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For the Martin Gore 1989 EP, see Counterfeit e.p.. For his followup album, see Counterfeit².

A counterfeit is an imitation that is made with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged money or documents, but can also describe clothing, software, pharmaceuticals, or any other manufactured item, especially when these products are protected by trademarks or patents.

History

Counterfeiting money is probably as old as money itself. However, the introduction of paper money has made it an easier thing to do.

Nations have used counterfeiting as a means of warfare. The idea is to overflow the enemy's economy with fake bank notes, so that the real value of the money plummets. Great Britain did this during the Revolutionary War to reduce the value of the Continental Dollar. Although this tactic was also employed by the United States during the American Civil War, the fake Confederate currency it produced was of superior quality to the real thing.

Another form of counterfeiting is the production of documents by legitimate printers in response to fraudulent instructions. An example of this is the Portuguese Bank Note Crisis of 1925, when the British banknote printers Waterlow and Sons produced Banco de Portugal notes equivalent in value to 0.88% of the Portuguese nominal Gross Domestic Product, with identical serial numbers to existing banknotes, in response to a fraud perpetrated by Alves dos Reis. Similarly, in 1929 the issue of postage stamps celebrating the Millennium of Iceland's parliament, the Althing, was compromised by the insertion of "1" on the print order, before the authorised value of stamps to be produced (see Postage stamps and postal history of Iceland.)

In 1926 a high-profile counterfeit scandal came to light in Hungary, when several people were arrested in the Netherlands while attempting to procure 10 million francs worth of fake French 1000-franc bills which had been produced in Hungary; after 3 years, the state-sponsored industrial scale counterfeit operation had finally collapsed. The League of Nations' investigation found Hungary's motives were to avenge its post-WWI territorial losses (blamed on Georges Clemenceau) and to use profits from the counterfeiting business to boost a militarist, border-revisionist ideology. Germany and Austria had an active role in the conspiracy, which required special machinery. The quality of fake bills was still substandard however, due to France's use of exotic raw paper material imported from its colonies.

During World War II, the Nazis attempted to do a similar thing to the Allies with Operation Bernhard. The Nazis took Jewish artists in the Sachsenhausen concentration camp and forced them to forge British pounds and American dollars. The quality of the counterfeiting was very good, and it was almost impossible to distinguish between the real and fake bills. The Germans could not put their plan into action, and were forced to dump the counterfeit bills into a lake, which were not recovered until the 1950s. Over one billion American dollars were forged, and economists estimate that that would have seriously damaged the American war effort.

Today the finest counterfeit banknotes are claimed to be U.S. dollar bills produced in North Korea, which are used to finance the North Korean government, among other uses. The fake North Korean copies are called Superdollars because of their high quality. Bulgaria and Colombia are also significant sources of counterfeit currency. In the early years of the 21st century, the United States Secret Service has noted a substantial reduction in the quantity of forged U.S. currency, as counterfeiters turn their attention towards the Euro.

There has been a rapid growth in the conterfeiting of Euro banknotes and coins since the launch of the currency in 2002. In 2003, 551,287 fake euro notes and 26,191 bogus euro coins were removed from EU circulation. In 2004, French police seized fake 10 euro and 20 euro notes worth a total of around 1.8 million euros from two laboratories and estimated that 145,000 notes had already entered circulation.

It is currently estimated that the Counterfeit Goods Trade consists of 5 to 7% of World Trade, ranging in losses between 500 Billion to 600 Billion U.S. Dollars. In the United States alone, the FBI has estimated that American companies lose up to 250 Billion Dollars due to counterfeiting.

Anti-counterfeiting measures

Traditionally, anti-counterfeiting measures involved including fine detail with raised intaglio printing on bills which would allow non-experts to easily spot forgeries. On coins, milled or reeded (marked with parallel grooves) edges are used to show that none of the valuable metal has been scraped off. This detects the shaving or clipping (paring off) of the rim of the coin. However, it does not detect sweating, or shaking coins in a bag and collecting the resulting dust. Since this technique removes a smaller amount, it is primarily used on the most valuable coins, such as gold.

In the late twentieth century advances in computer and photocopy technology made it possible for people without sophisticated training to easily copy currency. In response, national engraving bureaus began to include new more sophisticated anti-counterfeiting systems such as holograms, multi-colored bills, embedded devices such as strips, microprinting and inks whose colors changed depending on the angle of the light, and the use of design features such as the "EURion constellation" which disables modern photocopiers. Software programs such as Adobe Photoshop have been modified by their manufacturers to obstruct manipulation of scanned images of banknotes. There also exist patches to counteract these measures.

For U.S. currency, anti-counterfeiting milestones are as follows:

• 1996 $100 bill gets a new design with a larger portrait
• 1997 $50 bill copies the design used above
• 1998 $20 bill copies the design used above
• 2000 $10 bill and $5 bill copies the design used above
• 2003 $20 bill gets a new design with no oval around Andrew Jackson's portrait and more colors
• 2004 $50 bill copies the design used above
• 2006 $10 bill copies the design used above

According to the Treasury, there are no plans to redesign the $5 bill using colors. It is not known when the $100 bill will be redesigned in this format, but the new $10 bill (the design of which was revealed in late 2005) has entered circulation in March 2, 2006. The $1 bill and $2 bill are not worth counterfeiting, and so they continue to have the traditional appearance.

In the 1980s counterfeiting in the Republic of Ireland twice resulted in sudden changes in official documents: in November 1984 the £1 postage stamp, also used on savings cards for paying television licences and telephone bills, was invalidated and replaced by another design at a few days' notice, because of widespread counterfeiting. Later, the £20 Central Bank of Ireland Series B banknote was rapidly replaced because of what the Finance Minister described as "the involuntary privatisation of banknote printing".

In the 1990s, the portrait of Chairman Mao Zedong was placed on the banknotes of the People's Republic of China to combat counterfeiting, as he was recognised better than the generic designs on the renminbi notes.

Money art

A subject related to that of counterfeiting is that of money art, which is art that incorporates currency designs or themes. Some of these works of art are similar enough to actual bills that their legality is in question. While a counterfeit is made with deceptive intent, money art is not - however, the law may or may not differentiate between the two. See JSG Boggs.

Famous counterfeiters

• Mary Butterworth - a female counterfeiter in colonial America
• Samuel C. Upham - the first known counterfeiter of Confederate money during the American Civil War. His activities began or became known in early July 1862.
• Wesley Weber - was sent to prison for counterfeiting the Canadian 100 dollar bill.
• Anatasios Arnaouti - a British counterfeiter of more than £2.5 million in fake money, sentenced in 2005
• Rick Masters (fictional character, played by Willem Dafoe) - a master counterfeiter in William Friedkin's movie To Live and Die in L.A..
• Catherine Murphy was convicted of coining in 1789 and was the last woman to suffer execution by burning in England.

See also

• Counterfeit drug
• Counterfeit United States Notes
• Currency
• Fourrée
• Patent infringement
• Questioned document examination
• Secret Service
• Security printing
• Trademark infringement
• Uttering and Publishing

External links

• U.S. Secret Service article about how to detect counterfeit money
• Bogos: The Dangerous, Controversial, and Fascinating World of Counterfeit Coins
• Guide to Counterfeit Detection of Baseball Cards by David Rudd Cycleback
• Havocscope Counterfeit Goods and Piracy Market

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