A jury in Los Angeles convicted three individuals reportedly involved in money laundering through the use of gift cards.
A Sept. 28 press release by the Department of Justice's (DOJ) Office of Public Affairs confirmed the conviction of 26-year-old Bowen Hu, 27-year-old Tairan Shi and 33-year-old Blade Bai. The three were convicted of conspiracy to launder the proceeds of wire fraud stored on more than 5,000 Target gift cards by an LA jury. Hu and Shi are Chinese nationals, while Bai is a U.S. citizen.
The three will face a statutory maximum sentence of 20 years in federal prison for each count as they were convicted of money laundering – a felony offense. A fourth conspirator, 58-year-old Chinese national Yan Fu, previously pleaded guilty and was sentenced to 20 months in federal prison. U.S. District Judge Andre Birotte Jr. also ordered Fu to pay $48,073 in restitution.
According to the statement, the four worked with overseas-based telephone scammers who "tricked" victims across the U.S., such as older adults, into buying Target gift cards. These fraudsters duped victims into reading card or account numbers and access codes over the phone. One such group was the China-based Magic Lamp group, which conspired with Bai, Hu and Shi to collate personal information from scam victims using the WeChat messaging app to purchase the gift cards.
"Runners" such as Fu then used the gift cards bought using victims' money at Target stores, mainly in LA and Orange counties, to purchase consumer electronics, other gift cards and other items. Investigators even claimed that Fu traveled to as many as 17 Target stores in a single day to purchase items using the gift cards. Bai then resold the purchased consumer electronics, using some of the proceeds to pay the Magic Lamp group for their services.
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Authorities warn the public against fraudsters
"Through the purchases and other transactions at multiple Target stores, the four convicted individuals wanted to conceal the fact that the gift cards had been originally funded with fraudulent proceeds," the DOJ statement said. Prosecutors conservatively estimate that between June 2019 and November 2020, the accused laundered more than $2.5 million from more than 5,000 Target gift cards. (Related: Online safety: How to avoid common internet scams.)
Birotte scheduled the sentencing hearing for the three on Jan. 26, 2024. Back in September 2021, a press release by the U.S. Attorney's Office for the Central District of California announced the arrest and arraignment of both Hu and Shi. Bai and Fu were also summoned to appear before a federal court in October of that year, the statement added.
Donald Always, assistant director-in-charge of the Federal Bureau of Investigation's (FBI) LA Field Office, said: "Anyone being asked to purchase a gift card in order to resolve a technical issue or to avoid an arrest should not spend money but instead, make a report to the FBI at the Internet Crime Complaint Center."
"These defendants knowingly laundered the proceeds of a fraudulent scheme that targeted vulnerable citizens, including older Americans," he added. "This significant conviction should educate potential victims about the scam and send a message to anyone conducting similar schemes that the [FBI] and our partners are serious about combating this fraud."
"Defendants played a key role in victimizing American consumers," said Brian Boynton, principal deputy assistant attorney general and head of the DOJ's Civil Division. "This case is a testament to the commitment of the department and our partners to ensuring that all those who knowingly facilitate fraud face justice."
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