LOS ANGELES – Federal authorities have arrested two people named in an indictment that alleges a scheme to launder the proceeds of scams sent to fraudsters via Target gift cards, the Department of Justice reported.
Bowen Hu, 26, and Tairan Shi, 27, both Chinese nationals, were taken into custody and were arraigned in United States District Court in downtown Los Angeles.
Two other defendants named in the indictment – Blade Bai, 33, a U.S. citizen, and Yan Fu, 58, also a Chinese national – will be summonsed to appear in federal court next month, according to prosecutors.
In the one-count indictment unsealed, the Department of Justices has charged all four defendants with conspiring to launder proceeds of wire fraud that were stored on gift cards issued by Target. The indictment alleges that Bai, Hu and Shi obtained more than 5,000 gift cards from a group that called itself the “Magic Lamp” and sold gift card information via an online messenger application, the DoJ stated.
Cards Distributed to ‘Runners’
Bai, Hu and Shi oversaw the distribution of gift cards to “runners,” including Fu, who used the funds on the cards at Target stores primarily in Los Angeles and Orange counties to purchase consumer electronics, other gift cards and other items, according to the indictment. Through the purchases and other transactions at multiple Target stores, the defendants and their co-conspirators sought to conceal the fact that the gift cards had been originally funded with fraudulent proceeds, DoJ said.
The indictment alleges that perpetrators of fraud schemes induced victims across the United States to purchase Target gift cards. Then, the indicted defendants in Southern California conspired to launder the proceeds.
Older Adults Victimized
According to the DoJ, the victims, who were often older adults, were tricked into buying the gift cards based on various fraudulent schemes, including:
- Government-imposter scams, in which fraudsters impersonate government officials, such as officials with the Social Security Administration or local police officers, and falsely claim that victims need to purchase gift cards to resolve an issue, such as a pending arrest warrant or a problem with the victims’ Social Security number
- Tech support scams, in which fraudsters trick victims into believing there is a serious problem with their computer or with account access which can only be solved by paying substantial amounts through gift cards.
“This case offers an important reminder to consumers that gift cards are for presents to friends and loved ones – they should never be used for payments to any government or corporate entity,” said Acting United States Attorney Tracy L. Wilkison. “Don’t be fooled by callers claiming to be with a government agency, a bank or any other institution demanding that you purchase gift cards. There is no reason to purchase a gift card to resolve a problem with an account, your Social Security number or a supposed criminal case.”