Two Chinese nationals were arrested in connection with a large-scale fraud operation involving altered gift cards. The suspects, Guangji Zhang, 46, of Irvine, California, and Huachao Sun, 35, of Los Angeles, were arrested at a hotel in Dearborn on March 5 and were charged with conducting a criminal enterprise, a felony carrying a 20-year sentence, along with two counts of possessing fraudulent or altered transaction devices.
The two men were arraigned in the 51st District Court in Waterford on March 7, where they were formally charged. According to the Attorney General’s office, the pair is accused of running a sophisticated scheme that involved stealing unsold, empty gift cards from retail stores, tampering with them to reveal their unique redemption numbers, and re-sealing the cards to make them appear untampered with. Once altered, the cards were returned to store shelves. Scammers used computer programs to monitor when the cards were activated by unsuspecting customers. As soon as a shopper loaded money onto the cards, the fraudsters transferred the balance into a digital account, rendering the gift card worthless when given as a gift.
The investigation began when a special agent with the United States Postal Inspection Service (USPIS) identified a suspicious package containing over 1,500 gift cards, addressed to Zhang and Sun at their hotel. The Attorney General’s FORCE Team, along with Michigan State Police Fraud East detectives, initiated surveillance and observed the suspects placing the altered gift cards back into store stock at multiple Meijer locations in the Detroit area over two days. On March 5, they were arrested at their hotel, and search warrants were executed on their vehicle and hotel room, revealing a total of more than 3,000 gift cards.
Attorney General Nessel condemned the fraudulent activity, emphasizing its potential to cause significant financial harm to consumers and retailers. “Sophisticated fraud schemes undermine consumer trust and can cause significant financial harm,” Nessel said. “I am proud of my FORCE Team for their efforts to shut down these operations and hold bad actors accountable. They will continue to pursue and prosecute those who engage in scams targeting Michigan residents and businesses.”
The FORCE Team was established in January 2023 by Nessel to tackle organized retail crime. The unit, the first of its kind in the nation, targets criminal organizations involved in stealing products from retailers to sell for profit. The FORCE Team works in close collaboration with retailers, local law enforcement, and federal partners such as the FBI and the Postal Inspection Service.
The two defendants appeared in court yesterday for a probable cause conference. If convicted, both face substantial prison time and fines for their involvement in the fraud operation.
In addition to the arrests, Attorney General Nessel released a video alerting Michigan residents to the gift card scam, providing details on how the scam works and offering tips to avoid falling victim. She urged consumers to take extra precautions when purchasing gift cards, advising them to check for signs of tampering before making a purchase.
