Paper Money

Secret Service reviewing counterfeit notes in counterfeit holders

The contemporary plague of counterfeit coins being made and then placed into counterfeit third-party holders is now affecting rare paper money. Counterfeit notes are being placed in bogus early generation PCGS Currency holders.

The Anti-Counterfeiting Task Force, in conjunction with the Professional Numismatists Guild, is calling attention to a scheme involving the counterfeit notes in counterfeit early generation PCGS-Currency holders.

A recent example is a case currently being pursued by the U.S. Secret Service involving a Series 1882 $500 gold certificate. The note, identified as Friedberg 1216a, is a blatantly obvious fake, even without close personal examination. Nonetheless, the Secret Service laboratory did its own technical investigation, and based on additional information provided by trade specialists, confirmed this conclusion.

Given that the counterfeiters also read Coin World, extensive diagnostics will not be disclosed by the organizations warning of the counterfeit notes in counterfeit slabs. An easy one to observe, however, is that, even in a low resolution image, the paper is clearly wrong. Furthermore, without having to look in person at the note, it is possible to condemn it solely by virtue of its description. Its serial number is E72108. All F-1216a and F-1216b notes known have serial numbers beginning with the letter D. It was not until the Series 1922 (F-1217) notes were printed that the E serial number prefix was first used.

One 1922 $500 gold certificate bearing this very E72108 number has been known since 1993, when it was sold by Dean Oakes. Then, the Gengerke census says, it was sold by Currency Auctions of America in 2000, and then went unsold in a Lyn Knight auction in 2003. After that, Heritage sold it twice, in February 2005 and April 2013. It final recorded appearance was a month later, when it was sold on eBay.

Whether the model for the counterfeit was this note itself or one of the many images available, any of the many digital imaging programs available would have the capability to replace the signatures of Speelman and White on an image of the 1922 note, with those of Parker and Burke, as on an F-1216a note.

The spurious holders were also simple for the experienced eye to spot. Jason W. Bradford, president of Legacy Currency Grading of Santa Rosa, California, and the founder of PCGS Currency, simply said, “It’s all wrong.”

Among the factors he cited are the fonts used, numbering, design of the holder, and relative size of the note in relation to the holder containing it.

Other examples of similar fraudulent notes include a $20 Treasury note that recently appeared on eBay and the small-size $500 Federal Reserve note illustrated, also being offered for sale on eBay and determined to be counterfeit by several currency experts.

Dustin Johnston, vice president at Heritage Auctions, who assisted the Secret Service with diagnostics, called this a “wake-up call to the Secret Service” that it needs to provide tangible support with enforcement and legal action against these counterfeiters. He added, “If there is one lesson here, consumers should rely on reputable auction houses, or PCDA and PNG member dealers who know how to detect counterfeit products. Consumers have protections in the terms and conditions at the auction houses and through the codes of conduct provided by the PCDA and PNG.”

Finally, he said, “I would make a call for collectors and dealers to increase their support of the Anti-Counterfeiting Educational Foundation (ACEF), whose work includes monitoring dozens of websites for new products and cracking down on specific networks. We need more resources to prevent a big surge of bad products.”

More than ever, collectors need to be forewarned to buy rarer items only from reputable dealers and not from random sellers on common, nonspecialized internet sites. Additionally, dealers and their employees should be aware of the possibility that they may be offered these types of notes.

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