On the day after Christmas in 2013, a counterfeit $100 bill was used to buy a latte at a Peet's Coffee & Tea in downtown Pittsburgh. Later that day, a counterfeit $100 bill was used to buy a money order at a nearby Rite-Aid. Then another 16 were used at a Western Union counter to wire $1,500 (and pay a $93 service charge) to Uganda.
Within days of that spending spree, counterfeit $50 bills began appearing around the city, followed by counterfeit $20s. Fake money can get past a busy cashier or bartender, but it's inevitably discovered once it ends up at a bank. So when the first fake $100 bill was discovered in Pittsburgh, the Secret Service, whose original mandate when it was founded in 1865 was to combat counterfeiting, began to investigate.
All counterfeits have unique markings and characteristics, says former Secret Service forensic scientist Joel Zlotnick. For example, a counterfeit $100 made in Colombia will have subtle differences that enable investigators to distinguish it from a counterfeit $100 bill made in Peru, which in turn can be told apart from a counterfeit $100 bill made in North Korea. The first bill identified as being from a certain place becomes, in agency parlance, the parent note. All of the bills with the same identifying markings are in that bill's family of counterfeits.
Secret Service agents in Pittsburgh examined the bills and recognized them as having come from Uganda. They were high-quality fakes, printed on a professional offset press. When agents looked at in-store surveillance video, they recognized the man passing the notes as Joseph Graziano.
Graziano, who documented his opulent existence on his blog blackcardstatus.com, lived in an 18-story condo building in the city's Golden Triangle. He was seen at charity benefits and turned up on the city's lifestyle pages now and again. He drove a matte-black, $500,000 Lamborghini Murcielago LP 670-4 SuperVeloce with vanity plates that read "BNKRUPT."
Graziano and his Lamborghini in a video posted to YouTube four years ago
Clearly, Graziano wasn't bankrupt — but prosecutors say he was a thief. After graduating from the University of Pittsburgh with a degree in economics, the self-described "Entrepreneur, Philanthropist, Designer, Publisher, & Mogul" got hired as a corporate trust administrator in Bank of New York Mellon's Pittsburgh office, where he allegedly spent the next three years siphoning $2,441,294.35 out of customer accounts. Graziano also allegedly provided fraudulent financial records to get a mortgage, and used phony titles to borrow money against cars he no longer owned. While he was under federal investigation for that, he is also said to have sold iPads and MacBooks on eBay. When his customers received their orders, all they got were empty boxes.
Seven-figure thefts within government-regulated institutions tend to attract attention from law enforcement, and in September 2013, following a joint investigation by the FBI, the US Postal Inspection Service, and the Criminal Investigation Division of the IRS, Graziano was arrested and charged with 14 counts of embezzlement, bank fraud, and mail fraud. Facing 380 years in prison and $11,000,000 in fines, Graziano was released on a $25,000 bond. The court placed him under the supervision of a federal probation officer, and Graziano was ordered not to leave Pennsylvania.
According to court papers, three DHL packages addressed to Graziano were sent from Uganda a short time later. The shipping labels indicated they had been mailed by someone identified only as "A.B." from a store in Kampala called Beyond Computers. Inside the envelopes, behind pages of dummy paperwork, hidden compartments held almost $7,000 in counterfeit "FRNs" — what the Secret Service calls Federal Reserve notes. In other words, cash.
On February 25, two months after he passed his first counterfeit $100 bill at Peet's, Graziano was arrested in Arizona. But authorities still didn't know who had supplied him.
* * *
Counterfeit currency has circulated in America since at least the arrival of English settlers in the early 1600s. At that time, some Native American tribes used seashells as currency; white ones were less valuable than dark, and it wasn't long before European traders began dyeing white shells black. Native Americans in turn also made their own counterfeits.
Paper money was introduced in 1690 as a way for the Massachusetts Bay Colony to cover the costs of military expeditions. For the next 300 years, little changed about the way counterfeiting was done; aspiring counterfeiters had to invest in expensive printing presses and put together teams of retouchers, engravers, and other artisans.
"We used to go out and canvass printing supply houses," said ex-Secret Service agent Dan Bongino, author of Life Inside the Bubble. "Someone they'd never seen before would come in, pay cash for a bunch of green and black ink, and move into the neighborhood. That's how a lot of these idiots would get caught."
Then, about 20 years ago, counterfeiting began a massive metamorphosis.
