THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, September 24, 1995 TAG: 9509240128
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY LYNN WALTZ, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 277 lines
It was Aug. 13, 1994. The tourist season along the busy resort strip was at its peak. A red 1994 Chevrolet Lumina crept along Atlantic Avenue, stopping every so often to let two teenagers out to shop.
While the balding driver, Joe ``Fat Boy'' Baraducci, snoozed at the wheel, the teens bought tourist trinkets - a coffee cup with praying hands, a bullet dangling from a gold chain, a shell-covered basket, a bottle of sand - one shop at a time.
The teens used a fresh $100 bill to make each purchase, then tossed the merchandise and coin change on the floor of the car as they jumped in, pocketing the paper change.
Then, at Tequila Sunrise near 21st Street, something went wrong. A sharp-eyed clerk looked at the $100 bill a teenager handed her to pay for Panama Jack suntan lotion. The bill's security threads appeared pasted on.
``I'm sorry. I don't believe this is real,'' the 22-year-old clerk said.
The teenager silently retrieved the bill and walked out. While the clerk waited on hold to 911, she peered out the window and watched the teenagers go in and out of several more stores, the car following behind.
Finally, the clerk hung up and ran out, flagged down a motorcycle cop and warned other store owners as she chased the Lumina on foot. Officers and store clerks joined in the pursuit.
Inside the Lumina, police found 28 crisp $100 counterfeit bills hidden behind stereo speakers, stuffed hurriedly up headrests and into creases in the back seat. They also found nearly $10,000 in legitimate cash, wrapped in colorful Virginia Beach advertising flyers.
Four people were arrested at the Oceanfront that day, initiating an investigation that ultimately linked the bills to a Mafia underling in New York City and led to the epicenter of the world's drug trade - Cali, Colombia.
Today, Colombia is exporting more than just nose candy to places like Virginia Beach. The South American country has become one of the biggest suppliers of bogus $100 bills to the United States.
There has been a virtual explosion of phony Colombian bills in the U.S., with a 10,000-fold increase since 1991. So far this year, $7 million of the $24 million bogus bills passed in the U.S. were manufactured in Colombia.
Because of the surge in Colombian-produced currency, the hundred is now the most popular counterfeit denomination in the nation, having surpassed the twenty this year.
Most of the bills that end up in places like Virginia Beach come into the country through Miami, arriving through the mail - in small packages, inside magazines, books, book covers, and greeting cards. Or through airports, in suitcases with secret compartments, even in women's girdles.
Two other major ports of entry are New York City and Los Angeles, said Larry Kumjian, agent in charge of Norfolk's Secret Service office.
Once the bills get into the country, they can be hard to track. Counterfeit Colombian bills can be of such high quality - especially if printed on bleached U.S. currency - that even trained federal agents have argued about whether a bill is counterfeit.
How hard is it to spot the bills? Seventy-four bills just from the series of bills seized at the Beach have been passed in Hampton Roads since 1993. Only 7 were identified as counterfeit when they were passed. The rest, known as ``floaters,'' were kicked back by the Federal Reserve bank after being deposited in local banks by duped merchants, Kumjian said.
And staunching the flow of bogus bills from Colombia - where you can buy the funny money on the street - is proving difficult. The country has decriminalized counterfeiting to the extent that average jail time is just 87 days.
When Virginia Beach police seized the Lumina, they caught DeMaio and Baraducci red-handed. They impounded the car and brought in drug dogs, which went straight for the car's speaker grilles, whining and scratching.
There, investigators found envelopes of bogus bills. It's common for counterfeit bills to be tainted with cocaine, either in Colombia or as they are smuggled into the country alongside drugs, investigators say.
Though much of the counterfeiting takes place in the Cali region of Colombia, where the infamous Cali drug cartel is based, authorities do not believe it is the work of the cartel.
But the two operations often run hand in hand. The counterfeit business is patterned after the drug trade right down to the way the bills were passed in Virginia Beach: adults using teenagers to pass the bills because juvenile laws are more lenient.
``There is an organized distribution network of some sort, some major distributors with their contacts,'' said Frank Estrada, assistant agent in charge of the Miami office of the Secret Service, where the investigation into Colombian counterfeiting is headquartered.
``But nothing as sophisticated as (the) Cali cartel or Medellin cartel because the money's not there. This is basically a poor man's crime, not a rich man's crime.''
With drugs, criminals can make more money with less effort by handling smaller packages, Estrada said. ``A million dollars is a huge box of counterfeit,'' Estrada said. ``You've got to find buyers and pass it and your profit margin isn't nearly as good. Why would somebody involved in drugs do this when you can bring a shoebox full of cocaine in and make a lot more?''
