From: Black Unicorn <unicorn@access.digex.net>
Date: Mon, 4 Sep 95 20:44:48 PDT
To: cypherpunks@toad.com
Subject: Forgery, bills, and the Four Horsemen  (Articles and Comment)
Message-ID: <Pine.SUN.3.91.950904234136.7378C-100000@access2.digex.net>
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I have received a pile of requests for citations
Here are segments of a few.  As I typed them all by hand, errors 
are likely to be mine.

My comments follow the articles, so you can stop reading just before them :)


###The San Francisco Examiner
March 7, 1995  - Tuesday

Global Counterfeiting traced to Tehran

[...]

For the past five years, so called superbills, crisp $100 Federal 
Reserve Notes, so perfectly forged that they might be fresh off 
U.S. government printing presses, have been flooding banks and 
money markets around the world.  The total amount currently in 
circulation is believe to be $10 Billion or more.

Currency officials alarmed.

Alarmed Treasury and Federal Reserve Board officials fear the 
increasing number of such superbills has shaken international 
confidence in America's currency.

[...]

From the moment the new superbills surfaced in 1989, it was clear 
to the secret service... that these were no ordinary forgeries.  
Under microscopic examination, they showed only infinitesimal 
differences from legitimate notes.  Most significant, the 
counterfeits had been printed on presses virtually identical to 
those used at the Bureau of Engraving and Printing.

Secret service investigators concentrated on those nations that 
had acquired the same kind of intagilo presses.  Only two 
companies sold them on the international market.  One was a U.S. 
company, none of whose overseas customers was considered suspect.  
The second was a Swiss company, De La Rue Giori.

Evidence pointed to Iran

By the end of 1991, investigators had eliminated all but one of 
Giori's clients: the Islamic Republic of Iran.

[...]

Intelligence agencies uncovered evidence that Iran was not only 
mass-producing the notes, but had built a world-wide distribution 
network.  Key transshipment points had been established in 
Lebanon, Syria, Sudan, and North Korea.

Ronald de Valderano of Britain's Research Foundation for the Study 
of Terrorism says practically every Iranian-backed terrorist cell 
in the world is at least partially supported by the forgeries.  
The notes most often are used to buy arms or pay operating 
expenses or are sold on the currency black markets for legal cash.  
Indeed, when FBI agents searched the residence of suspects 
arrested for the bombing of New York's World Trade center, they 
found $20,000 of the forgeries.

[...]

Critics have for years urged that U.S. currency be better 
protected against such onslaughts.  Last July, the treasury 
finally announced that changed were planned for U.S. currency, 
including covert security features.

[...]



###The Independent
June 19, 1995 - Monday

'Perfect dollar forgeries flood Middle East; The Israeli and 
Iranian governments top the list of suspects behind the faultless 
$100 bills.

Robert Fisk

The Lebanese know how to spot a fake.  Fake weapons, fake 
perfumes, fake diplomatic consuls, fake money.  But the latest US 
$100 bills are a near perfect forgeries as they have seen, many of 
them accepted happily by Beirut's notoriously suspicious money 
changers.

[...]

The bills, dated 1988 but probably forged in Lebanon in the 
following two years - the last two years of the civil war - are 
still arriving at the Allied Business Bank at the rate of one a 
month, often brought in from Cyprus or other Middle East states by 
Arab clients unaware that they are forged.

[Laws of most middle eastern countries make perfect forgeries a 
capital crime]

"Anyone who makes a 'perfect' dollar bill out here is going to get 
strung up if he's caught," another bank official said.  "So the 
guys who're going to make a perfect note, without any mistakes, 
are working for a government who will protect them.  So a 
government must be involved, the intelligence services, 
ministries, the lot."

A senior bank official in Lebanon believed that Iran or Israel 
might be responsible.  "When you're producing this kind of high-
tech stuff, it's got to have official backing," he said.  "If 
you're spending this kind of money on a 'perfect' forgery, it's 
for big business - for political parties, arms purchases, for 
paying militias."

He repeated a rumour believed by several other banking officials 
in Lebanon - that the "perfect" dollars might be coming off 
counterfeit presses and dollar plates taken into Afghanistan by 
the Soviet intelligence service during the Soviet occupation; 
Afghanistan is now divided among militias respectively funded by 
Saudi Arabia and Iran.

[...]

"The security thread is the reason why we are alarmed," the senior 
Lebanese bank official said of the new forgeries.  "It's not easy 
to get the thread in.  You put in the thread when you produce the 
note - it's not printed on, it's embedded in the paper.  And it's 
a real security thread.

"We suspect they're being exported to a variety of places: to the 
US, to the former Soviet Union...."

Other bank officials suspect Iran... and suggest that Tehran has 
used fake currency bills to fund the Hizbollah, Hamas and other 
armed groups which are opposed to Israeli occupation.



###The Washington Post
May 05, 1995 - Friday, Final edition

Bogus Bills?;  Rumors Persist That Iran Is Counterfeiting U.S. 
Currency to Sabotage the Economy.

Thomas. W. Lippman

[...]

The allegation that Iran is waging economic warfare against the 
United States by printing and distributing millions of dollars in 
phony U.S. currency has been circulating on Capitol Hill at least 
since 1992, when it was made by a House Republican Task Force on 
Terrorism and Unconventional Warfare.

It might even be true or partly true, according to some sources.  
There is a problem with counterfeit greenbacks around the world, 
these sources said.  It's just not clear that Iran is responsible 
for it.

