WILMINGTON, MA — The U.S. Attorney’s Office thanked the Wilmington Police Department in a press release on Tuesday following the arrest of two Chinese nationals in California for allegedly laundering money generated from Target gift card scams.
“Our involvement with this case stemmed from two of our residents being scammed in March of 2020,” explained Wilmington Police Chief Joe Desmond. “It’s a fairly common scam involving the purchase of gift cards.”
Desmond praised Detective Ronald Alpers for his work on the investigation.
“Detective Alpers did an outstanding job of tracking down the purchased cards and then working with retailers to obtain video surveillance once the cards were used,” said Desmond. “The purchased cards were fraudulently used in New York City and many locations in California. Detective Alpers then contacted Homeland Security who was working on putting together the pieces of the larger criminal enterprise responsible.”
Desmond noted that, at this time, he Wilmington victims are still out the money they were scammed.
Bowen Hu, 26, of Hacienda Heights, and Tairan Shi, 27, of Diamond Bar, both Chinese nationals, were taken into custody today and are expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.
Two other defendants named in the indictment – Blade Bai, 33, of El Monte, a U.S. citizen, and Yan Fu, 58, of Chino Hills, also a Chinese national – will be summonsed to appear in federal court next month.
The one-count indictment unsealed today charges 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.
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.
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. 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; and
- 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.
According to court documents, Bai, Hu and Shi obtained the gift card numbers from the Magic Lamp group, often on the same day fraud victims had purchased the gift cards at the direction of a telephone scammer. Fu travelled to as many as 17 Target stores in a single day to conduct gift card transactions, and Bai resold the purchased consumer electronics, using some of the proceeds to pay the Magic Lamp group, the court documents allege.
Investigators conservatively estimate that the defendants laundered more than $2.5 million in gift cards between approximately June 2019 and November 2020.
All four defendants are charged with conspiracy to commit money laundering, a felony offense that carries a statutory maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This case is the product of an investigation by HSI and the FBI. The investigation was conducted under the auspice of HSI’s Los Angeles’ El Camino Real Financial Crimes Task Force, a multi-agency task force comprised of federal and state investigators focused on financial crimes in Southern California.
The Social Security Administration, Office of the Inspector General also provided assistance during the investigation, as did the following: the Brea (California) Police Department, the Glynn County (Georgia) Police Department, the Fontana (California) Police Department, the Charlotte-Mecklenburg (North Carolina) Police Department, the Streamwood (Illinois) Police Department, the Cleveland (Ohio) Police Department, the Madera County (California) Sheriff’s Office, the New York Police Department, the Norwood (New Jersey) Police Department, the Loudon County (Virginia) Sheriff’s Office, the Waukesha County (Wisconsin) Sheriff’s Department, the Fremont (California) Police Department, the Marin County (California) Sheriff’s Office, the County of Hawaii Police Department, the Henderson (Nevada) Police Department, the Wilmington (Massachusetts) Police Department, the Las Vegas (Nevada) Metropolitan Police Department, the Lewisville (Texas) Police Department, the Gardena (California) Police Department, the Des Moines (Iowa) Police Department, the Cobb County (Georgia) Sheriff`s Department, the Millburn (New Jersey) Police, the Wauwatosa (Wisconsin) Police Department, the San Angelo (Texas) Police Department, the Fairfax City (Virginia) Police Department, and the Virginia Beach (Virginia) Police Department.
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