Counterfeits: Funding Terrorism Transcript
1
Counterfeits: Funding Terrorism Transcript
Speakers: Narrator, Kris Buckner, Sharon Melzer
(Music)
NARRATOR: Counterfeit products are everywhere, and with profits reaching into the billions each year, it has become the most lucrative crime in the world. But perhaps the most disturbing part of this underworld operation is the potential for counterfeit goods to destabilize our national security.
KRIS BUCKNER: The sales of counterfeit goods have been tied to street gangs and terrorist organizations. There’s a lot of implications from the sales of counterfeit goods that I don’t think the general public really knows or understands.
(Door thudding open)
NARRATOR: Tracking the link between counterfeits and terrorism leads many experts back to the security crackdowns following 9/11.
(Helicopter whirring)
Counterterrorism efforts have shut down many of the old methods for making and laundering money, but it is now believed these security measures also push terrorists into the most profitable crime of all: counterfeit.
SHARON MELZER: I think we need to start looking at those masterminds as very intelligent businessmen. They make choices where they can maximize their profit but also have the least amount of worry about being detected and being punished, so it’s easier and it’s a smarter, more rational choice to pick counterfeit.
(Music)
NARRATOR: One product frequently linked to terror groups may come as a surprise. It isn’t watches or shoes or purses; it’s cigarettes.
SHARON MELZER: It’s perfectly legal to grow tobacco. You can even get government subsidies to grow tobacco. It becomes illegal when they either counterfeit the product or when they don’t pay taxes on it, so there’s a lot less risk involved.
NARRATOR: It’s a huge moneymaker for terrorist groups like Hezbollah. The profit margin on counterfeit cigarettes is 20 to one and sales net hundreds of millions of dollars each year. Many of the counterfeit smokes are made in South America and China, and then packaged with the brand name on the box. Illegal cigarettes have been found to contain higher levels of toxins as well as insect eggs and even human feces. Hezbollah cells have even been caught running counterfeit operations in the United States. One of the first scams uncovered was in Detroit in 2002. Hezbollah members bought genuine cigarettes in North Carolina where cigarette tax is low, then smuggled them to Michigan where tax is high.
SHARON MELZER: At that point, Michigan was about 7 dollars and 50 cents on the taxation so for every time they would move a carton, it was 7 dollars and 50 cents profit.
(Music)
NARRATOR: To make the packs look legit, the operatives counterfeited the state tax stamp. It became a multi-million-dollar scam for Hezbollah. But there’s no way to know how those funds could bankroll a potential terrorist plot.
[End of Audio]
From “Counterfeit Goods: Crime Inc. – The Underground Economy.” Copyright 2011 b.
1. Counterfeits: Funding Terrorism Transcript
1
Counterfeits: Funding Terrorism Transcript
Speakers: Narrator, Kris Buckner, Sharon Melzer
(Music)
NARRATOR: Counterfeit products are everywhere, and with
profits reaching into the billions each year, it has become the
most lucrative crime in the world. But perhaps the most
disturbing part of this underworld operation is the potential for
counterfeit goods to destabilize our national security.
KRIS BUCKNER: The sales of counterfeit goods have been tied
to street gangs and terrorist organizations. There’s a lot of
implications from the sales of counterfeit goods that I don’t
think the general public really knows or understands.
(Door thudding open)
NARRATOR: Tracking the link between counterfeits and
terrorism leads many experts back to the security crackdowns
following 9/11.
(Helicopter whirring)
Counterterrorism efforts have shut down many of the old
methods for making and laundering money, but it is now
believed these security measures also push terrorists into the
most profitable crime of all: counterfeit.
SHARON MELZER: I think we need to start looking at those
masterminds as very intelligent businessmen. They make
2. choices where they can maximize their profit but also have the
least amount of worry about being detected and being punished,
so it’s easier and it’s a smarter, more rational choice to pick
counterfeit.
(Music)
NARRATOR: One product frequently linked to terror groups
may come as a surprise. It isn’t watches or shoes or purses; it’s
cigarettes.
SHARON MELZER: It’s perfectly legal to grow tobacco. You
can even get government subsidies to grow tobacco. It becomes
illegal when they either counterfeit the product or when they
don’t pay taxes on it, so there’s a lot less risk involved.
NARRATOR: It’s a huge moneymaker for terrorist groups like
Hezbollah. The profit margin on counterfeit cigarettes is 20 to
one and sales net hundreds of millions of dollars each year.
Many of the counterfeit smokes are made in South America and
China, and then packaged with the brand name on the box.
Illegal cigarettes have been found to contain higher levels of
toxins as well as insect eggs and even human feces. Hezbollah
cells have even been caught running counterfeit operations in
the United States. One of the first scams uncovered was in
Detroit in 2002. Hezbollah members bought genuine cigarettes
in North Carolina where cigarette tax is low, then smuggled
them to Michigan where tax is high.
SHARON MELZER: At that point, Michigan was about 7
dollars and 50 cents on the taxation so for every time they
would move a carton, it was 7 dollars and 50 cents profit.
(Music)
NARRATOR: To make the packs look legit, the operatives
3. counterfeited the state tax stamp. It became a multi-million-
dollar scam for Hezbollah. But there’s no way to know how
those funds could bankroll a potential terrorist plot.
[End of Audio]
From “Counterfeit Goods: Crime Inc. – The Underground
Economy.” Copyright 2011 by Films Media Group. Adapted
with permission.
Title
ABC/123 Version X
1
Funding Terrorism Worksheet
GHS/563 Version 1
1
University of Phoenix MaterialFunding Terrorism Worksheet
Complete Parts I and II of this worksheet.
Part I
Watch the “Counterfeits: Funding Terrorism” video located on
the student website.
Complete the table by including the following:
· Left column: Identify 2 or 3 funding strategies used by
terrorists or terrorist organizations to fund their activities.
· Middle column: Identify the threat the funding strategy poses
to homeland security and to legitimate businesses.
· Right column: Identify strategies used in counterterrorism to
combat the funding strategy.
Funding Strategy
Threat
Counterterrorism Strategy
