This error occurs when an uncut sheet of currency accidentally gets folded over during the printing process at the Bureau of Engraving and Printing. Because bills are printed in three separate stages (the back, the front, and the final overprint of seals and serial numbers), a fold creates a dramatic defect once the bill is unfolded and cut. This is an interesting example in that the sheet was straightened prior to the mechanical cutting phase. This resulted in the Treasury seal being separated into two  pieces.