The Colombian bills - including the series passed at the Beach - get the highest ``quality ranking'' from the Secret Service and are considered among the best in the U.S.
Real U.S. currency is printed on a material that is 75 percent cotton and 25 percent linen. Red and blue security fibers are added to the paper as it's made. In the 1990 series, a polyester thread was added with a repeating ``USA'' and a number that matches the denomination of the bill. It can be seen when the bill is held up to a light.
Raised Intaglio type gives a three-dimensional quality to the portraits on the bill, and fancy scroll work, which sits on top of the paper, casts a shadow when viewed under a microscope.
Bogus Colombian dollars are frequently printed on Venezuelan currency, purchased cheaply and bleached. It's a good quality paper with red, blue and green security fibers. Counterfeit manufacturers simulate the polyester ``USA'' thread.
Where the counterfeiting quality breaks down is in the offset printing process, which does not yield the three-dimensional effect of a real bill. And, because the plates are manufactured from a photograph negative rather than original artwork, details do not hold up in the printing. Also, though the paper is high quality, the feel is different than a real U.S. bill.
On the bills seized in Virginia Beach, ``the paper was much thicker than normal,'' Kumjian said. ``This one stood out because of its thickness.''
Investigators say the best way for merchants to identify a counterfeit - after feel - is the naked eye. But that can be tough.
The bills seized in Virginia Beach came from a printed series known as a ``family'' of bills. It is the most prevalent series, or family, in Colombian-produced currency, representing about $4 million of the $7 million passed so far this year.
``Family'' is a term used by the Secret Service to identify bills that are manufactured from a group of photographic negatives that originated from a single negative.
The counterfeiting process starts with a photographic image of the currency. The negative is used to etch or burn an image of the money onto a plate, usually made of aluminum. The plate is then attached to a drum in the printing press. As paper passes across it, the image is printed.
When a single negative is either reproduced or a number of plates are mass-produced from it, a ``family'' of bills is born. Each time a negative or plate is reproduced, there are variations in the image, but trained Secret Service investigators can group the bills by comparing the variations and determine whether they came from the same family of negatives and plates.
The series of bills seized at the Beach comes from a group of negatives that has been shared and reproduced so many times there are now more than a 1,000 variations.
``Every time you reproduce and make a plate, there are possibly variations,'' Kumjian explained. ``What we think has happened is the people in Colombia have mass produced the negatives and plates on this note so everybody gets a crack at it.''
Characteristic flaws in the Virginia Beach series include problems with the seal and missing lines. The fulcrum at the top of the scale in the seal is missing and there are ink spots and white spots on the counterfeits.
Investigators first spotted the Virginia Beach ``family'' of bills in Los Angeles on April 3, 1991. Since then, the numbers have skyrocketed. In 1991, a total of $33,500 were passed. The following year, it jumped to $283,600. By 1993, the total was $1,408,300. In 1994, it was $1,813,000. This year, just since January, the total is $4,133,800.
As the bogus bills make their way from the mountains of Colombia through Venezuela, into Miami or New York and on to Virginia Beach, all sorts of people can be swept into the intrigue:
A trained Colombian printer with a family who gives in to the lure of easy money for a few hours of work.
Venezuelan businessmen who innocently purchase the bogus bills while not so innocently trying to buy U.S. cash on the black market.
Elderly women with overstuffed suitcases and young women wearing girdles padded with bogus $100s, trying to slip past Customs and smuggle the contraband into the States.
And in Virginia Beach, Antonio DeMaio, described by a federal prosecutor as ``The fastest car thief in New York.''
DeMaio, a reputed Mafia underling, and Baraducci were convicted on counterfeiting charges in the Virginia Beach case this month in Norfolk federal court. DeMaio, known for carrying machine guns along with his car burglary equipment, allegedly works for a Mafia chop-shop in Brooklyn.
He passed the counterfeit bills while out on $1 million bond awaiting trial in New York, where he is charged with helping pick up containers of Colombian cocaine at New York piers.
Investigators say the bills may have been purchased by organized crime, then filtered down through the organization to shadowy associates, who arranged to have them passed.
``I'm not saying he's a member of the Mafia,'' Assistant U.S. Attorney Michael Smythers told a federal judge of DeMaio. ``He is an underling, he's participated in it, he's in it up to his ears.''
They may never know for sure. Neither DeMaio nor his partner, the driver, Baraducci, are talking. Perhaps for good reason, court records show.
Federal prosecutors here told DeMaio to watch his back while he's out on bond.
``There may even be some serious danger to him by being released, because he knows too much, your honor,'' Assistant U.S. Attorney Mike Smythers told a federal judge.
