scanner, and other electronic equipment at his fingertips, he can alter the check to suit his own purpose—changing the date, deleting the payee’s name to that of his own, adding zeros to the dollar amount. He then prints the altered check on his own laser printer, using paper that he has purchased at the nearest stationery store in the same color as the check. Running off dozens or more forgeries at a time, he can cash them at any one of the bank’s branches in any city.

The proliferation of check counterfeiting by this simple and inexpensive means is so great, bank and law-enforcement officials say, that the cost to the economy could reach $1 billion. In a particularly brazen case, reported The New York Times, a Los Angeles-based gang roamed the country cashing thousands of fake payroll checks at banks, totaling more than $2 million. Industry analysts estimate that the total annual cost of check fraud is now $10 billion in the United States alone. “The No. 1 crime problem for financial institutions,” said an FBI official, “is counterfeit negotiable instruments, such as check fraud and money order fraud.”

Buyers Beware! Counterfeiting Can Cost Lives

THE untrained, unsuspecting victims can be fooled. The expensive-looking watch offered you by the street vendor at a fraction of the cost—is it real or fake? Will you buy it? The luxurious fur coat offered you from a car window on a side street—the seller promises it’s mink. Will its appeal and bargain price get in the way of your better judgment? The diamond ring on the finger of the recently divorced wife—now broke and homeless, waiting for a train in a New York subway station—you can have it for a mere pittance. Would you think the bargain was too good to pass up? Because these questions are asked in this article dealing with counterfeiting and because of the circumstances presented, you are likely to answer “NEVER!”

Ah, but let’s change the places and the circumstances and see what your answers would be. What about the expensive, popular designer handbag for sale at a legitimate outlet store at an attractive markdown price? The well-known brand of whiskey sold in the corner liquor store? Surely no problem here. Consider, also, the film with a recognizable label that is on sale in a drugstore or camera shop. This time the expensive watch costing thousands of dollars is offered to you, not by a street vendor, but by a reputable store. The price has been drastically reduced. If you were in the market for such an expensive timepiece, would you buy it? Then there are well-known brands of footwear at substantial savings in one particular shop you are directed to by friends. Are you sure they are not just cheap imitations?

In the world of art, at fashionable picture galleries, there are auction sales galore for collectors of expensive art. “Watch your back,” warned one art expert. “Connoisseurs with years of experience get fooled. So do dealers. So do museum curators.” Are you so learned that you would match wits with possible counterfeiters? Beware! All the pictured items could be counterfeit. Often they are. Remember, if an object is rare and has value, someone somewhere is going to try to counterfeit it.

Counterfeiting merchandise is a $200-billion enterprise worldwide and is “growing faster than many of the industries it’s preying on,” wrote Forbes magazine. Fake automobile parts cost American automakers and suppliers $12 billion a year in lost revenues worldwide. “The U.S. auto industry says it would employ another 210,000 people if it could manage to put phony parts suppliers out of business,” the magazine said. It is reported that about half the counterfeiting factories are outside the United States—virtually everywhere.

Counterfeits That Can Kill

Some kinds of counterfeit products are anything but harmless. Imported nuts, bolts, and screws make up 87 percent of the $6 billion of the U.S. market. Evidence to date, however, indicates that 62 percent of all these fasteners have fabricated brand names or illegitimate grade stamps. A 1990 report by the General Accounting Office (GAO) found at least 72 American “nuclear power plants had installed nonconforming fasteners, some in systems to shut down the reactor in case of nuclear accident. The problem is getting worse, says the GAO. . . . The magnitude of the problem, cost to taxpayers or potential dangers resulting from using such [inferior] products are unknown,” reported Forbes.

Steel bolts, whose strengths are inadequate for the purposes used, have been counterfeited and smuggled into the United States by unscrupulous contractors. “They could threaten the safety of office buildings, power plants, bridges and military equipment,” according to American Way.

Imitation brake linings were blamed for a bus crash in Canada several years ago that took the lives of 15 people. It is reported that bogus parts have been found in such unlikely places as military helicopters and a U.S. space shuttle. “The average consumer’s attitude is one thing when you’re talking about a fake Cartier or Rolex watch,” said a prominent counterfeiting investigator, “but when your health and safety is endangered, that changes the picture.”

The list of potentially dangerous counterfeits includes heart pacemakers sold to 266 U.S. hospitals; imitation birth-control pills that reached the American market in 1984; and fungicides, composed principally of chalk, that ruined Kenya’s coffee crop in 1979. There are widespread bogus pharmaceuticals that can endanger the lives of consumers. The deaths resulting from counterfeit medicines worldwide may be staggering.

There is a mounting concern over counterfeited small home electrical appliances. “Some of these products carry phony trade names or authorizations such as the Underwriters Laboratory listing,” American Way reported. “But they aren’t made to the same safety standards, so they will explode, cause house fires and make the whole installation unsafe,” said one safety engineer.

In the United States and in Europe, aviation groups are equally alarmed. In Germany, for example, airlines have found bogus engine and brake parts in their inventory. Investigations are “being conducted in Europe, Canada and the United Kingdom, where unapproved parts (tail rotor shaft nuts) have been linked to a recent fatal helicopter crash,” transportation officials said. “Agents have seized scores of bogus jet engine components, brake assemblies, poor quality bolts and fasteners, defective fuel and flight systems parts, unapproved cockpit instruments and flight computer components that are critical to flight safety,” reported the Flight Safety Digest.

In 1989 a chartered airplane en route to Germany from Norway suddenly went into a steep dive from its cruising altitude of 22,000 feet [6,600 m]. The tail section was torn away, sending the plane into a dive so violent that both wings snapped off. All 55 souls aboard were killed. After a three-year investigation, Norwegian aviation experts discovered that the crash was caused by faulty bolts, called locking pins, that held the tail section to the fuselage. Stress analysis showed the bolts were made of metal far too weak to withstand the buffeting forces of flight. The faulty locking pins were counterfeit—a word only too familiar to aviation safety experts everywhere, for counterfeiting is a growing problem that endangers the lives of airplane crews and passengers.

When national television interviewed the inspector general for the Department of Transportation in the United States, she said: “All the airlines have received bogus parts. They all have them. They all have a problem.” The industry admits, she added, “that they have probably an estimated two or three billion dollars worth of unusable inventory.”

In the same interview, an aviation safety consultant, who has advised the FBI on various undercover operations involving bogus parts, warned that counterfeit parts represent a true danger. “I think we are definitely looking at a major air carrier disaster sometime in the near future as a result,” he said.

The day of reckoning is soon at hand for those whose greed allows them to put their own selfish desire ahead of the lives of others. God’s inspired Word states definitely that greedy persons will not inherit God’s Kingdom.—1 Corinthians 6:9-10.