'Poppy Quarter' Behind Spy Coin Alert

A Canadian Fluorescent Coin is seen in Washington, Friday, May 4, 2007. An odd-looking Canadian coin with a bright red flower was the culprit behind the U.S. Defense Department's false espionage warning earlier this year, The Associated Press has learned. The coins glow under a black light, the rectangle in the center is not visible under regular light. (AP Photo/J. Scott Applewhite) (J. Scott Applewhite - AP)

Others in Canada's spy service also were searching for answers. "We would be very interested in any more detail you may have on the validity of the comment related to the use of Canadian coins in this manner," another intelligence official wrote in an e-mail. "If it is accurate, are they talking industrial or state espionage? If the latter, who?" The identity of the e-mail's recipient was censored.

Intelligence and technology experts were flabbergasted over the warning when it was first publicized earlier this year. The warning suggested that such transmitters could be used surreptitiously to track the movements of people carrying the coins.

"I thought the whole thing was preposterous, to think you could tag an individual with a coin and think they wouldn't give it away or spend it," said H. Keith Melton, a leading intelligence historian.

But Melton said the Army contractors properly reported their suspicions. "You want contractors or any government personnel to report anything suspicious," he said. "You can't have the potential target evaluating whether this was an organized attack or a fluke."

The Defense Security Service disavowed its warning about spy coins after an international furor. The U.S. said it never substantiated the contractors' claims and performed an internal review to determine how the false information was included in a 29-page published report about espionage concerns.

The Defense Security Service never examined the suspicious coins, spokeswoman Cindy McGovern said. "We know where we made the mistake," she said. "The information wasn't properly vetted. While these coins aroused suspicion, there ultimately was nothing there."

A numismatist consulted by the AP, Dennis Pike of Canadian Coin & Currency near Toronto, quickly matched a grainy image and physical descriptions of the suspect coins in the contractors' confidential accounts to the 25-cent poppy piece.

"It's not uncommon at all," Pike said. He added that the coin's protective coating glows peculiarly under ultraviolet light. "That may have been a little bit suspicious," he said.

Some of the U.S. documents the AP obtained were classified "Secret/Noforn," meaning they were never supposed to be viewed by foreigners, even America's closest allies. The government censored parts of the files, citing national security reasons, before turning over copies under the U.S. Freedom of Information Act.

Nothing in the documents _ except the reference to nanotechnology _ explained how the contractors' accounts evolved into a full-blown warning about spy coins with radio frequency transmitters. Many passages were censored, including the names of contractors and details about where they worked and their projects.

But there were indications the accounts should have been taken lightly. Next to one blacked-out sentence was this warning: "This has not been confirmed as of yet."

The Canadian intelligence documents, which also were censored, were turned over to the AP for $5 under that country's Access to Information Act. Canada cited rules for protecting against subversive or hostile activities to explain why it censored the papers.

___

Associated Press writer Beth Duff-Brown contributed to this story from Toronto.