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The New $100: The War on Counterfeiting

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High-tech American currency, such as the fancy new 3-D hundred dollar bills, effectively eliminates petty counterfeiters, relegating the industry to the very most high-tech criminals. And the Treasury's anti-counterfeiting strategy will work because it seeks as much to prevent counterfeiting from occurring at all as it does to punish culprits. It was not always this way.

Before the Civil War, and before issuance of our current national currency in 1862, a full third of circulating American cash was phony. President Lincoln viewed counterfeiting as such a threat to the U.S. economy that he created the United States Secret Service in 1865 (on the very day of his assassination) - not to protect government officials, but to stop counterfeiters.

The first Director of the Secret Service quickly shut down 200 counterfeiting plants, and the illegal industry has weakened continually ever since. And now, thanks to the high-tech bills that replaced "water marks" beginning in 1996, counterfeiting is now an elites-only game. But it will soon be almost dead, with only sophisticated (and often foreign) operations capable of bona-fide counterfeiting.

In the hit 1985 counterfeiting movie To Live and Die in L.A., counterfeiting mastermind Rick Masters, played by Willem Dafoe, famously denigrated the police detective he had just killed by stating "your brains are in your ass." Today, it is small-time counterfeiters who should heed that lesson. While To Live and Die realistically portrayed Masters, with his sophisticated counterfeiting methods and perfectly designed paper, as almost untouchable by authorities, he would undoubtedly choose a different criminal venture today.

With its successive series of high-tech bills, the Treasury Department has squelched much of the illegal industry without a street fight. Here's why. Counterfeiting only works if people believe the bills will pass minimal scrutiny on the street. Thanks to "distinctive counterfeit deterrent graphics," gone are the days where the creative drug addict with a printer could pass a fake twenty at the corner store, or risk a beat-down by using funny money to buy drugs. Unlike street-level drug dealers, street-level "counterfeiters" were always treated leniently by the Federal Sentencing Guidelines. A person using or carrying less than five thousand dollars in simpleton counterfeit currency barely risks going to jail.

But, these sorts of counterfeiters were never the real problem. In the 21st century, where even the most recent immigrant or youthful drug dealer can recognize a phony bill, they are simply out of the game. This allows law enforcement to focus on the smaller group of sophisticated players that might actually be capable of producing enough fake currency to hurt the economy. At the same time, Federal sentencing guidelines seek to deter high-tech counterfeiters by basing punishment on the level of sophistication used as well as dollar amounts.

A manufacturer of 100,000 counterfeit hundreds (who necessarily must copy the new "distinctive counterfeit deterrent") faces a recommended sentence of more than a decade in prison. In the end though, Treasury's anti-counterfeiting strategy works because, as mentioned, it seeks as much to prevent counterfeiting from occurring at all than it does to punish culprits.

The strategy does not rely merely on the tried and false method "deterring" criminals with long prison terms. (This strategy, employed in the War on Drugs, both maximizes costs to the system and maximizes profits to drug cartels.) Instead, the War on Counterfeiting makes counterfeiting American currency an unprofitable (or impossible) venture to the vast majority of potential players.

Christopher Leibig is a partner at the criminal defense law firm of Zwerling, Leibig & Moseley in Arlington, Va., and a published author who just finished his second book, "Montanamo," a current affairs thriller based on the true story of a small town in Montana that sought a lucrative federal contract to house Guantanamo Bay prisoners in its languishing prison.

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