Counterfeiting US Currency

Chinese Global Exports of

Mass Production

Counterfeit Numismatic Collectibles

Like “blood diamonds” these goods are sold to westerners – typically to Americans – with disposable income. Like counterfeit consumer goods, these fakes deprive the buyer of the benefit of the bargain. Moreover, by US law, (nearly) all coins and bank notes produced by or for the U.S. government are at once the lawful obligations of the federal government as well as assets of the U.S. Treasury. In other words, a fake 1878 Trade Dollar silver coin is as counterfeit as a fake one dollar bill from 2008. Although complaints from the collector community have skyrocketed as a result of the immensely popular eBay auction website, the US government has been powerless to stop the flow.

Moreover, it is alleged that the federal government chooses to do nothing on two counts. First, the volume, however large, does not actually threaten circulating currency as defined by “M1” in economics. Second, and more to the point, the Chinese government holds perhaps more than $1 trillion in US government debt. Chinese citizens make money selling these goods and their activities do not contravene Chinese law.

However, again, under US Code Title 18 Chapter 25 Sections 471-491 the creation, buying, or selling not only of any current money of the United States but any current money of any foreign government is illegal.

eBay itself does, indeed, close down such auctions as are shown to traffic in counterfeits. However, their resources are limited in the first place. Moreover, anyone can come back in again under a new email address, that being the primary form of electronic identity. Furthermore, it has long been established that any seller can arrange an excellent rating in customer satisfaction merely through patronage via dummy accounts and other shills. Furthermore, payment of fees to eBay via its own PayPal service operations assures eBay of income from these sales. Consequently, these counterfeits continue to be marketed.

Remember that (almost) every US government coin from 1792 and (almost) every US government paper money issue since 1863 is still by law an obligation of the government and an asset of the Treasury.

Think, also, of the Philip K. Dick novel, The Man in the High Castle. America lost World War II. The Germans occupy the East Coast; the Japanese occupy the West Coast. The Rockies are largely unoccupied. Life under the Japanese is not half so bad and the successful Japanese salarymen have a hunger for US History. They collect six shooters, wanted posters, and other memorabilia of the Old West... most of it being made now in the Rockies for their consumption. If you were an American, would you care if a Japanese businessman pays too much for a fake wanted poster?

On July 9, 2004, at about 2:30 pm, I spent an hour on the phone interviewing Special Agent Jeff Kegley. Kegley is with the Treasury Obligations Section (“the lab people”). He spoke with me on behalf of Public Affairs.
According to Special Agent Kegley, the Secret Service has a special case type – an assigned category, that is – specifically for altered coins. Adding or removing a Mint mark to increase the numismatic value of a money object is a violation of Federal Law.
On the matter of counterfeit coins, Kegley cited three recent operations against factories in Columbia and Ecuador that were turning out fake Sacagewea Dollars.
The Secret Service actively pursues criminals who make counterfeit quarters that target casino slot machines. They also work with casinos on the problem of counterfeit tokens for slot machines. I point out that this means that if you collect casino tokens, collecting fake casino tokens is against Federal law.
As for the claim that they do nothing about eBay: Jeff Kegley said (quote): “I take exception. We try to investigate everything that is brought to our attention. We kill the auction.” He noted that often sale of counterfeit US currency is a matter of ignorance of the law without criminal intent. The open sale of counterfeits as counterfeits is illegal. “We get this all the time,” he said. When the Secret Service contacts the seller, the enforcement agency is usually content to seize the contraband.
Special Agent Kegley told me that the Secret Service actively searches for counterfeits on electronic auctions. They work with customs agents who seize this contraband when it is imported.

If you have knowledge of anyone buying wholesale lots of counterfeit U.S. currency, contact your local Secret Service office. They are on the inside cover of your phone books right next to the FBI. The Secret Service has offices in over 100 cities in US and 17 cities worldwide, including Hong Kong. According to Kegley, about five years ago, the Chinese beheaded someone for counterfeiting US currency.
(Excerpt from “Counterfeits, Fakes, and Phonies: Threat or Menace?” by Michael E. Marotta. ANA Numismatic Theater Presentation, Saturday, August 21, 2004, 2:00 pm)

Comforting as that sounds, since then, other facts have been recorded.

Inside a Chinese Coin Counterfeiting Ring
Photos of Counterfeit Coin Dies, Minting Machinery, and Fake Coins
By Susan Headley, About.com Guide
The sheer size, scope, and professionalism of this counterfeiting ring will astonish you. Although the working conditions often appear dirty and the minting equipment is old, this is obviously a well-funded enterprise that is run like a legal business in China. There is no law in China against making these "replicas" as long as they are sold as such.
Full story (and photos) here

Susan's Coins Blog
U.S. Mint Warns About Chinese-Made Counterfeit Coins
Wednesday November 11, 2009
The U.S. Mint has issued a Consumer Advisory warning citizens about the counterfeit U.S. coins that have been flooding into the United States from China. Although counterfeit coins are as old a phenomena as coins themselves, dating back to antiquity, the Chinese-made counterfeits represent an unusually dangerous threat because of the high technology being employed to produce many of them.
Full story here

Newsgroups: rec.collecting.coins
From: Peter <w2...@hotmail.com>
Date: Fri, 25 Sep 2009 07:03:28 -0700 (PDT)
Local: Fri, Sep 25 2009 9:03 am
Subject: Philadelphia coin show
I spent some time at the show in Philadelphia, yesterday. It
interested me to attend a lecture by Gregory Dubay. He has studied
the Chinese counterfeits and counterfeiters and had much of interest.
It seems that the counterfeiters are fairly full service operations.
What they do is legal in China. For their highest grade efforts (he
described 4 quality levels), they use actual planchets made for the US
mint, they have surplus presses from the US mint, they have discarded
US dies and die steel, and they are able (for ca. $3000) to create
computer enhanced, laser cut dies.

His lecture included samples of some of the coins (at various
grades). After listening to the lecture, the questions and answers
and examining the sample coins, I asked a question that seems useful
here. Why would anyone pay more for an old coin than the Chinese
charge for one of their copies?

Although I still consider it a serious question, may I mention Dr.
Dubay's answer? He said (broadly) that he is not any longer
interested in purchasing expensive coins.
Newsgroups: rec.collecting.coins
From: Peter <w2...@hotmail.com>
Date: Fri, 25 Sep 2009 19:29:17 -0700 (PDT)
Local: Fri, Sep 25 2009 9:29 pm
Subject: Re: Philadelphia coin show
On Sep 25, 5:57 pm, "mazorj" <maz...@verizon.net> wrote:
> On a more serious note, was there anything said about the U.S. government's
> attempts to stop these things at the border or in the domestic distribution
> channels?
There was a bit of discussion about the enabling role of eBay. It led
to a discussion where Dr. Dubay discussed how he imported his
samples. He said he simply sent them to himself by a shipping company
(I forget whether he mentioned Fedex or whatever). He noted that
several had been opened for inspection by customs with no comment by
the customs.
One interesting comment was that Canadian eBay takes a sterner line
with the Chinese and they don't seem to have the same volume of
counterfeits to deal with.

Added by Michael E. Marotta
on 11/25, 6:42am

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