AMERICAN FORK — Two people were arrested and face charges associated with a massive national fraud scheme in which they are accused of convincing people, typically elderly people, into loading thousands of dollars onto Walmart gift cards, which they then allegedly used to buy other gift cards that they sold online.
The scheme is responsible for more than $600,000 in losses to fraud victims and Walmart, according to charges filed in 4th District Court.
Junliang Tang, 35, and Shuyan Wang, 23, were both charged with money laundering, pattern of unlawful activity and unlawful use of card, all second degree felonies. Prosecutors asked for a higher bail than usual as they see both of the accused as “serious flight risks” because they are Chinese nationals.
Investigators say the complicated scheme typically targets elderly people and they typically pose as IRS or government agents, computer service technicians or bail bondsmen.
A Walmart investigator said such criminals then convince people to “load large sums of money onto Walmart gift cards,” the charges state. “After the gift cards are loaded, a network of purchasers enter Walmart stores and use the fraudulently obtained Walmart gift cards to purchase other “closed loop” gift cards, such as Apple iTunes gift cards, Nintendo cards, etc. Those ‘closed loop’ gift cards are then monetized into cash through various online marketplaces.”
A closed loop gift card is one that can only be used with a specific vendor. Those cards can, however, be monetized in other ways, including selling them online.
The case began to come together for investigators on Jan. 22 when a Walmart loss prevention officer in Saratoga Springs contacted a detective to report that a woman had purchased $1,600 in various gift cards on her phone as payment. He provided investigators with her licence plate number, which matched the plates of a car observed days earlier working with a male suspect in Oregon, police say.
On Jan. 23, a Walmart loss prevention officer saw a man in the same Walmart purchasing $1,800 in gift cards in several transactions.
“The gift cards were purchased using barcodes from Walmart gift cards loaded onto the (suspect’s) cellphone,” the charges state. “This was the same method (an investigator) observed (with) the ... woman using the day before.”
At about the same time, an American Fork police sergeant located the woman from the previous day’s incident purchasing gift cards at an American Fork Walmart, according to the charges.
Walmart senior global investigator Brandon Hunter was in Salt Lake City “at this same time briefing agents with the Utah Attorney General’s Office about the scheme he was investigating.”
Police were able to piece together an incident involving a Utah victim. The woman told police that “someone claiming to be a police officer” called her and her husband and instructed them “to purchase several thousand dollars in Walmart gift cards.”
Police were able to confirm the gift cards she and her husband purchased were among those used by the suspect because they’d asked them to send them the barcodes on the gift cards, and those were used in the purchases at two locations.
When interviewed by police, Tang said “he was being paid to buy gift cards at Walmart locations by someone he said he had met online. Tang said he was paid 1% to 2% of the total dollar amount of the gift cards he purchased and uploaded into a digital form for people in China to access,” the charges state.
In total, investigators have “connected 1,379 Walmart gift cards to transactions executed by Tang and Wang in Utah between Jan. 16 and Jan. 23. These cards were purchased by 204 different people from 46 states over the exact same time period, shortly before the cards were used at Utah Walmart stores,” according to the charges.
“In total, over $239,472.38 was laundered in this fashion between those dates.”
Contributing: Pat Reavy