It is not illegal merely to possess counterfeit money. Possessing counterfeit money becomes illegal if you know that it is counterfeit and intend to use it to defraud someone. Counterfeiting is a federal crime, and using counterfeit money is often a state one. A conviction for counterfeiting can carry up to 20 years in federal prison.
| When possessing counterfeit money is illegal | When it is legal |
| · you know that it is fake, · you use it to buy something, and · you intend to defraud someone. | · you are unaware that it is fake, · you do not use it, or · you did not intend to defraud anyone. |
Using counterfeit money to defraud is a crime
Generally, the criminal elements of the crime of using counterfeit money are:
- you had counterfeit or fake currency,
- you knew that it was fake,
- you used it to purchase goods or services, and
- you did so with the intent of defrauding someone.[1]
It is up to the prosecutor to prove each of these elements beyond a reasonable doubt.
The key aspect is that you knowingly use it in order to defraud.
Money is “counterfeit” if it is fake, but appears to be real enough that it would deceive an ordinary person.
State and federal offenses
Knowingly using counterfeit money to defraud someone is typically a state crime. Actually counterfeiting the money is a federal offense, and also often a state one.
According to 18 U.S.C. 471, the main federal counterfeiting law:
“Whoever, with intent to defraud, falsely makes, forges, counterfeits, or alters any obligation or other security of the United States, shall be fined under this title or imprisoned not more than 20 years, or both.”[2]
This offense is prosecuted by the Secret Service.[3]
Counterfeiting money is also often a state crime. It is typically covered by the criminal statute that prohibits forgery.
The criminal defense lawyers at our law firm have found that federal law enforcement agents will typically only prosecute elaborate counterfeiting operations or those that implicate a lot of money. Smaller amounts of counterfeit bills will generally be prosecuted by the local district attorney’s office.
What can be counterfeited
Note that both state and federal law is not confined to making or using fake bills of U.S. currency. A criminal case can be opened if you use or counterfeit any of the following:
- credit cards,
- bank notes,
- treasury notes,
- reserve notes,
- bonds and other securities,
- foreign obligations or securities, and
- money orders.
While rare due to their low value, counterfeiting coins of United States currency is also a criminal offense.
Penalties for a conviction
The penalties of a conviction will depend on the nature of the white-collar crime you are charged with committing.
Using counterfeit money to defraud someone is generally a low-level felony under state law. In California, for example, it is the crime of forgery and is a wobbler. It can be prosecuted as either a misdemeanor or as a felony. If prosecuted as a misdemeanor, a conviction carries up to 1 year in county jail. If prosecuted as a felony, a conviction carries up to 3 years in state prison.[4]
Counterfeiting the money is a more serious offense. The maximum prison sentence is 20 years in a federal penitentiary and a fine of up to $250,000.[5]
There may also be other consequences in addition to prison time, including:
- strict terms of probation after your sentence is complete, or in lieu of jail time,
- criminal fines,
- restitution,
- loss of any professional certifications or licenses that were used to facilitate the offense, and
- other repercussions of having a criminal record.
Simply having counterfeit currency is legal
Note that the crime of using counterfeit currency requires:
- your knowledge that the money is fake, and
- an intent to defraud someone.
Simply having counterfeit money is not a crime. However, our criminal defense attorneys have found that law enforcement tends to get suspicious if they find that you have counterfeit money on your person in public. They could reasonably ask what you intend to do with it other than to spend it.
Legal defenses
The best legal defense will depend on the circumstances of your case and your unique needs and interests. However, our criminal defense lawyers tend to use one or more of the following for clients who have been accused of using counterfeit money:
- lack of knowledge,
- lack of intent, and/or
- false accusations.
Lack of knowledge
Probably the most common defense to a charge that you used fake money is that you did not know it was fake. If you had no idea that the money was not real, then you could not have intended to defraud anyone.
Our defense team has found that the lack of knowledge defense, also known as a mistake of fact defense, is particularly strong if the counterfeit money was extremely accurate. If it fools detectives who know what to look for, it is probably unreasonable to expect you to notice that it was not real money.
Lack of intent to defraud
Another common defense to raise is that you did not intend to defraud anyone. This argument is implicit in the lack of knowledge defense, but is occasionally used on its own.
For example: Ned collects counterfeit items as a hobby. A counterfeit dollar bill from his collection accidentally ends up in his wallet and he spends it without realizing it.
False accusations
While fairly uncommon, you can be falsely accused of using counterfeit money by someone who wants to cause you trouble. This can happen after a personal relationship goes sour. The other person may act out of revenge, spite, or anger, and tell police that you broke the law. This can lead to criminal charges being filed.
Legal Citations:
[1] See California Penal Code 475 PC.
[2] 18 USC 471.
[3] 18 USC 3056(b).
[4] California Penal Code 475 PC.
[5] 18 USC 471.
