Catching Counterfeiters

​AS PART OF a U.S. Immigration and Customs Enforcement (ICE) initiative known as Operation Phalanx, a major fraudulent identification documents ring was busted up in 2011.

Twenty-two members of the Mexico-based fraud organization were indicted early in 2011 in the United States, and many have already been sentenced for their roles in the group. Those indicted included managers and “runners,” who distributed the group’s business cards and facilitated transactions.

The case began when ICE was tipped off to the lower levels of the organization, which was structured like a business, says Mike Lamonea, assistant special agent in charge with ICE Homeland Security Investigations’ Norfolk and Richmond, Virginia, offices.

The organization maintained 19 cells in 11 different states, and everything was structured like a business and tightly controlled by the group’s U.S. ringleader, Israel Cruz Millan, says Lamonea. Detailed business records were kept for each cell.

But it was more like mafia business than main street business. Violence and repercussions were doled out by the group to its own members when they broke the internal rules, says Lamonea.

Violence was also used against the competition. The level of violence was exceptional, states Rick Outland, president of the board of directors of the Document Security Alliance (DSA), a membership group of organizations and individuals from government, private industry, and academia that seeks to improve document security. Outland says that violence supplanted the usual price wars rival gangs engage in. The gang either killed or threatened the competition until there was no one else offering counterfeit documents on its turf.

The number of counterfeiters has grown, says Outland, because tools like high-tech printers make counterfeiting easier. “Where you used to have [to] possess a quality or a skill as a craftsman to create photographic reproductions and to create printing plates and to create printing offsets… now, essentially, every office is a potential manufacturing facility,” he says.

Despite the advances in printing, some documents have become incredibly difficult to counterfeit in recent years. For example, the U.S. passport has added smartcard technology with a chip inside the document. Counterfeiters get around that obstacle by providing “breeder” documents, such as birth certificates, which the purchaser can use to legally obtain the documents that are more difficult to counterfeit, like a passport or, in certain states, a driver’s license.

Counterfeiters are banking on the documents being good enough to withstand visual inspection, thus allowing people to gain access to legitimate instruments. “If it’s a genuinely issued passport, even though it’s under a fictitious name…at that point, you have the Holy Grail,” which can be used to open bank accounts, travel, and obtain further documents, says Outland.

But individuals don’t always have to go through the trouble of using breeder documents to get the more secure legal ones. That’s because even documents with difficult-to-replicate security features can be simulated.

And the truth is that not everyone will take a look at that passport smartcard or read it electronically, so sometimes simulated documents are enough.

“If you’re not...going to microscopically examine some of the features found and the printing details or the security features, then anything is going to be simulated as a ‘flash pass’ and pass by,” says Outland.

The government’s goal when counterfeit documents are found is to trace them back to the manufacturing facility (perhaps with help from the person who was caught) and get the facility shut down, says Outland. “The ultimate goal is to do what we did here in Phalanx and identify the leadership, identify the production mills, and take those people off to mitigate the number of documents that are being put into our community,” says Lamonea.

As for the counterfeit documents already in existence, DSA would like officials to do more to avoid being fooled by them. That would entail true authentication of the data and the document. Now, says Outland, government backend systems are focusing on validating the information on the documents, but he wants to see more attention paid to whether the document itself is legitimate when people are using it.

“You need to look at both the data as well as the document that it’s sitting on,” Outland maintains adding “[T]hat’s something that the DSA is pursuing.”