Counterfeiting for
fun and profit

Ink jet currencyAmid talk of changes wrought by digital banking, the media consistently overlook a centuries-old, venerated industry whose demise could put thousands out of work. Will no one speak up for the noble counterfeiter?

Counterfeiting was inevitable from the moment currency was invented. As early as the fourth century BCE, nogoodniks in Mesopotamia were counterfeiting clay tokens. In 17th century England, the Royal Mint employed no less than Isaac Newton—yes, that Isaac Newtonto bust counterfeiters. It appears that chasing down “the most notorious counterfeiter of his day” proved to Newton but a trifling challenge compared with chasing down the laws of motion.

It’s no exaggeration to call counterfeiting an industry. There’s the cottage industry side, where homebodies use ink-jet and laser printers to turn one-dollar bills into ten-dollar bills. Surprisingly, these low-quality forgeries have legs. According to Bloomberg as quoted by The Atlantic, the U.S. Secret Service reported that in 2013 “… nearly 60 percent of the $88.7 million in counterfeit currency recovered in the U.S. was created using inkjet or laser printers.”

There’s the big industry side, too. Take, for example, a not-unusual operation in Peru employing skilled teams of up to twelve at a time to crank out tens of millions in fake U.S. $100 bills. They take pride in their work, using quality presses, expensive paper, and a variety of inks. They even hand-weave polyester threads into the bills. Their product fools most counterfeit detecting equipment, with the fortunate exception of bank-owned sorters.

The occasional bungler provides a degree of comic relief. One fine morning in 1991, employees of Graphic Reproductions, a large Salt Lake City printing company not far from my home, arrived at work to find windows papered over and presses dripping green and black ink. An astute worker called the Secret Service. Owners William A. Schraegle and Ronald P. Miller mounted an interesting defense at trial. Surely, they argued, the state didn’t think they intended to spend the five million in bogus bills they’d printed. They did it merely, they claimed, for the “professional challenge” and had “no plans to actually use the money.” Hard to imagine, but the Secret Service didn’t buy it. Still, U.S. District Judge Bruce Jenkins was lenient. He sentenced Schraegle and Miller to, respectively, 36- and 33-month prison terms and, incredibly, fined them just $5,000 apiece—about a tenth of a percent of what they’d printed.

Given the investment and risk of counterfeiting paper currency, you’d think the bad guys would have a heyday counterfeiting digital currency. Just imagine the reduced overhead—no warehouse, no presses, no paper, no ink, no having to weave in polyester threads, and no smugglers. All you’d need is a laptop and a hacker.

Or so it would seem, until you take a closer look.

One of digital currency’s strengths is that it leaves a trail of credits and debits on myriad computers throughout the world. You might get away with hacking one computer, but hacking all of them is pretty much impossible. Right now, anyhow. Even cryptocurrency the likes of Bitcoin appears impervious.

But take heart, would-be digital forgers. News of Bitcoin’s meteoric rise has spawned a new opportunity, namely, the marriage of cryptocurrency with Ponzi schemes. There is, however, a downside. Folks who try it end up in jail.

It’s getting to the point where earning money the old fashioned way is looking more and more attractive.

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