The Supernote

IN THE SPRING OF 1992, two Lebanese-born drug traf­fick­ers found them­selves in jail in Mass­a­chu­setts, and their prospects looked grim. Gebran Han­na, of Ottawa, and Peter Kat­tar, of Andover, Mass­a­chu­setts, had shipped more than three tons of hashish, con­cealed in plas­tic bar­rels of olives, from the Bekaa Val­ley, in Lebanon, to Boston Har­bor, and they were caught. If they were con­vict­ed, they would like­ly face manda­to­ry sen­tences of thir­ty years or more. Their only hope for clemen­cy was to coop­er­ate with the gov­ern­ment of the Unit­ed States, and pro­vide use­ful infor­ma­tion. As it hap­pened, they knew about some­thing big.
     Han­na was escort­ed to the office of Paul Kel­ly, the Boston fed­er­al pros­e­cu­tor who had brought the hashish case. After Kel­ly, a slim blond man in his thir­ties, and an agent of the Unit­ed States Cus­toms Ser­vice inter­ro­gat­ed him about the drug busi­ness, Han­na sud­den­ly changed the sub­ject. Was the gov­ern­ment inter­est­ed in learn­ing about a coun­ter­feit Unit­ed States hun­dred-dol­lar bill of remark­able qual­i­ty being print­ed in Lebanon? Han­na said he had inside knowl­edge of the oper­a­tion, and offered to direct his broth­er, who lived in Ottawa, to trav­el to Beirut and obtain sam­ples. Kel­ly was skep­ti­cal but inter­est­ed. “We said, ‘Fine. Do that,’” he recalls. As had been arranged, the broth­er stopped at Logan Air­port on his way back from Lebanon, and there he met the cus­toms agent and turned over five bills.
     Kel­ly was stunned when the bills were pre­sent­ed to him. Two of them did not appear to be fraud­u­lent. “I’ve done coun­ter­feit­ing cas­es, and I know what a coun­ter­feit bill looks like,” he says. “These bills looked gen­uine. They felt gen­uine. I said, ‘If these are coun­ter­feit, this is a seri­ous prob­lem for the Unit­ed States.’” Kel­ly imme­di­ate­ly called the Boston office of the Unit­ed States Secret Ser­vice, a branch of the Trea­sury. “I said, ‘We have some out­stand­ing-look­ing bills, and they came from Lebanon,’” he recalls. “Secret Ser­vice was at our door in three and a half min­utes. They knew exact­ly what I was talk­ing about.”
     Kel­ly, it turned out, had obtained sam­ples of a coun­ter­feit hun­dred-dol­lar bill that had been dubbed the Super­note. It had sur­faced around 1990 and orig­i­nat­ed in the Mid­dle East, and, the agents told Kel­ly, as far as they could deter­mine between two and three bil­lion dol­lars’ worth had been print­ed in two years. It was indeed no ordi­nary coun­ter­feit. Most fake cur­ren­cy is print­ed on an off­set press—the type used for books and magazines—and it tends to look and feel flat. The Super­note, how­ev­er, was being man­u­fac­tured by the same indus­tri­al process used to make authen­tic Unit­ed States cur­ren­cy, known as intaglio print­ing, in which an etched plate meets paper with tremen­dous force, giv­ing the note a dis­tinc­tive, embossed feel. The paper used for the Super­note was an uncan­ny repli­ca of the cur­ren­cy stock pro­duced exclu­sive­ly for the Unit­ed States gov­ern­ment since 1879 by Crane & Com­pa­ny, of Dal­ton, Massachusetts—seventy-five per cent cot­ton, twen­ty-five per cent linen, with embed­ded red and blue fibres.
     The work­man­ship of the Super­note was extra­or­di­nary. It had sequen­tial ser­i­al num­bers, and the print­ing plates con­tin­ued to be refined. A Secret Ser­vice agent iden­ti­fied Kelly’s two sam­ples as Super­notes by three minus­cule imper­fec­tions. Even when the flaws were point­ed out, Kel­ly says, “I frankly couldn’t see the damn imper­fec­tions.” (A for­mer employ­ee of the Secret Service’s foren­sic divi­sion says that when a sam­ple of the Super­note first arrived at the agency’s lab­o­ra­to­ry, in Wash­ing­ton, a top tech­ni­cal ana­lyst “exam­ined it the way he has every oth­er coun­ter­feit note in the world, and called it gen­uine.”)
