They allegedly laundered more than $2.5 million in gift cards
A federal grand jury in Los Angeles has indicted four Southland residents in connection with an alleged fraud scheme that induced people into purchasing thousands of Target gift cards, which were then used at stores in Los Angeles and Orange counties to purchase electronics and other goods.
The indictment, unsealed on Tuesday, charges U.S. citizen Blade Bai, 33, of El Monte; and Chinese nationals Bowen Hu, 26, of Hacienda Heights; Tairan Shi, 27, of Diamond Bar; and Yan Fu, 58, of Chino Hills, with conspiring to launder proceeds that were stored on fraudulently-obtained Target gift cards.
According to the Department of Justice (DOJ), defendants Bai, Hu and Shi received over 5,000 gift cards from a group dubbed the "Magic Lamp."
The defendants then distributed the cards to "runners," including Fu, who used the funds on the cards at Target stores in Los Angeles and Orange County and elsewhere to purchase, among other items, consumer electronics and other gift cards, according federal prosecutors.
Fu visited as many as 17 Target stores in a single day to use the fraudulently obtained cards, and Bai resold the purchased goods, using some of the proceeds to pay the Magic Lamp group, said prosecutors, adding the defendants have allegedly laundered more than $2.5 million in gift cards between June 2019 and November 2020.
The indictment further alleges that perpetrators of the fraud schemes induced victims to send proceeds to them or their associates to resolve financial issues, said DOJ officials.
Some of perpetrators claimed to be government officials or police officers who told victims to purchase gift cards to resolve issues such as arrest warrants or Social Security matters, while others convinced victims they needed to buy the cards to correct computer or account access problems, prosecutors said.
"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 U.S. Attorney Tracy L. Wilkison for the Central District of California. "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."
All four defendants are charged with conspiracy to commit money laundering. If convicted, they face a maximum penalty of 20 years in prison, said federal prosecutors.