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The product is carefully created in rural facilities throughout the Peruvian countryside using cheap labor, then hoarded in stash houses controlled by violent gangs in Lima.

Once there, the goods are packed into parcels, loaded onto planes or hidden inside luggage, pottery, hollowed-out Bibles, sneakers, children’s toys or massive shipping containers bound for major U.S. ports of entry, such as Miami.

The product’s ultimate destination, according to the U.S. Secret Service, is generally New York, New Jersey, Boston and the greater Northeast.

It’s here, federal authorities say, that a few powerful organizations pass the product to splinter groups that control the streets, reaping huge financial rewards before authorities have time to react.

It’s an illicit trade that bears an uncanny resemblance to narcotrafficking, and while there is some overlap between the two activities, this “product” has nothing to do with cocaine.

But the profits created by smuggling the counterfeit currency known as the “Peruvian note” — generally considered the finest fake money on the planet — are just as staggering, if not more so, according to the Secret Service. Responsible for producing and distributing an estimated 60 percent of the world’s counterfeit U.S. notes, more fake American money comes from Peru than any other country, according to the Secret Service, which has been combating the currency’s rise since 2003.

“It’s very similar to the drug war,” said Jose, a Secret Service agent who leads the agency’s efforts to crack down on the trade in Peru and declined to provide his last name. “The modus operandi is very similar, and a lot of the smuggling routes and the hierarchy of organizations involved are very similar, as well as the execution.”

“A lot of these organizations are family-run,” he added. “Making a counterfeit note is a skill that’s been passed down. It’s an art, and the skill isn’t easily transferrable.”

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OperationSunset4
Authorities also recovered eight printing presses that are used in the production of fake money. (U.S. Secret Service)
Last week, the Secret Service announced its largest seizure of counterfeit currency to date, after recovering $30 million in fake U.S. bills and 50,000 euros piled in houses and apartment buildings in Lima.

Known as Operation Sunset, the massive effort involved 1,500 Peruvian National Police officers and resulted in a total of 54 search warrants and 48 arrests in Lima.

“Additionally six counterfeit plants were suppressed, eight counterfeit manufacturing presses seized and over 1,600 printing plates and negatives of varying denominations were found,” the agency said in a news release.

Secret Service Director Joseph Clancy called the Peruvian government “a valuable partner” in the fight against counterfeit currency.

Though Operation Sunset marked an important victory in the fight against counterfeit cash, it was but a single victory in an ongoing war. The Treasury Department is locked in a constant struggle to outwit counterfeiters by adding new designs, such as “holograms, floating ink and security strips,” according to the Guardian. No matter how many creative barriers the experts place in their way, the criminal competitors are never far behind.

“Every time a new design would come out, we would have an informal pool on how soon it would be counterfeited,” Don Brewer, the former head of the Secret Service’s anti-counterfeiting division, told the Guardian.

The Secret Service’s latest seizure is staggering compared to the total amount of counterfeit bills recovered in the previous seven years in Peru, according to authorities.

“Since 2009, in our investigations with the Secret Service, we have seized about $75 million in fake bills,” Walter Escalante, head of the Peruvian National Police’s anti-fraud division, told the Guardian in March. “We don’t know what percentage entered the U.S. illegally and has gone inside the financial system. We think that our $75 million is the better part of what has entered the U.S.”

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For all the millions in fake currency intercepted by authorities, millions more flow into the United States each year. In an interview with the Guardian, a counterfeiter who goes by the fake name of Geraldo Chavez said that most currency in the United States arrives via Mexico.

The Secret Service says it recovered $30 million in counterfeit currency from Peru, the world’s leading source of fake U.S. currency. (U.S. Secret Service)
“There are Peruvian-Mexicans who are in charge of passing the money over the border,” he told the newspaper. “You don’t [smuggle] by airplane [directly] into the United States because their airport control uses the latest technologies. … These bills get into the U.S. over the frontier by the ‘coyotes.’ This is a mafia — they get the bills into Texas and California.”

The size of the latest recovery speaks to the organization and skill of those involved in the illegal trade, said Jose, the Secret Service official. In the United States, he said, counterfeiters rely on laser printers to reproduce U.S. currency; but in Peru, much of the reproduction relies on printing presses and skilled artisans.

In the end, a fairly unsophisticated process creates a very sophisticated bill.

“Once they cut the bills, the finishing process is what separates Peruvian notes from the rest of the world,” Jose said. “They’re very good at creating texture on the note, which makes is passable not just in the U.S. economy, but also in South America and abroad.

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“It can take weeks to create a note, and they dedicate themselves to it,” he added. “They have all the people in place to finish.”

That can mean as many as 10 individuals playing a role in producing a counterfeit note, from financiers, designers, printers and cutters to artists who re-create watermarks and raised textures that provide the appearance of authenticity. The entire process is “compartmentalized,” Jose said, allowing each chain in the link to remain ignorant of the others.

“The person who makes the design doesn’t know the finisher or the distributor,” he said.

Chavez, the Peruvian counterfeiter interviewed by the Guardian, told the paper that raw materials for making counterfeit money are “very cheap.”

“I will give you an example,” he said. “A $100 bill that I sell for $20? My costs are between $3 and $5. So what’s my profit? $15. Here [in Peru], you get the supplies you need at a low cost. This glue? It costs me 50 cents. The flour, even less. . . . The paper you buy in bulk, and that costs 40-50 sols” — or $10 to $15 per stack.”

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