     Most alarm­ing of all, the Super­note was so well engi­neered that it could fool cur­ren­cy scan­ners at the nation’s twelve Fed­er­al Reserve banks. The black ink on the front of Amer­i­can cur­ren­cy con­tains fer­rous oxide, which is mag­net­ic, and the Fed’s scan­ners read the mag­net­ic field down the cen­ter line of the por­trait with such pre­ci­sion that a thou­sand gen­uine hun­dred-dol­lar bills are reject­ed for every one that is lat­er found to be coun­ter­feit. Yet, Kel­ly recalls, “Secret Ser­vice told me the bills went through those machines.”
     The Super­note, Kel­ly learned, had been cir­cu­lat­ing in Europe, the Far East, the Mid­dle East, and the for­mer Sovi­et Union, but only a lim­it­ed sup­ply had reached the Unit­ed States. This was not reas­sur­ing. Of the almost three hun­dred and nine­ty bil­lion dol­lars in Amer­i­can paper mon­ey now in exis­tence, some two-thirds, or more than two hun­dred and fifty bil­lion, is in for­eign hands. The world­wide pop­u­lar­i­ty of the dol­lar is a tremen­dous boon to the Unit­ed States. As the Fed­er­al Reserve is fond of point­ing out, every bill in cir­cu­la­tion is in effect an inter­est-free loan; an equiv­a­lent amount in gov­ern­ment secu­ri­ties would cost the Unit­ed States more than twen­ty-five bil­lion dol­lars in annu­al inter­est pay­ments. The beau­ty of bills stuffed in a mat­tress in Kaza­khstan, for instance, is the good chance that the notes will nev­er be called in. The Super­note was by no means the first for­eign-made or for­eign-dis­trib­uted coun­ter­feit of Amer­i­can cur­ren­cy, but because of its fright­en­ing and unprece­dent­ed qual­i­ty it seemed sin­gu­lar­ly poised to dam­age world con­fi­dence in the dollar.

IN GENERAL, for­eign coun­ter­feit­ing of Amer­i­can paper mon­ey is an enforce­ment quandary for the Secret Ser­vice, which is essen­tial­ly a domes­tic police force. At home, its anti-coun­ter­feit­ing record is exem­plary; by track­ing sus­pi­cious pur­chas­es of paper and ink, the Ser­vice is able to seize more than nine­ty per cent of the coun­ter­feit mon­ey that is print­ed in the Unit­ed States before it can be dis­trib­uted. Only a frac­tion of the Service’s two thou­sand agents are sta­tioned abroad, how­ev­er, and to make cas­es out­side the Unit­ed States the agency depends heav­i­ly on for­eign law enforce­ment. In Thai­land in 1985, for exam­ple, with the aid of the Roy­al Thai Police, the Ser­vice tracked down Lee Ah-sin, nick­named King Kong, an eccen­tric, obses­sive­ly metic­u­lous Malaysian-born engraver who man­u­fac­tured an out­stand­ing hun­dred-dol­lar bill using a con­vert­ed squid-proces­sor as a press.
     The Super­note was clear­ly not the work of an eccen­tric. It appeared instead to be the Secret Service’s worst night­mare: an indus­tri­al-lev­el coun­ter­feit print­ed in a hos­tile region of the world. What’s more, there was evi­dence that the print­ing oper­a­tion was pro­tect­ed by the mil­i­tary of Syr­ia, an essen­tial­ly hos­tile gov­ern­ment. The Secret Ser­vice agents, Kel­ly recalls, envi­sioned the Super­note facil­i­ty as “a barn or a big ware­house” with mul­ti­ple press­es, either in the Syr­i­an-con­trolled Bekaa Val­ley of Lebanon—the noto­ri­ous bad­lands of the Mid­dle East, where drugs are har­vest­ed and ter­ror­ist groups con­duct field exercises—or in Syr­ia itself, but in either case guard­ed by Syr­i­an sol­diers. That sce­nario raised anoth­er ugly possibility—that the Super­note was a form of state-pro­tect­ed ter­ror­ism, a charge that would not be new to Syr­ia. “The Secret Ser­vice did believe that this was an effort not just to acquire amaz­ing wealth but also to desta­bi­lize the econ­o­my of the Unit­ed States,” Kel­ly says.
