OCALA, Fla. — A Chinese national has pleaded guilty to the possession of more than 6,100 unauthorized gift cards in a scheme to defraud consumers and major retailers out of $1.9 million following a joint investigation with Homeland Security Investigations (HSI) Orlando and the Ocala Police Department.
Donghui Liao, 32, faces a maximum penalty of 10 years in federal prison. A sentencing date has not yet been scheduled.
According to the plea agreement, a large-scale retail store has been the victim of an ongoing organized gift card fraud scheme. The structure of the scheme involved individuals stealing gift cards from the store, obtaining the account information from the back of the cards, resealing the cards in their original packaging, and placing the gift cards back onto the shelves of a different store location for customers to purchase. Once a customer purchased the gift card and loaded a monetary amount onto it, the fraudsters had access to the funds without the customer’s knowledge.
On Oct. 17, 2023, an officer with the Ocala Police Department observed Liao retrieving numerous gift cards from a black shoulder bag he was wearing and placing those gift cards on the retailer’s gift card display. Liao was also observed taking gift cards off the shelves and concealing them inside his bag before leaving the store. Seventy-one of the gift cards that Liao had placed on the shelves showed signs of alteration and forgery. A search of Liao’s vehicle revealed 6,032 additional stolen gift cards. The combined value of the gift cards in Liao’s vehicle, if purchased and activated by customers, would have been $1.886 million. Store surveillance identified Liao performing this same scheme on multiple occasions at different stores in Ohio, Georgia, North Carolina, and Florida.
It is being prosecuted by Assistant U.S. Attorney Sarah Janette Swartzberg.
Gift card draining techniques not only affect retailers, but also our Nation’s economy and jeopardize our Nation’s national security and public safety. While gift card fraud is not committed by any one organization, Project Red Hook specifically targets Chinese organized crime groups due to the cross-border nature of the crime. This type of fraud erodes Americans’ confidence in our Nation’s economy and retailers, and funds the illicit activities of Chinese organized crime groups, such as, fentanyl production and smuggling, illegal migration, and human trafficking. Visit Project Red Hook for more information on gift card fraud scams and the relevant indicators for public, retail, and law enforcement awareness. Under the auspices of Project Red Hook, HSI takes a proactive approach to raise awareness and disrupt this fraud scheme that ranges in the hundreds of millions, and potentially billions of dollars in scope.
HSI Tampa’s area of responsibility, which includes 10 geographically strategic offices, covers more than 51,600 square miles of the total 65,757 square miles in the state of Florida. This region has more than 14.2 million people and includes 58 of the 67 counties. HSI Tampa also includes five of the 10 largest cities in Florida, 15 primary commercial service airports, and 11 seaports.
Learn more about HSI Tampa’s mission to increase public safety in Florida communities on X, formerly known as Twitter, at @HSITampa.