The question arose again Tuesday when the irrepressible Rep. Dana 
Rohrabacher (R-Calif.) asked Assistant Secretary of State Robert 
Pelletreau about it in an International Relations Committee 
hearing on the Clinton administration's economic boycott of Iran.

Rohrabacher, who spend much of the recent congressional recess 
traveling in Asia, said he heard about the phony money from many 
people.  "Have you received and credible reports that the Iranians 
are counterfeiting American money" he asked.

Pelletreau, a normally unflappable career diplomat, looked 
uncomfortable.

"I know there is an intense investigation and campaign underway, 
led by the U.S. Secret Service to uncover all the sources of 
counterfeiting of American money abroad," he said.  "I just am 
personally not in a position to give you the exact details of what 
we believe Iranian involvement is in that."

"There are many leaders throughout the world... who believe that 
the American currency is being undermined by an intentional act of 
economic warfare on the part of the Iranian government... by 
counterfeiting billions of dollars' worth of U.S. currency," 
Rohrabacher said.  "Am I getting you right that basically you're 
not denying that this is going on?"

"I am not denying it," Pelletreau said.  The 1992 GOP report said 
the fake currency is being printed in the Iranian mint in Tehran, 
"using equipment and know-how purchased from the U.S. during the 
reign of the Shah," which ended in 1979....  A Wall Street Journal 
report at the time said that the phony bills-- whoever was making 
them-- were so good they could fool sophisticated currency-
handling equipment at the Federal Reserve.



###Counterfeiting and Money Laundering Deterrence act of 1995
Patrick Leahy

I rise today to introduce the Counterfeiting and Money laundering 
Deterrence Act of 1995.

[...]

A number of analysts believe the threat to the U.S. currency is 
urgent. News reports say that intelligence experts in the U.S. and 
Israel are aware of a highly skilled group of counterfeiter 
operating out of Lebanon's Bekaa Valley.  The counterfeiters, 
controlled by Syria and Iran, have turned out as much as $1 
billion of the extremely high-quality reproductions of the U.S. 
$100 bill.

[...]

First, the bills requires all existing $100 denomination U.S. 
currency to be exchanged within a 6-month period.  This would make 
drug traffickers who hoard vast amounts of hard currency hard-
pressed to convert their existing cash into the new money.  If 
they cannot exchange their funds in the specified time frame, 
their funds are worthless under the bill.

[...]

Second, the bill established two new versions of the $100 bill: 
one for use at home and one for use abroad.  The only business 
that relies on exporting large amounts of hard currency is drug 
trafficking.  This provision would make money smuggled out of the 
United States worthless, turning the tables on drug traffickers 
who covertly move money from the streets of this country to 
foreign bankers who launder it without reporting illicit 
transaction to the Treasury.

A U.S. citizen traveling abroad who wished to bring $100 currency 
with him would hardly be inconvenienced by this measure: a quick 
stop at a U.S. bank to convert their greenbacks into differently-
colored foreign-use bills would be all that is necessary-- just 
like purchasing travelers, checks.  The only ones who would be 
inconvienced would be drug traffickers who would hate to exchange 
their greenbacks for foreign use currency at a U.S. bank because 
of currency transaction reporting requirements.

[...]


### END ARTICLES



The presence of counterfeit bills, the legislation to defeat them, 
and the general sentiment of government in the matter is 
disturbing for a few reasons.

1.  Focus on Surveillance

The legislation adopted to defeat counterfeiting is linked with 
the four horsemen quite closely.  The solution, instead of making 
the bills difficult to forge like they should have been in the 
first place (U.S. bills are currently the easiest to forge of 
western nations- and counterfeit bills are long lived as currency 
changes are unheard of in the U.S.) is to create a regime where an 
additional tier of reporting is required.  It seems the first 
answer to every "problem" (read: every element which might allow 
citizen autonomy) now is to link it to money laundering and 
terrorism and drop a blanket solution over it which without fail 
includes highlevel reporting or tracking elements.  (Anyone seen 
this before with the... oh, I dunno, strong encryption issue?)

2.  The demonization of cash.

I have written here before on the increasing difficulty with which 
one uses cash without suspicion in the United States.  It has come 
to the point where money, in any amount, won't buy you everything 
anymore.  Many products and services are available ONLY by credit 
or credit card- and by extension, available only to traceable 
transactions.  Is it any wonder Americans have one of the lowest 
ratios of income to debt in the world today?  "They" would have 
you believe that cash is nothing but a tool for the four horsemen.  
I am most disturbed in this context by the way the act is 
financed- i.e. by the extinguished obligations from unexchanged 
currency.  Does this measure sound ominous to anyone but me?

3.  The corruption of e-cash to further the above.

If the government is disturbed by the laundering of money enough 
to actually print, or even propose printing, two kinds of 
currency, how will they respond to untraceable, unaccountable and 
infinitely liquid e-cash?  I think the answer is in past behavior:  
e-cash will be linked to the four horsemen and subjected to 
rigorous reporting requirements- systems which are true e-cash 
will be banned.  At the same time the widespread presence and use 
of e-cash will be used to question anyone who uses physical 
currency.  The death of cash continues as it were.  Why would 
anyone carry bills anymore when a plastic smartcard (or your 
highschool ring) is so much more convenient?  You must have 
something to hide.  No, good citizen units will WANT to use "e-
cash" because they are honest, and know the government means them 
no harm and is here to protect them from the four horsemen.


The cash is dead, long live the king.



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