New institute aims to foil high-tech counterfeiters

April 03, 1995|By Ivan Penn | Ivan Penn,Sun Staff Writer

Hard hit by defense spending cuts, the Johns Hopkins University Applied Physics Laboratory (APL) in Laurel is gearing up to research a new kind of war -- this one against counterfeiters.

APL recently signed a 10-year agreement with the U.S. Treasury Department's Bureau of Engraving and Printing to open a Securities Technology Institute, the first center of its kind in the country.

The Howard County lab's researchers will work with other industrial and academic institutions to study technologies used to produce currency and new ways to guard U.S. bills against counterfeiters.

The new adversaries of APL scientists range from small-time forgers to organized crime, from the five men indicted by a federal grand jury in February for producing $60,000 worth of counterfeit $20 bills on Solomon's Island to the ring caught near Montreal in February printing $15 million in fake U.S. $100 notes.

For now, APL's Treasury contract is small: $750,000 for the first year compared with the lab's annual budget of more than $400 million, about 95 percent from military research.

But -- in the wake of last week's announcement of the layoffs of about 350 APL employees this summer -- lab officials hope to avoid more job losses by attracting more contracts for high-tech research innonmilitary fields. "Our mission says we will address problems of national importance, not just defense," said Daniel Dubbel, an APL researcher and program manager for the new institute.

"There will always be smart people out there, trying to make a quick buck. We think we have some good ideas to guard against it," he said. Treasury officials are eager for the help.

"We recognized the fact that we had the knowledge in the printing field, but we lacked the knowledge in the scientific field -- the 'Star Wars' types of things," said Ira Polikoff, deputy assistant director of the Bureau of Engraving and Printing. "If people don't feel confident in our currency, they won't use it."

In Maryland, $4,000 to $6,000 in counterfeit money enters the market each week, according to the U.S. Secret Service. Nationally over the last five years, counterfeiters have put into circulation an annual average of $19 million in fake money.

But most counterfeit money in this country is confiscated before it reaches the public. During the last five years, Secret Service agents in the United States have seized more than $266 million in fake currency.

Counterfeiting of U.S. bills is even more prolific overseas. There is about $380 billion worth of real U.S. currency throughout the world, said Richard Rohde, special agent in charge of the Secret Service's counterfeit division, with about $250 billion of it circulating outside the United States.

International seizures of fake bills since 1990 total more $351 million -- powerful testimony, Mr. Rohde says, to "the overwhelming popularity of the dollar."

In the past, Treasury officials consulted with other government or government-affiliated agencies -- such as the Federal Reserve and the National Research Council -- on ways to stop counterfeiting. Now the core of U.S. currency research will be conducted at APL.

Since it opened in 1942, APL has undertaken defense studies for the federal government, with virtually all its funding recently coming from the Navy.

A $60 million drop in the lab's total funding -- mostly from its Navy contract -- forced the recently announced layoffs of about 8 percent of APL's 2,750 full-time staff and about 20 percent of its 700 contractual employees.

But unlike military work, combating counterfeiting is a growth industry -- particularly because of high-tech copiers and computers. Since 1989, the number of counterfeiters using copiers and computers has doubled each year, according to the National Research Council.

U.S. bills already have eight to 10 different counterfeit deterrents -- including serial numbers, a Federal Reserve seal and a Treasury seal.

In 1990, the Treasury Department added a thin plastic strip to the left side of denominations greater than $1. Imprinted on the strip is wording -- such as "USA TWENTY" -- to guard against reproduction with computers and copiers. The plastic strip and wording are visible when held to a light, but they won't copy or scan easily.

"We're seeing more and more of those hackers with computer-generated notes," said Steve Mason, special agent in charge at the Baltimore office of the Secret Service.

In the Solomon's Island case, agents shut down a plant that produced $60,000 in $20 bills. Bogus bills were passed in Baltimore City and Howard, Anne Arundel, Prince George's and Calvert counties.

Nine people were arrested in that case. Five of them were indicted by a federal grand jury and pleaded guilty in February to counterfeiting and conspiracy to distribute counterfeit U.S. currency. According to court records, here's how it was done:

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