     The Secret Ser­vice had done its best to inves­ti­gate the Super­note, and ear­li­er in 1992 it had set up a task force in Cyprus. If the agency could locate the print­ing facil­i­ty, Kel­ly was now told, that infor­ma­tion would be turned over to the Unit­ed States mil­i­tary or intel­li­gence ser­vices. The Secret Ser­vice was eager to speak to Gebran Han­na and Peter Kat­tar, the hashish smug­glers, and a meet­ing was arranged at the U.S. Attorney’s Office.
     Han­na and Kat­tar said that, as they under­stood it, the coun­ter­feit oper­a­tion had begun in Lebanon in the mid-sev­en­ties, dur­ing the civ­il war between Chris­t­ian Pha­langists and Mus­lims. The Pha­langists, who were short of mon­ey, con­script­ed skilled Armen­ian engravers to make the plates of a coun­ter­feit Unit­ed States hun­dred, and this was print­ed on the bleached paper of gen­uine one-dol­lar bills. The coun­ter­feits, though imper­fect, were suc­cess­ful­ly passed in Czecho­slo­va­kia to buy rifles. Years lat­er, accord­ing to Han­na and Kat­tar, high-rank­ing offi­cials of the Syr­i­an mil­i­tary in Lebanon took con­trol of the coun­ter­feit­ing oper­a­tion, and the Super­note was devel­oped, although coun­ter­feit hun­dreds of less­er qual­i­ty also con­tin­ued to be pro­duced. Han­na and Kat­tar said that they knew of three print­ing facil­i­ties in Lebanon, and that the coun­ter­feit hun­dreds were trans­port­ed via drug routes—in trucks pass­ing through Turkey to Europe and in ships from the Lebanese port of Juniyah to Cyprus.
     The debrief­ing ses­sions with Han­na and Kat­tar last­ed sev­er­al months. In Feb­ru­ary, 1993, the two men plead­ed guilty to the hashish con­spir­a­cy and were sen­tenced, Han­na to eight years in prison and Kat­tar to ten. Both men were giv­en lighter sen­tences in return for their infor­ma­tion about coun­ter­feit­ing and about oth­er items of inter­est to the gov­ern­ment. With that, Kelly’s involve­ment in the Super­note inves­ti­ga­tion came to an end, but what he had learned from the Secret Ser­vice con­tin­ued to trou­ble him. “I’m here in Boston pros­e­cut­ing drug traf­fick­ers and mur­der­ers, but this was sev­er­al notch­es above any­thing I’d seen before,” he says. “It seemed to me a tremen­dous prob­lem for the country.”

KELLY has been proved right. Today, the Super­note remains one of the longest unsolved coun­ter­feit­ing cas­es in the mod­ern his­to­ry of the Secret Ser­vice, and it has begun to under­mine inter­na­tion­al con­fi­dence in Unit­ed States cur­ren­cy. Its rate of man­u­fac­ture appears prodi­gious; in the Russ­ian Fed­er­a­tion alone, where the dol­lar has sup­plant­ed the unsta­ble ruble as the pri­ma­ry cur­ren­cy, the Russ­ian Cen­tral Bank esti­mates that the vol­ume of Super­notes is as high as four bil­lion dol­lars. And because of the pos­si­bil­i­ty of eco­nom­ic ter­ror­ism as a motive for the Super­note, the full dimen­sions of the prob­lem are not yet known.
     It is a prob­lem that has not been wide­ly or accu­rate­ly report­ed. To date, the few press accounts of the Super­note have most­ly been based on a July, 1992, report of the House Repub­li­can Research Com­mit­tee Task Force on Ter­ror­ism and Uncon­ven­tion­al War­fare. The report blamed Syr­ia and Iran for dis­trib­ut­ing the Super­note, and stat­ed that it was actu­al­ly being print­ed by the gov­ern­ment of Iran at the mint in Teheran—charges that Iran called “wild hal­lu­ci­na­tions of the extreme right.”
