2 Chinese nationals charged in massive gift card fraud scheme in Metro Detroit
FOX 2 - Two Chinese nationals were arrested and charged for a gift card scheme involving thousands of cards..
The Michigan attorney general announced that Guangji Zhang, 46, of Irvine, California, and Huachao Sun, 35, of Los Angeles were both arraigned on March 7, accused in a large scale fraud enterprise.
Zhang and Sun were arrested at a Dearborn hotel on March 5. They have been charged each with one count of Conducting a Criminal Enterprise, a 20-year felony, and two counts of Possession of a Fraudulent or Altered Transaction Device, AG Dana Nessel's office.
A package determined to be suspicious by the USPIS agent was found to contain more than 1,500 gift cards and was addressed to the two defendants at the Dearborn hotel.
Investigators say the scheme involved the theft of empty, unsold gift cards from retail stores. The cards were then tampered with to reveal their redemption numbers, recorded by the scammers.
They were then concealed again with an adhesive to appear as though they have not been tampered with, Nessel's office claims.
It is alleged that the scammers then returned the altered gift cards to their retail point of sale and used computer programs to monitor when any card is activated with a balance of funds.
As soon as a shopper placed a balance on the card, the scammer was then able to transfer the balance into another digital account. The gift card, when given as a gift and redeemed, would already be depleted.
Nessel released a video Friday alerting Michiganders to the gift card scam, detailing how the scam is believed to operate, and offering tips to avoid becoming a victim.
This investigation was initiated by a special agent of the United States Postal Inspection Service, a federal partner of the Attorney General’s FORCE Team.
The Focused Organized Retail Crime Enforcement team with the Michigan State Police Fraud East team, surveilled the package recipients who, allegedly, visited Meijer locations in White Lake, Waterford, Auburn Hils, Southgate, Allen Park, and Taylor over two days placing altered gift cards back among store stock.
On March 5th, the men were arrested at their hotel and search warrants were executed on their vehicle and hotel room. In all, the Attorney General alleges, the men possessed more than 3,000 gift cards.
"Sophisticated fraud schemes undermine consumer trust and can cause significant financial harm, and I am proud of my FORCE Team for their efforts to shut down these operations and hold bad actors accountable," Nessel said. "They will continue to pursue and prosecute those who engage in scams targeting Michigan residents and businesses. I urge everyone to stay alert and be cautious when buying gift cards. Taking a few extra moments to check for tampering can save you from becoming a victim."
Each defendant will next appear before the 51st District Court on March 18 at 2:30 p.m. for a probable cause conference.
The FORCE Team has worked with retailers and crime. FORCE is an acronym that stands for Focused Organized Retail Crime Enforcement. Recent corporate partners on investigations have included Sam’s Club/Walmart, Meijer, Target, Home Depot, TJ Maxx, Rite-Aid, Lululemon, Ulta Beauty, Amazon, and Lowe’s.