Counterfeit Currency—Mexico and California

A large transnational counterfeit currency operation was disrupted on Friday morning as Special Agents with the US Secret Service arrested ten people in California.^[1] According to the Secret Service, the operation, which manufactured high-quality US$100 bills in Mexico, was responsible for distributing approximately US$7.5 million in counterfeit bills within the past year alone.^[2]

The ten people were arrested in Santa Ana, California, and approximately US$75,000 worth of “high-grade” counterfeit notes were seized during the execution of search warrants at three houses; earlier in the investigation, more than US$475,000 in counterfeit bills had been seized, all of which were manufactured at the same facility in Mexico.^[3]

The investigation into this transnational crime has so far led to six indictments.

According to the federal indictment, “the counterfeit [US]$100 bills were manufactured by persons located in Mexico. [Two of the defendants] obtained the counterfeit bills from associates in Mexico and made various arrangements to bring the bills into the United States.”^[4] Once the bills were in the US, they were distributed to various sub-distributors, and some were used by the defendants to make fraudulent purchases of goods and services in Orange County, California.^[5]

Transnational counterfeiting of money is covered by 18 U.S.C. § 470(a), which states that a person who, outside the US, engages in the act of making, dealing, or possessing any counterfeit obligation or security of the United States, can be punished as if the offense was committed within the United States.

The actual counterfeiting of money is covered by 18 U.S.C. § 471, which makes it a crime for a person who has an intent to defraud, to falsely make, forge, counterfeit, or alter any obligation or other security of the United States. The punishment for a violation of section 471, is a fine, imprisonment for up to 20 years, or both.

Attempting to pass counterfeit money is covered by 18 U.S.C. § 472, which makes it a crime for a person, having an intent to defraud, to pass, utter, publish, sell, keep, conceal, bring into the United States, or attempt to do any of the previous, any falsely made, forged, counterfeited, or altered obligation or other security of the United States. The punishment for a violation of this section is a fine, imprisonment for up to 20 years, or both. Note: the provisions of section 470 do not textually apply to section 472. However, since section 472 covers bringing counterfeit currency into the United States, a defendant does not need to be charged under section 470 for the transnational transportation of counterfeit currency.^[6]

Dealing in counterfeit currency is covered by 18 U.S.C. § 473, which makes it a crime for a person to buy, sell, exchange, transfer, receive, or deliver any false forged, counterfeited, or altered obligation or security of the US. The defendant must also have the intent that the counterfeits will be passed, published, or used as true and genuine. The punishment for a violation of section 473 is a fine, imprisonment for up to 20 years or both.

Finally, the tools of counterfeiting are covered by 18 U.S.C. § 474(a). It is a crime under this section to possess or deal in any plate, stone, or other thing from which an obligation or security of the United States can be created. The defendant must intend that counterfeit currency is to be made from the tool. Doing so is a class B felony, which means that maximum term of imprisonment is 25 years.^[7]

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[1] US Attorney’s Office, Secret Service Disrupts International Counterfeiting Ring, Dec. 9, 2005.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] See e.g., United States v. Leftenant, 341 F.3d 338, 341 (4th Cir. 2003) (US erroneously brought charges against defendant under 18 U.S.C. § 470, and then amended complaint to bring charges under section 472). (PDF)
[7] 18 U.S.C. 3581(b)(2).