     Indeed, the the­o­ry expressed to Paul Kel­ly by the Secret Ser­vice agents in 1992—that the Super­note facil­i­ty is in either Lebanon or Syr­ia, and is pro­tect­ed by the Syr­i­an military—is now con­sid­ered fact by many at the State Depart­ment, accord­ing to insid­ers. A coun­ter­feit hun­dred of less­er qual­i­ty is also being print­ed in the same region. State Depart­ment sources say that a diplo­mat­ic solu­tion to the Super­note prob­lem has been sought in sev­er­al dis­cus­sions with the Syr­i­an gov­ern­ment, includ­ing a May, 1994, meet­ing between War­ren Christo­pher and the Syr­i­an Pres­i­dent, Hafiz al-Assad. The State Depart­ment is hin­dered in those dis­cus­sions, how­ev­er, by the slow progress of the Super­note inves­ti­ga­tion on the part of the Secret Ser­vice; with­out know­ing the pre­cise loca­tion of the print­ing oper­a­tion, one source says, “it’s dif­fi­cult to pound the table.”
     The Secret Ser­vice, mean­while, may not be alto­geth­er to blame for its lack of progress on the Super­note. It has appar­ent­ly been held back by a curi­ous pol­i­cy deci­sion of the Unit­ed States Trea­sury, which has often been accused of being a schiz­o­phrenic institution—part banker, part cop. In deal­ing with the Super­note, the banker con­stituen­cy evi­dent­ly has set the agen­da. The Trea­sury, tak­ing its cue from the Fed­er­al Reserve, has a dif­fi­cult time regard­ing coun­ter­feit­ing, even on a very large scale, as a macro­eco­nom­ic prob­lem, because cash is a rel­a­tive­ly small per­cent­age of the total mon­ey sup­ply. Wire trans­fers, checks, and cred­it-card trans­ac­tions, after all, run into the tril­lions. Coun­ter­feit­ing becomes sig­nif­i­cant to the Fed only if it under­mines con­fi­dence in the dol­lar.
     Dozens of inter­views with high-lev­el insid­ers left the impres­sion that the Fed­er­al Reserve and the Trea­sury don’t fear the Super­note itself as much as they fear a con­fi­dence prob­lem that might result if they pub­licly acknowl­edge it and coun­te­nance a large-scale inves­ti­ga­tion. (As one expert on inter­na­tion­al ter­ror­ism who has looked into the Super­note puts it, “If the note is that near­ly per­fect, it doesn’t exist.”) Last March, the Secret Ser­vice briefed the Sen­ate Appro­pri­a­tions Com­mit­tee on its for­eign enforce­ment prob­lems, and the com­mit­tee, deeply con­cerned, urged a sig­nif­i­cant increase of Secret Ser­vice agents over­seas. In late August, the Ser­vice final­ly won approval to open its first per­ma­nent office in the Mid­dle East, in Cyprus.
     The Treasury’s efforts to keep the exis­tence of the Super­note qui­et have failed. After five years of Super­note pro­duc­tion, mer­chants and bank tellers in many for­eign cities, notably in Europe and the Far East, are increas­ing­ly reluc­tant to accept hun­dred-dol­lar bills. In August of 1994, for exam­ple, the colum­nist Liz Smith not­ed that “top banks” in Lon­don would not exchange pound notes for hun­dreds because of con­cern about a coun­ter­feit, which, they sus­pect­ed, came from the Mid­dle East. Last Feb­ru­ary, the Hong Kong Stan­dard report­ed that a rash of coun­ter­feit hun­dreds had hit that city. Sen­a­tor Patrick Leahy, who serves on the Bank­ing Com­mit­tee, com­plained recent­ly that while he was on vaca­tion in Ire­land this sum­mer estab­lish­ments would soon­er accept his traveller’s checks than his hun­dreds. Sim­i­lar prob­lems have been report­ed in Greece.
