It was the most popular counterfeit $100 bill in circulation, and for more than a decade its makers were a mystery to the U.S. Secret Service.
Agents collected and analyzed the fake greenbacks, which first popped up in Israel in the late 1990s. They were so good that they were often discovered only after they reached a bank or the Federal Reserve.
So when Secret Service agent Adam Gaab came across four of the fake $100s on May 17, 2012, shortly after they had been detected at a Loan Max in Northern Virginia, he knew he had the rare chance to link a bill back to the person who passed it.
“It was the No. 1 note,” said Ed Lowery, special agent in charge of the Secret Service’s criminal investigation division. “You aggressively run out leads on the No. 1 note.”
The investigation evolved into a two-year international odyssey that culminated in the indictment last week of 13 Israelis and Americans of running one of the most successful counterfeiting operations in U.S. history. Hundreds of agents were involved by the time they executed raids and arrest warrants in five states in May and June that resulted in the capture of the 13 suspects and the seizure of $2.5 million in fake bills and a printing plant in a Cherry Hill, New Jersey, warehouse, according to federal authorities.
The counterfeiting ring was responsible for producing at least $77 million in fake bills, mostly $100s, said U.S. Secret Service Director Julia Pierson.
“This has been a painful note for us,” Pierson said in an interview. When a bill’s so good that it’s not discovered until it’s in the banking system, that “separates the passing of the note to its detection. It allows these people to operate more anonymously.”
One sign of the ring’s sophistication, the agents said, was that the counterfeiters appeared close to mimicking the latest currency security features, including 3D ribbons.
The Secret Service has been battling counterfeiting since 1865 and has watched it evolve from an art form practiced by master printers to amateurs scanning and printing bills with their home computers. In the fiscal year ended Sept. 30, the service recovered $157 million in fake bills.
The home-computer variety is often easy to spot. Those produced on sophisticated printing presses, mostly overseas, are harder to identify. Some are so good that they become legendary within law enforcement, such as the “SuperNote” that has been produced in North Korea for decades.
Though famous, the North Korean note wasn’t the most widely passed and seized of fraudulent greenbacks cataloged by the Secret Service. That honor belonged to what they called the “Russian-Israeli Note,” which agent Gaab held in his hands after he went to the Loan Max in Woodbridge, Virginia, in 2012.
Over the years, the Secret Service’s forensic analysis linked 17 different versions of the fake $100 to the same source, according to court records and interviews with Pierson, Lowery and other agents.
The Secret Service was able to break the ring after Gaab tracked down the man who passed the four $100 bills at the Loan Max. A year later, Gaab and local police raided the suspect’s home in Dale City, Virginia, and persuaded him to become an informant.
The man and another informant helped the Secret Service identify his supplier, and soon agents were using wiretaps, tracking mobile phones and conducting time-consuming surveillance on suspects that led them to Israel, where the bills were being manufactured.
Agents identified the ringleaders as two Russian-speaking Israelis: Itzhak Loz, 46, and Ronin Fakiro, 45. Loz and Fakiro, who have been in custody since their arrests in May in New York, made hefty profits on the sale of their bills for 20 percent to 50 percent of their face value, according to the agents and court papers.
Federal prosecutors are seeking the forfeiture of the ring’s assets totaling at least $4.5 million. The ring moved its operation early this year to New Jersey to cut down on costs, agents said.
“It’s much easier to distribute counterfeit once it’s here, rather than overseas,” said Lowery. “Getting it into the country is the hard part.”
Agents conducting surveillance of a New Jersey warehouse in February watched in shock as a tractor trailer pulled up and unload at least one large printing press that they would determine had been shipped from Israel. Within weeks of the delivery, the ring was churning out fake bills.
“It’s rare to see that here in the United States,” Lowery said. “I mean, you hear about it in training. We see them overseas. But not here.”
© Copyright 2015 Bloomberg News. All rights reserved.