US, Georgia investigate S. Ossetia counterfeiters

WASHINGTON, Nov 26 (Reuters) The US Secret Service is working with police in the former Soviet republic of Georgia to investigate an international counterfeiting operation that produces fake 100 dollar bills that have been seized in the United States and Israel, the Washington Post reported today.

The counterfeiting operation, based on the separatist enclave of South Ossetia, has produced more than 20 million dollar in fake bills that have been transported to the United States and Israel, according to investigators cited by the Post.

The counterfeit notes have been passed at numerous businesses in Baltimore, Maryland; New York City; Buffalo, New York; and Newark, New Jersey, the newspaper said. It said the notes have also surfaced in Georgia and neighboring Russia.

The Post said the number of notes produced in the region and passed in the United States has increased dramatically in recent years.

It cited unidentified senior officials, US diplomats, US court documents and a recent report to Congress.

The presence of a major international counterfeiting ring in an area of the former Soviet Union where territorial status remains unresolved 15 years after the collapse of communism offers a stark example of how organized crime has flourished in the region, sometimes through neglect and sometimes with the suspected involvement of government officials, it said.

''Counterfeiting is not the only headache for us if you're talking about criminality in South Ossetia,'' Ekaterine Zguladze, Georgia's deputy interior minister, told the Post.

''You also have drug trafficking, weapons trafficking, robbery, kidnapping. And our opportunity to fight criminals in there is very limited.'' White House spokesman Alex Conant referred queries on the matter to the Secret Service, where the duty officer was not immediately available to comment.

REUTERS BDP PM1225