The counterfeit bills are almost identical to real $100 bills. The Secret Service says the bills they confiscated were of the highest quality. They started the investigation four years ago.
It was the summer of 2007. The price of gold was taking off.
"The defendant in this case has a store in Chinatown that deals with gold and gold coins and he passed currency to a number of victims during a number of different transactions," San Francisco district attorney spokesperson Seth Steward said.
Peter Cheng, 82, listened in court through a Chinese interpreter as Secret Service agents testified in his trial. He was arrested in November 2008.
Authorities say it was from this family-owned jewelry store that Cheng handed out counterfeit $100 bills to pay for gold coins.
They say he gave $36,000 of the fake currency to three unsuspecting victims.
"We believe the defendant did know that the money he was passing was counterfeit," Steward said.
Cheng's attorney says his client was fooled just like everyone else. The bogus bills look almost identical to real money. The Secret Service calls them "super notes."
"They have all the security features: the threads, the letters, the hologram, they pass the detection pen, they pass the regular bank machines," defense lawyer Robert Amparan said.
It took the most sophisticated detection machines at the Bank of America, then a repository for the Federal Reserve Bank, to catch the fakes. The $100 super notes were perfect except for one thing -- the printing of the "n" in United States was slightly different.
So where do the counterfeit bills come from?
"We have been advised by the Secret Service agents, they have some believe they come from maybe north Vietnam, maybe from North Korea, maybe from Russia," Amparan said.
But both the prosecution and Cheng's lawyer agree that is not an issue in this case.
"It's whether or not my client knowingly possessed these as counterfeit and passed them as counterfeit," Amparan said.
Six years ago, the government accused North Korea of making super notes and passing them through an extensive international network of Asian organized crime. The Secret Service agent who testified Wednesday said it was extremely rare to see that many super notes -- $36,000 worth -- in the possession of just one person. They want to know where the fakes came from.