     Final­ly, last month, the Trea­sury did take action on the Supernote—though with­out ever once pub­licly men­tion­ing it. At a press con­fer­ence notable for its lev­i­ty (intro­duc­to­ry remarks were deliv­ered by an actor dressed as Ben Franklin), Robert E. Rubin, the Sec­re­tary of the Trea­sury, announced the first sig­nif­i­cant redesign of Amer­i­can cur­ren­cy since 1929, to com­mence next year with a new hun­dred-dol­lar bill. Among the mod­i­fi­ca­tions are a larg­er, off-cen­ter por­trait, a water­mark, and a patch of ink that shifts from green to black when viewed from dif­fer­ent angles. Rubin insist­ed that the redesign had been prompt­ed not by any exist­ing prob­lem but, rather, by the “future and poten­tial threat” of coun­ter­feit­ing posed by col­or pho­to­copiers, dig­i­tal scan­ners, and col­or laser print­ers. He described the amount of coun­ter­feit cur­ren­cy now in exis­tence as “de min­imis” and “not an eco­nom­ic prob­lem,” and assert­ed that the redesign was an exam­ple of “antic­i­pat­ing a prob­lem” and “stay­ing ahead of the curve.”
     It remains to be seen just how effec­tive a solu­tion the cur­ren­cy redesign will be. Even if the Mid­dle East­ern coun­ter­feit­ers can­not dupli­cate the new hun­dred, they can con­tin­ue to cause dam­age for some time with the old. The Trea­sury has a pol­i­cy of nev­er recall­ing exist­ing cur­ren­cy, for fear that the world’s hoard­ers of dol­lars might switch to Deutsche marks or yen. Even­tu­al­ly, a mar­ket pref­er­ence for the new hun­dred, and the replace­ment of old bills as they pass through the Fed­er­al Reserve sys­tem, is expect­ed to dri­ve the old one out of exis­tence, but that could take years. In the mean­time, Mary Ellen With­row, the Trea­sur­er of the Unit­ed States, empha­sizes that “we will have two kinds of mon­ey cir­cu­lat­ing at the same time, the old and the new—and they both will be good.”
     While the threat of wide­spread ama­teur coun­ter­feit­ing on col­or repro­graph­ic equip­ment is indeed seri­ous, it is far­fetched to think that that threat alone prompt­ed the cur­ren­cy redesign. Since 1990, hun­dreds and fifties have had two anti-repro­graph­ic fea­tures: a translu­cent poly­mer thread embed­ded in the paper, and micro­print­ing around the por­trait. By 1993, the thread and the micro­print­ing had been added to twen­ties, tens, and fives. Even those fea­tures, which did vir­tu­al­ly noth­ing to alter the look of the cur­ren­cy, took years to imple­ment. Redesign like the one announced last month is a rad­i­cal step for the Trea­sury, which believes that the con­sis­tent look of green-and-black Amer­i­can cur­ren­cy con­veys its sta­bil­i­ty. Many politi­cians, mean­while, have long held that a dra­mat­ic redesign of the cur­ren­cy would be high­ly offen­sive to the Amer­i­can public—like chang­ing the flag. While oth­er nations reg­u­lar­ly alter their currency—Great Britain, for exam­ple, has remade the pound note six times since 1914—the print­ing plates of Amer­i­can paper mon­ey have changed so lit­tle since 1929 that on the back of a new ten-dol­lar bill the car dri­ving by the Trea­sury Build­ing is of Mod­el T vin­tage.
     Need­less to say, the con­sis­ten­cy of those print­ing plates is a ben­e­fit to coun­ter­feit­ers. Back in 1981, the Secret Ser­vice began agi­tat­ing for a full-scale redesign of the cur­ren­cy, out of con­cern that Unit­ed States paper mon­ey might be vul­ner­a­ble not mere­ly to ama­teur reprog­ra­phy but to an indus­tri­al-lev­el coun­ter­feit­ing prob­lem like the Super­note. Offi­cials of the Secret Ser­vice pressed for more than a dozen anti-coun­ter­feit­ing fea­tures, includ­ing holo­grams, chem­i­cal mark­ers, and the use of mul­ti­ple col­ors, a stan­dard fea­ture in major cur­ren­cies through­out the world.
