18 USC 331: Coin Mutilation, Intent, and Penalties

Under 18 U.S.C. 331, fraudulently altering, defacing, or falsifying a U.S. coin, or knowingly passing an altered coin as genuine, is a federal felony punishable by up to five years in prison and fines reaching $250,000 for individuals. The statute turns entirely on one word: “fraudulently.” Without intent to deceive someone about a coin’s value or authenticity, there is no crime, which is why souvenir penny machines run legally at every tourist stop in the country.

What the Statute Prohibits

Section 331 reaches two separate acts. The first is physical alteration. Anyone who fraudulently changes, damages, or removes metal from any coin produced by a U.S. mint, or any foreign coin that circulates as money in the United States, commits a federal offense.¹ Plating a cheap coin to pass it as a more valuable one, shaving metal from gold or silver coins, and creating outright fakes all fall inside this prong.

The second is distribution. Anyone who knowingly possesses, sells, attempts to pass, or brings into the country an altered coin faces the same penalty. Prosecutors don’t have to prove you did the altering yourself. Knowing the coin was altered and trying to spend or sell it as genuine is enough.¹

There is no minimum dollar amount and no quantity threshold. A single coin, altered with fraudulent intent, is technically enough.

The Fraudulent Intent Line

Every prohibition in Section 331 hinges on fraudulent intent. In a 1980 letter, the U.S. Mint’s Office of the Director confirmed that compressing a coin into a souvenir does not violate Section 331 because no fraudulent intent is present. That reasoning covers a lot of everyday coin modification:

Elongated penny machines at theme parks, museums, and tourist attractions.
Hobo nickels, the folk art tradition of carving coins into miniature sculptures.
Coins drilled for jewelry, keychains, or used in art projects.

What crosses the line is alteration meant to deceive: plating copper pennies with gold and selling them as rare collectibles, shaving silver from pre-1965 quarters while spending them at face value, or manufacturing fakes to fool vending machines. The test each time is whether the modification is meant to pass the coin off as something it isn’t.

What Prosecutors Have to Prove

The elements depend on which prong applies. For someone charged with altering a coin, the government must show a physical change and intent to defraud. Accidental damage, artistic expression, and personal use fall short. Intent is usually established circumstantially: the scale of the operation, specialized tools, a pattern of deceptive transactions, or communications showing the defendant understood what they were doing.

For someone charged with distributing, prosecutors must show two things: the defendant knew the coin had been altered, and they fraudulently tried to pass, sell, or possess it. A person who unknowingly receives a counterfeit coin and spends it in good faith has not committed this offense. Knowledge is again typically proved by patterns: repeated sales, bulk purchases of plating materials, or online listings the seller knows to be false.

Penalties

A Section 331 violation carries a maximum of five years in federal prison, a fine, or both.¹ Because the maximum exceeds one year, the offense is a felony. Under the general federal fines statute, felony-level offenses expose individuals to fines up to $250,000 and organizations up to $500,000.² Courts can also order restitution to anyone who bought altered coins at inflated prices.

Sentencing Guidelines

Federal judges apply the U.S. Sentencing Guidelines to place a defendant within the statutory range. Counterfeiting offenses start at a base offense level of 9, which produces modest prison time for a first offender, but several enhancements can push that number sharply higher:³

Face value over $2,500 but under $6,500 adds 1 level. Above $6,500, the increase follows the general fraud table and scales quickly with the dollar amount.
Possessing or controlling counterfeiting devices or materials adds 2 levels, with a floor at level 15.
A firearm or other dangerous weapon connected to the offense adds 2 levels, with a floor at level 13.
Any part of the offense occurring outside the United States adds 2 levels.

A first-time offender at the base level faces a range of zero to six months. Someone with enhancements and prior convictions can reach the full five-year statutory maximum.