"Computers really took a lot of the 'art' out of counterfeiting," Bongino said. "It used to be limited to people who had some sort of artistic talent, but things really changed with the advent of inkjet printers, producing what we call a P-note — a printer note."
In 1995, about 1 percent of all counterfeit notes passed in the US were P-notes. Today, that number is roughly 60 percent. A P-note doesn't need to be perfect; if it can be used once, it has done its job. The truly sophisticated counterfeits generally come from overseas, where they're printed on professional presses by organized criminal syndicates.
North Korean meth, motorcycle gangs, Army snipers, and a guy named Rambo. Read more here.
The increasing affordability of printers actually pushed down the price of commercial-grade presses as well. As digital printing made counterfeiting more accessible to amateurs, the printing plants put out of business by desktop publishing began to sell off equipment — some of which originally cost upwards of $1 million — for pennies on the dollar. Suddenly, a counterfeiter didn't necessarily need a cartel to back him financially. He just needed a couple of partners with cash.
It was obvious Graziano wasn't printing the bills himself. In addition to Pennsylvania, similar counterfeits of Ugandan origin had been spotted in a handful of other US states, as well as in Europe and Africa. To begin working their way up to the head of the operation, agents needed to get Graziano talking.
In colonial times, counterfeiting was a capital offense. Today it won't get you executed, but it will earn you 15 years in federal prison. Already facing more than four lifetimes behind bars on his existing charges, Graziano was in deep shit. Though there is as of yet no word on what if any deal was struck, Graziano began talking to investigators.
Clock continued to assume Community-X, whose members had all been personally approved by him, was a private forum. But the Secret Service saw everything Clock posted.
He said he got his counterfeit bills through the Tor Carding Forum (TCF), a members-only dark net marketplace dealing in stolen financial information. The seller's name, he told them, was Willy Clock.
Clock had offered Graziano $4,000 in counterfeit $100 bills for $1,500 in real money, and Graziano bought his first batch in mid-December. When Clock left TCF in January to start his own invite-only criminal marketplace called Community-X, Graziano followed. But the following month, Graziano got arrested in Arizona. And as soon as that happened, Clock banned him from the site.
With Graziano's access cut off, investigators could no longer use him to get to Clock. But US Customs and Border Protection was flagging all DHL shipments sent to the US by A.B. from Kampala, which allowed Secret Service agents to identify people in the US doing business with Clock. The total number of buyers targeted has not been made public, nor have details about the interactions between buyers and authorities. But by April, the Secret Service had a new mole inside Community-X.
On April 30, the mole, named in court papers as CI-1, arranged to purchase $5,000 in counterfeit $100 bills from Clock. They still hadn't shown up by May 20, when Clock sent an email apologizing for the delay — but three days later, CI-1's package finally arrived via Priority Mail. Inside were 52 counterfeit $100 bills, the extras perhaps thrown in to make up for the wait. Though they were sent to CI-1 from one of the US-based re-shippers Clock used to throw off the authorities — he would ship a customer's order to another customer, who might ship it to a third, and so on until it finally arrived at its intended destination — Secret Service analysis determined the fakes had been made in Uganda.
* * *
Though the Secret Service wouldn't know it until they flipped yet another informant months later, a Community-X member traveled from the US to Uganda in July, returning with more than $300,000 in counterfeit currency. According to court documents, they had been hidden between the glued-together pages of charity pamphlets, and there were so many bills that another confidential informant, this one known as CI-2, was recruited to help unpack them. (It has not been explained how Clock's courier was able to get all that paper past Customs.) After the pamphlets were soaked in hot water to dissolve the glue, the re-shippers were responsible for treating the bills with hairspray — a simple way to trick the kind of counterfeit-detecting pens used at checkouts — before sending them off to the customers who bought them.
Clock continued to assume Community-X, whose members had all been personally approved by him, was a private forum. But thanks to CI-1, the Secret Service saw everything Clock posted. And on November 17, Clock announced he had just shipped $250,000 in counterfeit dollars from Uganda to the United States.
At the same time, phony US dollars were streaming into the Ugandan economy. In one high-profile caper, eight people exchanged $317,000 worth of counterfeit US dollars for real Ugandan shillings over the course of four days at a Stanbic Bank branch in Kampala. A squad of Secret Service agents flew there and linked up with detectives from the Uganda Police Force's Special Investigations Unit. A.B., the person who'd sent the three DHL packages from Kampala to Joe Graziano in Pittsburgh the year before, was arrested. A.B. then owned up to having shipped the counterfeit $100 bills — but he didn't say anything about Willy Clock. The guy printing the bills, A.B. said, was an American named Jack Farrel.
