A jury in Los Angeles convicted three individuals for their roles in laundering proceeds of large-scale consumer fraud schemes through gift card transactions. Blade Bai, Bowen Hu and Tairan Shi were convicted of conspiracy to launder proceeds of wire fraud. Bai was also convicted of a separate money laundering conspiracy count.
As part of the scheme, fraudsters engaged in government-imposter scams and tech support scams. In a government-imposter scam, fraudsters contact consumers and impersonate government officials, such as officials with the Social Security Administration or local police officers. The fraudsters falsely claim that victims need to purchase gift cards to resolve an issue, often claiming that the victims are subject to a pending arrest warrant or that the victims have a problem with their Social Security number. In a tech support scam, fraudsters deceive victims into believing that there is a serious problem with the victim’s computer or with an online or mobile app account access and that the problem can only be resolved by paying substantial amounts through gift cards.
In this case, telephone scammers instructed victims to purchase gift cards from the retail store Target and provide the scammers with the account numbers and access codes listed on the gift cards. The defendants then distributed the numbers assigned to the gift cards to “runners,” 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. In one instance presented as evidence at trial, runners acting on behalf of the defendants redeemed gift cards that originated from a victim in Illinois approximately 13 minutes after the victim purchased the cards. 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.
“Defendants played a key role in victimizing American consumers,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’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.”
“This investigation is a good example of law enforcement collaboration coming together to protect communities from fraudulent activities,” said Special Agent in Charge Eddy Wang of Homeland Security Investigations (HSI) Los Angeles “HSI and its partners on the El Camino Real Financial Crimes Task Force will continue to track down criminal organizations preying on innocent victims and ensure they are held accountable.”
“These defendants knowingly laundered the proceeds of a fraudulent scheme that targeted vulnerable citizens, including older Americans,” said Assistant Director in Charge Donald Always of the FBI Los Angeles Field Office. “This significant conviction should educate potential victims about the scam and send a message to anyone conducting similar schemes that the bureau and our partners are serious about combating this fraud. 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 IC3.gov.”
A fourth defendant, Yan Fu, had previously pleaded guilty and was sentenced to 20 months in prison.
Bai, Hu and Shi are scheduled to be sentenced on Jan. 26, 2024.
HSI and the FBI Los Angeles Field Office, West Covina Resident Agency investigated the case. The investigation was conducted under the auspice of HSI 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, Glynn County (Georgia) Police Department, Fontana (California) Police Department, Charlotte-Mecklenburg (North Carolina) Police Department, Streamwood (Illinois) Police Department, Cleveland (Ohio) Police Department, Madera County (California) Sheriff’s Office, New York Police Department, Norwood (New Jersey) Police Department, Loudoun County (Virginia) Sheriff’s Office, Waukesha County (Wisconsin) Sheriff’s Department, Fremont (California) Police Department, Marin County (California) Sheriff’s Office, County of Hawaii Police Department, Henderson (Nevada) Police Department, Wilmington (Massachusetts) Police Department, Las Vegas (Nevada) Metropolitan Police Department, Lewisville (Texas) Police Department, Gardena (California) Police Department, Des Moines (Iowa) Police Department, Cobb County (Georgia) Sheriff’s Department, Millburn (New Jersey) Police, Wauwatosa (Wisconsin) Police Department, San Angelo (Texas) Police Department, Fairfax City (Virginia) Police Department and Virginia Beach (Virginia) Police Department.
Trial Attorneys Wei Xiang and Meredith Healy of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Monica Tait of the Major Frauds Section for the Central District of California prosecuted the case.
The Consumer Protection Branch and United States Attorney’s Office for the Central District of California are part of the Transnational Elder Fraud Strike Force, which investigates and prosecutes scams run by transnational criminal organizations, including mass mailing and telemarketing fraud scams.
If you purchased a gift card at the direction of a scammer, immediately call the gift card issuer and ask them to freeze the gift card numbers involved – and save your receipt and the gift card. Then, report the crime to the Federal Trade Commission at www.reportfraud.ftc.gov/#/ or 877-382-4357, to the FBI’s Internet Crime Complaint Center at www.ic3.gov, and to your local police department.
If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This Justice Department hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is open Monday through Friday from 10:00 a.m. to 6:00 p.m. ET. English, Spanish and other languages are available.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.
Additional information about the U.S. Attorney’s Office for the Central District of California may be found at www.justice.gov/usao-cdca.