Forfeiture

Federal law also strips the defendant of the fruits and tools of the offense. Under 18 U.S.C. 492, counterfeit coins, the equipment used to make them, and raw materials intended for counterfeiting are automatically forfeited to the United States when found in someone’s possession without Treasury Department authorization.⁴ Refusing to surrender counterfeit items or tools when a Treasury agent asks is itself a separate crime carrying up to a year in prison.

The statute does provide a safety valve. If you can show you came into possession of counterfeit items without intentionally breaking the law and without willful negligence, you can petition the Secretary of the Treasury for remission or mitigation. The Secretary has discretion to return items or reduce the forfeiture on terms they consider reasonable.⁴

Charges That Get Stacked With Section 331

Section 331 rarely appears alone in a serious case. Prosecutors add related counts when the facts support them, and the added counts often carry sentencing exposure that dwarfs the underlying statute.

18 U.S.C. 485 covers making counterfeit coins from scratch rather than altering existing ones. Manufacturing a fake coin resembling any U.S. denomination above five cents, or any foreign gold or silver coin circulating in the United States, carries up to fifteen years.⁵ The line matters: altering a genuine coin is 331 (five-year max); creating a coin from raw materials is 485 (fifteen-year max).

18 U.S.C. 489 prohibits making or possessing tokens or discs that resemble U.S. or foreign coins in design, color, or inscription without Treasury authorization. It targets novelty items and game tokens designed to look like real money, and it carries a fine but no imprisonment.⁶

18 U.S.C. 470 reaches conduct abroad. Someone outside the United States who makes or deals in counterfeit U.S. obligations, or who possesses counterfeiting equipment, can be prosecuted as if the offense occurred domestically.⁷

18 U.S.C. 1343, the wire fraud statute, applies when altered or counterfeit coins are sold through online platforms, auction sites, or any transaction using electronic communications. Wire fraud carries up to twenty years.⁸ In modern coin-fraud cases, this is often where the real sentencing exposure lives.

18 U.S.C. 1956 adds money laundering charges when proceeds from fraudulent coin sales are moved through financial institutions to disguise their origin. Conviction carries up to twenty years and fines up to $500,000 or twice the value of the laundered property, whichever is greater.⁹

Coins Versus Paper Currency

A frequent point of confusion: Section 331 covers coins; 18 U.S.C. 333 covers paper currency, and the two work very differently. Section 333 makes it illegal to mutilate paper money with intent to render it unfit for circulation, and it is only a misdemeanor carrying up to six months.¹⁰ Section 331 requires fraudulent intent, not just intent to unfit the currency, and its five-year maximum makes it a felony.

Reporting a Suspected Counterfeit Coin

If you think a coin in your possession is counterfeit or fraudulently altered, take it to your local police department or your bank. Both will forward suspect coins to the Secret Service, which has primary federal jurisdiction over counterfeiting investigations.¹¹ Do not try to spend it. Knowingly passing an altered coin is itself a federal offense under Section 331, no matter how you originally received it.

1
Office of the Law Revision Counsel. 18 USC 331 – Mutilation, Diminution, and Falsification of Coins
2
Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine
3
United States Sentencing Commission. USSG 2B5.1 – Offenses Involving Counterfeit Bearer Obligations of the United States
4
GovInfo. 18 USC 492 – Forfeiture of Counterfeit Paraphernalia
5
Office of the Law Revision Counsel. 18 USC 485 – Coins or Bars
6
Office of the Law Revision Counsel. 18 USC 489 – Making or Possessing Likeness of Coins
7
Office of the Law Revision Counsel. 18 USC 470 – Counterfeit Acts Committed Outside the United States
8
Office of the Law Revision Counsel. 18 USC 1343 – Fraud by Wire, Radio, or Television
9
Office of the Law Revision Counsel. 18 USC 1956 – Laundering of Monetary Instruments
10
Office of the Law Revision Counsel. 18 USC 333 – Mutilation of National Bank Obligations
11
United States Secret Service. Counterfeit Investigations