     In 1984, after three years of study and exper­i­men­ta­tion, the Secret Ser­vice and the Bureau of Engrav­ing and Print­ing had devel­oped three pro­to­type twen­ty-dol­lar bills, all with mul­ti­col­ored print­ing. Robert Leu­ver, the direc­tor of the B.E.P. at the time, says he brought the pro­to­types to Don­ald Regan, the Trea­sury Sec­re­tary, who then took them to the White House. “They didn’t float,” Leu­ver recalls Regan telling him. Ear­ly the next year, James Bak­er replaced Regan as Trea­sury Sec­re­tary, and rep­re­sen­ta­tives of both the B.E.P. and the Secret Ser­vice showed the pro­to­types to Baker’s deputy, Richard Dar­man, who, one of those rep­re­sen­ta­tives says, flat­ly reject­ed them. In 1986, Bak­er final­ly approved only two new features—the poly­mer thread and the micro­print­ing. The Secret Ser­vice made it clear that it con­sid­ered the changes insuf­fi­cient pro­tec­tion against var­i­ous types of coun­ter­feit­ing, and received assur­ances from the Trea­sury that oth­er changes would come soon.
     As it turned out, even the new fea­tures approved by Bak­er did not begin to take effect until 1990. Crane & Com­pa­ny, the exclu­sive sup­pli­er of Amer­i­can cur­ren­cy paper, was ini­tial­ly unable to mas­ter the tech­ni­cal dif­fi­cul­ties of embed­ding a poly­mer thread, and in 1986 the B.E.P. was forced to seek oth­er bid­ders. The most promis­ing new sup­pli­er, Por­tals Ltd., a British paper man­u­fac­tur­er, was knocked out of the run­ning the fol­low­ing year, how­ev­er, when Mass­a­chu­setts Rep­re­sen­ta­tive Sil­vio Con­te, a close friend of Crane’s late chair­man, put through an amend­ment to an appro­pri­a­tions bill requir­ing that Amer­i­can cur­ren­cy paper be sup­plied by an Amer­i­can-owned con­cern. Crane got anoth­er chance to pro­duce paper with an embed­ded thread, and final­ly suc­ceed­ed in 1989.
     The Treasury’s reluc­tance to alter the tra­di­tion­al look of the cur­ren­cy is appar­ent even in the redesign that is to take effect next year. Sec­re­tary Rubin stress­es that the new cur­ren­cy “retains the basic Amer­i­can feel and look”—it will be print­ed on the same Crane paper, of the same size, and in the same two col­ors. Mary Ellen With­row, the Trea­sur­er, says that the use of addi­tion­al col­ors was nev­er seri­ous­ly con­sid­ered. “Green is the col­or of pros­per­i­ty, and black is a good thing, too—it shows we’re sound and sol­id and in the black,” she says.

THE TREASURY remains obses­sive­ly secre­tive about the Super­note, to the point of denial. At a hear­ing before the House Bank­ing Com­mit­tee last year, Guy Caputo, then the deputy direc­tor of the Secret Ser­vice, would not con­firm the exis­tence of a high-qual­i­ty Mid­dle East­ern coun­ter­feit; nor would Ronald K. Noble, the Treasury’s under-sec­re­tary for enforce­ment, in an inter­view for this account. In late August, Theodore E. Alli­son, assis­tant to the board of gov­er­nors of the Fed­er­al Reserve, insist­ed, unblink­ing­ly, “We’ve talked to thir­ty Russ­ian banks in the past month, and they don’t have any prob­lems with coun­ter­feits.… There’s no sign of it.”