Investigators typed the name into Facebook, bringing up a profile whose bio declared, "I'm a bad mother fuckin cowboy from Texas working in Kampala Uganda for the next 4 months doing everything you wouldn't want to." Agents showed Farrel's profile photo to A.B. and asked if it was the man with whom he'd been working. He said yes.
Agents ran the photograph through facial recognition software and discovered their man wasn't named Willy Clock or Jack Farrel. Instead, they got a positive match from a photograph on file at the Texas Department of Motor Vehicles. The photo was of a man named Ryan Gustafson.
* * *
Gustafson had first visited Africa as a child more than two decades ago.
In 1992, missionaries LeRoy and Lisa Gustafson went to Uganda with their sons Peter and Ryan, ages 5 and 3 at the time. The purpose of their work, as described on their blog, was "to glorify Jesus our Lord and Savior to fulfill His command to make disciples of all nations to know God and make Him known." LeRoy, whose LinkedIn profile lists a degree in Ornamental Horticulture from the University of Idaho, taught farming and food production skills, and helped set up a training institute for new pastors. When Lisa wasn't homeschooling the boys, she trained local teachers and spent time "reaching out to the village children and adults with Sunday School and Worship Sunday school."
In 2012, Lisa and LeRoy headed south to spread the Word in Rwanda. Peter, by then 25, traveled to Eastern Europe to try his hand at photography. Ryan's movements in the intervening two years were less clear, but if he ever left, he appeared to have wound up back in Uganda.
Authorities still needed to get to Ryan Gustafson. The Secret Service and Ugandan detectives arranged for a Ugandan confidential informant identified in court papers as "CI-3" to set up a buy. On December 11, 2014, less than a year after Joe Graziano passed his first counterfeit $100 bill at Peet's Coffee, CI-3 was sent to buy $10,000 in counterfeit dollars from Gustafson for 5.5 million Ugandan shillings (about $2,000).
Ugandan lawmaker calls anti-gay law a 'Christmas gift' to the country. Read more here.
Court documents say CI-3 was met by "Jack Farrel's houseboy, Kojo Christopher," who made the exchange at the Speke Hotel. A Secret Service analysis found the counterfeit $10,000 that Christopher allegedly sold to CI-3 to be from the same family as the bills passed by Graziano in Pittsburgh. Officials tailed him home, and at about 4pm, Gustafson was put in handcuffs.
A search of the rented house allegedly recovered $180,420 in counterfeit US dollars and $15,722 in counterfeit euros, in addition to counterfeit Ugandan shillings, Congolese francs, Ghanaian cedi, and Indian rupees. Authorities say they found computers and printers, a scanner, bottles and cans of ink, inkjet cartridges, 10 thumb drives, two paper cutters, counterfeit detection pens, peel-off stickers that mimic security features found in euro notes, two Tasers, 200 glue sticks, pamphlets reading "Give a Child Hope Today" with counterfeit US Dollars sandwiched between glued-together pages, Western Union and Moneygram receipts, and a $10,000 money wrapper signed by Willy Clock. The search also turned up a pair of Anon Hands — molded rubber gloves that hide a wearer's fingerprints — that were identical to the ones in a picture Clock had posted to a Community-X thread months earlier. The Secret Service was still able to lift a print identified as Gustafson's from a document sent to Graziano.
Counterfeit cash allegedly found by authorities at Gustafson's home. (Photo via US Attorney's Office)
As he was being arrested, Gustafson continued to insist that his name was Jack Farrel until a search of his home turned up Ryan Gustafson's US passport, Ryan Gustafson's Texas ID card, Ryan Gustafson's Colorado driver's license, and an official Kenyan document charging Ryan Gustafson with unlawful possession of a firearm. According to court documents, agents discovered the Jack Farrel Facebook account was associated with the same email address that Gustafson had provided on his US passport application. He allegedly accessed the Jack Farrell account from the same IP address, on the same date, at about the same time, as he accessed another Facebook account under the name Jack Farrel, both displaying profile pictures that appeared to be of Ryan Gustafson. Another account under the name Ryan Gustafson was associated with the email address email@example.com.
Agents obtained data logs showing that "an individual" logged into the second Jack Farrel Facebook account on the same date, from the same IP address, as Willy Clock did when he emailed CI-1 months before.
