Three Chinese nationals who were part of a Chinese transnational criminal organization have been sentenced for their involvement in a gift card fraud scheme, with the illicit money being used to buy expensive electronic products, which were then shipped to China.
The three individuals, who have also been sentenced to one year of supervised release, face deportation upon completing their prison sentences.
“These individuals were part of a Chinese transnational criminal organization that used a complex scheme to steal and launder millions of dollars through gift card theft,” Michael J. Krol, special agent in charge of Homeland Security Investigations New England, said in a statement.
Prosecutors said the trio’s crimes were part of a bigger problem. Organized crime groups in China had acquired more than $100 million in gift cards through fraudulent means, prosecutors said. These illicit means included stealing gift card data “by hacking U.S. companies, tampering with physical gift cards, and targeting U.S. citizens through romance and elder fraud schemes,” according to the press release.
The China-based criminal groups then sent the data from the gift cards to Chinese nationals operating cells in the United States via a China-based messaging platform in exchange for cryptocurrency, prosecutors said.
These cells would then use the gift card data to buy high-value electronics, particularly Apple products, prosecutors said, and ship them to China, Hong Kong, or Southeast Asian countries. Prosecutors noted that cell members typically run their operations in states with no sales tax, such as New Hampshire, to maximize their profits.
Wu, Jiang, and Chen were members of a cell in New Hampshire, where Wu and Jiang were responsible for buying fraudulent gift cards at a discount rate. Together, they either used the cards or gave them to others in the scheme, with Wu responsible for $1.4 million in fraud, Jiang for $3 million, and Chen for $400,000.
“The defendants played a critical role in laundering proceeds of romance and other online scams by purchasing the stolen gift cards and using them to purchase Apple products,” acting U.S. Attorney Jay McCormack said in a statement, according to the April 22 press release.
“While they may not have committed the initial fraud, the defendants’ actions helped convert stolen funds into tangible goods, enabling a large-scale financial crimes conspiracy.”
On Oct. 19, 2023, Jiang, Chen, and two other Asian males used gift card data on their cellphones to buy Apple, Bose, and Powerbeats products at a Target store in Salem, New Hampshire, totaling more than $12,356, according to a court document submitted in late March.
In January last year, law enforcement officials executed a search warrant at a warehouse used by the trio in Salem and found more than 7,000 Apple products, worth about $8 million, according to the court document.
Following the searches, law enforcement officials arrested Wu and Jiang before they could board a flight to Shanghai at the John F. Kennedy International Airport in New York, the court document states.
Chen was identified as one of the “runners,” who were considered “lower-level” participants in the scheme, receiving commissions for purchasing electronic products from stores, according to the court document.
The Epoch Times contacted the lawyers of Wu, Jiang, and Chen for comment, and did not receive a response by publication time.
Criminals are known to target gift cards at stores by stealing information on them before putting them back on store shelves, according to HSI. When a consumer buys a tampered gift card and loads money onto it, the criminal could immediately drain the funds.