``He knows about where this counterfeit money came from. He knows about these narcotics. He knows about this car theft ring. You know, they have a lot of reasons up there why they don't need him around any longer, a lot of reasons.''
Investigators believe the Virginia Beach bills either came into the country through Miami or New York. In Miami, up to 65 percent of the counterfeit bills seized were manufactured in Colombia. Bogus bills can sell for as much as 50 cents on the dollar there.
Like drugs, the closer to the source and the larger the quantity, the lower the cost.
``Twenty-five cents is a real good price,'' Estrada said.
And, like drugs, counterfeit bills are often carried into the country by couriers.
In March, 63-year-old Maria Castro of Los Angeles was arrested at Miami International Airport after Customs inspectors noticed the sides of her suitcases were unusually thick. Inside were $248,700 in bogus $100 bills.
Castro asked Secret Service agents if they thought she would be out of prison by the time she was 80.
While counterfeiting is generally not a violent crime, two young women - one a courier - were murdered earlier this year in Miami.
Melanie Ann Molano was caught with $40,000 in her girdle as she came into Miami airport in November 1994. Three months later, she and her best friend, 17-year-old Lititia Cabassa, were found floating in Biscayne Bay. They had been strangled.
Molano had been cooperating with authorities and had worn a wire to try to catch the man she said hired her to smuggle the bills. Later, she apparently decided not to cooperate. Authorities are still not certain the slaying was related to the counterfeiting.
The money came from the Cali area of Colombia.
In the Colombian counterfeiting business, the person who reaps the smallest reward is often the artisan at the beginning of the chain - the printer.
Fourteen manufacturing plants, responsible for printing the series of bills passed at the Beach, have been seized in Colombia since 1991, most in the Cali region, Kumjian said.
While investigators are reluctant to be too specific, they describe the typical Colombian counterfeit printer as a non-violent, working-class family man with a talent for high-quality printing who is simply trying to make a living.
Plants and printing plates have been seized in people's homes, in legitimate printing shops and on farms or ranches. Their main edge over other counterfeiters is cheap labor and lots of time, Miami agent Estrada said.
``Here a counterfeiter might buy a big printing press with top-of-the-line equipment. There, they take old dilapidated equipment and keep it running.''
When the currency leaves Colombia, it generally moves into Venezuela, where currency law changes have led to a huge black market in the purchase of U.S currency. Venezuelans are desperate for real cash because they can only take $3,000 per year into the United States.
Counterfeiters slip their money into the black market, often netting unsuspecting Venezuelan businessmen. As evidence of their innocence, one man tried to deposit the $30,000 dollars he purchased on the black market into a legitimate bank account once he got into the states, only to have half of it rejected as counterfeit.
Despite substantial obstacles, the Secret Service has made 75 arrests nationwide since 1991 on the series of bills found in Virginia Beach.
One hurdle is that federal agents cannot conduct investigations in Colombia, but must serve in an advisory role for a government known for its corruption due to cartel influence.
The Secret Service has joined other federal agencies in a cooperative task force to address the problem. They randomly check baggage from suspect countries and inspect currency of suspicious travelers. They try to weed out airline employees who are working from the inside.
Still, more and more bills are getting through.
And, even when arrests are made, the criminals running the counterfeiting scams are savvy: They tend to set up systems that are difficult to prosecute.
For example, because the two men in the Beach case used teenagers to pass the bills, investigators could not directly link them to the counterfeiting.
A jury, apparently troubled by the largely circumstantial evidence, could not deliver a unanimous verdict and a mistrial was declared. DeMaio and Baraducci pleaded guilty anyway after apparently realizing prosecutors were going to retry them on the same charges.
Because of the difficulty in successfully prosecuting Colombian counterfeiters, the Secret Service depends heavily on grass-roots help - from people like the sharp-eyed clerk on Atlantic Avenue, and the cop who quickly contacted the feds when he saw what he bleieved to be a bogus bill.
Their quick action helped other merchants avoid the sinking feeling the owner of Paradise Fashions on Atlantic Avenue got when he opened the till and found a bogus hundred tucked in with the real bills. The bill was one of those the teens in the Lumina had passed.
``It's a big problem to them,'' Kumjian said. ``We have a responsibility to the merchants in our community. Even several hundred being passed doesn't seem like a big problem but to them it is because they're out the money. The clerk who caught the bill and the quick action of the Virginia Beach cops really made the difference here.'' ILLUSTRATION: Map
JOHN CORBITT
Graphic
JOHN CORBITT/Staff
BOGUS BENS IN VIRGINIA BEACH
SOURCE: Department of the Treasury, United States Secret Service
[For complete graphic, please see microfilm]
KEYWORDS: COUNTERFEIT MONEY SOUTH AMERICA by CNB