* * *
Senior Superintendent of Police Joseph Ojinga, the Ugandan cop who supervised the African end of the Gustafson investigation, confirmed that counterfeit currency and rounds of ammunition were found at Gustafson's house, but he won't reveal further details about the case. Gustafson's various social media accounts described him as a Project Associate with the UN Refugee Shelter Programme in the Democratic Republic of Congo, and a member of the Colorado State University Class of 2006. However, the school told VICE News it has no record of him attending, and a UN spokesperson said there were no records of Ryan Gustafson. Early reports in the Ugandan press identified Gustafson as a "retired US Army colonel" and an "American engineer." Gustafson's uncle, however, told us he's neither.
"Ryan Gustafson is my nephew," Ron Gustafson — LeRoy's brother — wrote in an email to VICE News. "To the best of my knowledge, he has no college education and he has never been in the Army. What he has been up to over the last several years while in Africa, I have no idea."
Ron, who owns the Jamaica Beach RV Resort in Galveston, Texas, said he hadn't talked to Ryan for some time, but added that his son Nathan had been in touch. Nathan didn't respond to repeated requests for comment, nor did Gustafson's parents. Ryan's current attorney in Uganda, Evans Ochieng, also declined to speak to us.
'His notes were very good. He was a little bit worried that if he continued printing US dollars, it would eventually bring the Secret Service on his back.'
Isaac Walukagga is a lawyer who initially took Gustafson's case before withdrawing a week later, without official explanation. But he told us the problem involved money.
"I was keen on representing Ryan," said Walukagga, who added that he met Gustafson at the Uganda Police Force's Special Investigations Unit shortly after his arrest. "Unfortunately, we had issues with my remuneration, specifically, on when he was going to make a down payment."
Walukagga said Gustafson struck him as intelligent yet "very vulnerable." Frustration appeared to creep into his voice when he said that Gustafson "needs to fully understand the ramifications of the situation he is in."
"We had one or two instances where I told him to do one thing, and he did another," Walukagga said. "He was not taking my instructions seriously, and I believed this was exposing him. I told him candidly, 'Look, if you dont stop this, I will disengage.' Which I did."
CI-3's identity was inadvertently exposed by one African news source. When we tracked him down in Kampala, he said that we had the wrong man before owning up to being CI-3. He said "friends of Jack Farrel" were after him, and declined to say more. He did, however, agree to put use in touch with an associate of his named Ronnie, who said he's the local fixer who put CI-3's undercover buy in motion.
"I know what's going on around here, who's into what, this and that," Ronnie told VICE News. "The Secret Service was looking for Jack Farrel, whom I knew. And I helped arrange that."
Ronnie said he got to know Gustafson as Jack Farrel in Kampala a couple of years ago.
"People do what they have to do to survive, and we looked at Jack as a resource," he said. "His notes were very good; he got machines from China to do the job. He was a little bit worried that if he continued printing US dollars, it would eventually bring the Secret Service on his back. So that's why he also printed local currency, all top-quality."
Ronnie isn't very happy with the way things turned out — and again, the problem is money. He said his involvement in the Gustafson case took a lot of time and went beyond setting up CI-3's buy, and that he spoke to VICE News in the hope that someone at Secret Service headquarters would read the story and right the financial wrong he believes was perpetrated upon him and CI-3.
"If you are an informer, you're entitled to payment," Ronnie said. "We should have gotten $50,000, $100,000. After they made the bust, they had us sign blank receipts, then they paid us $1,950 each. Can you imagine?"
Bahrain update: Six months in jail for a tweet. Watch it here.
The Secret Service, which has a 99.7 percent conviction rate in cases that go to trial, declined to comment. Kojo Christopher is charged alongside Gustafson; A.B. is being prosecuted as well. Graziano, who was forced to shut blackcardstatus.com this fall after American Express sued him for trademark infringement, is awaiting trial in Pennsylvania.
According to US Attorney David Hickton, Gustafson faces "significant jail time" in Uganda, where he has been charged with conspiracy, possession of counterfeit [currency], selling/dealing in counterfeit [currency], and unlawful possession of ammunition. After his case is settled there, he will ostensibly be extradited to the US to face federal counterfeiting and conspiracy charges.
He's expected back in court January 28 for a bail hearing.
Follow Justin Rohrlich on Twitter: @justinrohrlich