     Allison’s state­ment was an astound­ing one, con­sid­er­ing that on Sep­tem­ber 13th Vik­tor Mel­nikov, the direc­tor of for­eign-cur­ren­cy reg­u­la­tion and con­trol for the Russ­ian Cen­tral Bank, met with rep­re­sen­ta­tives of the State Depart­ment and described a Super­note epi­dem­ic in his coun­try. Mel­nikov, whose obser­va­tions were report­ed in a cable to the State Depart­ment from the Amer­i­can Embassy in Moscow, said the Cen­tral Bank had cal­cu­lat­ed that the peo­ple of Rus­sia were hold­ing between fif­teen and twen­ty bil­lion dollars—more dol­lars than rubles—and that the Amer­i­can hun­dred was an espe­cial­ly pop­u­lar denom­i­na­tion. Unfor­tu­nate­ly, he said, between fif­teen and twen­ty per cent of those dol­lars were believed to be “coun­ter­feit, ‘Super­notes,’” and he added that “the sit­u­a­tion was so bad that Ger­man banks would no longer accept 100 dol­lar bills from Russ­ian cit­i­zens.”
     The sever­i­ty of the Super­note prob­lem in Rus­sia is even more remark­able in light of the vol­ume of gen­uine hun­dred-dol­lar bills that are being sent there. In the last year, a hand­ful of Amer­i­can banks—led by Repub­lic National—have shipped more than twen­ty bil­lion dol­lars in crisp, new hun­dred-dol­lar bills to about fifty Moscow banks, in return for oth­er cur­ren­cies or gold bul­lion. Vik­tor Mel­nikov does not think this is a good thing; he told the State Depart­ment rep­re­sen­ta­tives that at least half the banks in Rus­sia were believed to be con­trolled by orga­nized crime, and expressed con­cern that much of the mon­ey com­ing from the Unit­ed States “was being used for ille­gal pur­pos­es, includ­ing nar­cotics traf­fick­ing.” Repub­lic Nation­al and the oth­er banks may be prof­it­ing hand­some­ly on their trans­ac­tion fees, but they are break­ing no laws in send­ing all that cash to Rus­sia; indeed, they buy it direct­ly from the Fed­er­al Reserve, and the stacks of hun­dreds arrive by plane in Moscow still in their gov­ern­ment shrink-wrap. Alli­son, of the Fed, acknowl­edged that some “unde­sir­able stuff” might be going on in Russia—it’s a big coun­try, he point­ed out—but he spoke with obvi­ous sat­is­fac­tion of the Russ­ian demand for dol­lars. “Issu­ing cur­ren­cy is about the best rack­et there is for a gov­ern­ment,” he said, smil­ing.
     The clos­est that any Trea­sury employ­ees inter­viewed for this account came to admit­ting the exis­tence of the Super­note was an acknowl­edg­ment by two Secret Ser­vice officials—Paul Hack­en­ber­ry, the assis­tant direc­tor of inves­ti­ga­tions, and Richard Rohde, the head of the coun­ter­feit division—that a “fam­i­ly” of coun­ter­feit hun­dreds was being print­ed in the Mid­dle East. But they insist­ed that the term Super­note was a “mis­nomer” and was not employed by the Secret Ser­vice. “They are good-qual­i­ty notes, but not that good,” Rohde said. When he was asked to present some sam­ples of the Mid­dle East­ern coun­ter­feit for inspec­tion, he pro­duced two notes—one a Series 1988 and the oth­er a Series 1993. Although he took con­sid­er­able pains to point out var­i­ous imper­fec­tions, the 1993 note nev­er­the­less looked flaw­less to an untrained eye. More­over, the note con­tained an embed­ded poly­mer secu­ri­ty thread, a feat that had tak­en Crane & Com­pa­ny years to accom­plish.
     But Hack­en­ber­ry and Rohde were will­ing, even eager, to talk about the alarm­ing rise of for­eign coun­ter­feit­ing of Amer­i­can cur­ren­cy, and the need for the Secret Ser­vice to enhance its over­seas presence—an obvi­ous source of frus­tra­tion. Rohde said that of the coun­ter­feit Amer­i­can mon­ey seized with­in the Unit­ed States last year, sev­en­ty-two per cent was man­u­fac­tured abroad, and that the vol­ume of seizures out­side the Unit­ed States was increas­ing every year. In August, the Roy­al Cana­di­an Mount­ed Police, with the help of the Secret Ser­vice, con­fis­cat­ed a hun­dred and twelve mil­lion dol­lars in fake hun­dreds in Saint-Con­stant, Que­bec; in Bogo­ta, Colom­bia, coun­ter­feit­ers copi­ous­ly pro­duce hun­dreds and twen­ties on the bleached paper of authen­tic dol­lar bills.
     The estab­lish­ment of a new office in Cyprus may at last help the Secret Ser­vice answer some key ques­tions about the Super­note. (Until now, the task force in Cyprus has con­sist­ed most­ly of agents on tem­po­rary loan from offices in Rome and the Unit­ed States, with occa­sion­al assis­tance from the Paris office, the State Depart­ment, the C.I.A., Israeli intel­li­gence, and the Ger­man fed­er­al police.) A per­son famil­iar with the efforts of the Super­note task force says that one of those key ques­tions is whether the motive for the coun­ter­feit extends beyond sim­ple greed to the fund­ing of Islam­ic ter­ror­ist groups, or an ide­o­log­i­cal attack on a sym­bol of the Unit­ed States. An even dark­er, though high­ly spec­u­la­tive, sce­nario, advanced by, among oth­er peo­ple, a senior staff mem­ber for a Sen­ate sub­com­mit­tee that inves­ti­gates mon­ey laun­der­ing, is that the Super­note may be used to under­write the devel­op­ment of a deploy­able nuclear device; in the for­mer Sovi­et Union, weapons-grade plu­to­ni­um is reput­ed­ly for sale. Robert Leu­ver is con­vinced that the Super­note is designed to cause eco­nom­ic harm. “This is an act of terrorism—monetary war­fare,” he says. “The Trea­sury won’t admit it.”
     Since 1979, Syr­ia has appeared on the State Department’s list of ter­ror­ist nations—a small club of coun­tries that includes Cuba, Iran, Iraq, Libya, North Korea, and Sudan. While no Syr­i­an offi­cials are known to have been direct­ly involved in plan­ning or exe­cut­ing ter­ror­ist attacks since 1986, Syr­ia per­mits Iran to sup­ply arms to Hezbol­lah, the Islam­ic ter­ror­ist group, through Dam­as­cus, and allows oth­er groups, includ­ing Hamas and the P.K.K., to train or take refuge in the Bekaa Val­ley. Nev­er­the­less, Syr­ia has tried to ini­ti­ate dis­cus­sions with the State Depart­ment to have its name removed from the list; Dam­as­cus is pub­licly com­mit­ted to the Mid­dle East peace process, and dur­ing the past three years Pres­i­dent Clin­ton has met twice with Pres­i­dent Assad. Before one of those meet­ings, Clin­ton was briefed by then Trea­sury Sec­re­tary Lloyd Bentsen, who, in turn, had been briefed on the Super­note by two Secret Ser­vice agents from the Cyprus task force. A State Depart­ment offi­cial says that stop­ping pro­duc­tion of the Super­note would like­ly be a con­di­tion of Syria’s removal from the ter­ror­ist list.
     There is lit­tle rea­son to believe that a diplo­mat­ic solu­tion will work. Syr­ia, some peo­ple have observed, is as much a rack­e­teer­ing enter­prise as it is a nation, and for years it has alleged­ly been involved in the inter­na­tion­al drug trade—a busi­ness often com­ple­ment­ed by coun­ter­feit­ing. Accord­ing to a 1992 con­gres­sion­al report, large quan­ti­ties of heroin—at the time of the report, near­ly twen­ty per cent of Unit­ed States consumption—along with hashish and cocaine, are pro­duced in the Bekaa Val­ley. The report named sev­er­al high-rank­ing mem­bers of the Syr­i­an gov­ern­ment and mil­i­tary as con­spir­a­tors in the drug traf­fick­ing, includ­ing Pres­i­dent Assad’s broth­er Rifaat. The motive behind the Super­note remains the sub­ject of great­est spec­u­la­tion, and may deter­mine whether mil­i­tary force is used to destroy the print­ing facil­i­ty, if it is ever locat­ed. It will also deter­mine whether the Trea­sury has blun­dered in fail­ing to treat the Mid­dle East­ern coun­ter­feit as an urgent law-enforce­ment issue, let alone one of nation­al security. ♦