In a federal criminal case involving large-scale gift card fraud, Chinese couple Xuliang Hou and Yuna Lin were sentenced last Tuesday at a federal court in downtown New York. Hou was sentenced to 50 months in prison, while Lin received a 48-month (4-year) prison term. They were also ordered to jointly compensate the victims nearly $140,000 and each pay a $25,000 fine. The court also ordered the forfeiture of assets acquired through their crimes, totaling over $4.06 million.
According to the indictment and court documents, from July 2020 to June 2022, Hou and Lin were involved in a transnational fraud group. The group members impersonated law enforcement officers, credit card company representatives, or technical support personnel, deceiving victims into buying gift cards from retailers like Target and Apple under false pretexts like “virus intrusion” or “account theft.” They would then provide the card numbers and information to the scammers, claiming they could “fix the problem.”
After obtaining these card numbers, Hou and Lin would bind the gift cards to digital wallets through platforms like Target App and use the consolidated funds for shopping. They made substantial purchases of electronic products, mainly Apple-branded, and shipped them to China for profit through logistics companies. Investigations revealed that the pair purchased goods worth over $4.06 million and instructed Chinese buyers to transfer a total of 29.5 million yuan (approximately $4,065,978) to Hou’s parents’ bank accounts or Lin’s Alipay account.
Records provided by Target identified at least 220 victims, with some cases being particularly severe. A 72-year-old woman lost $28,000 within three days, leaving her with only 56 cents in her bank account. She even had to forgo a planned knee surgery and return to work to pay for medical expenses due to the fraud.
Another victim, fooled by a computer pop-up warning of a “virus,” repeatedly bought gift cards over several months. In July 2020, the cards she purchased were used on Hou’s Target account to buy five Apple Watches. Her prolonged contact with the scammers led to a breakdown in family relationships, forcing her to move out of her residence.
Similar victims, at least two more, were tricked in different states, with their gift cards being used by Hou and Lin to purchase Apple products.
Evidence presented by the prosecution showed that Hou, Lin, and other co-conspirators communicated details of their criminal activities through WeChat groups. They discussed the risks and strategies of similar cases in other parts of the U.S., indicating a clear awareness of the criminal risks.
For instance, upon learning that four Chinese individuals in Los Angeles were arrested for money laundering using gift cards, Hou commented in the group, “Comrades, someone in Target in California got arrested again. They went to 17 stores in one day to buy and return items…” Lin replied, “The scenario described in Target is exactly what you did. Don’t know when the FBI will take action.”
Two days later, upon hearing about five Chinese individuals arrested on Staten Island, Lin warned another accomplice, “Someone got arrested in New York yesterday…a person I know…be careful.” Despite sensing the risks, the group members continued their operations.
The defense lawyers highlighted that 32-year-old Lin, who immigrated from rural Fujian, China to the U.S. in 2016, had a tough upbringing in a poor household with multiple children. She was seen as a burden, dropped out of school to work to support her sister’s education, and faced fines and discrimination from her family due to excess births. After losing her job during the pandemic, she feared falling back into poverty and committed the crime with Hou. Her lawyer stated that she was initially unaware of the overall fraud scheme but later participated in purchasing and reselling goods, feeling ashamed of her actions after pleading guilty.
Hou’s lawyer stated that 34-year-old Hou, who immigrated from Fuzhou, China to the U.S. in 2017, hoped to change his fate and seek a better life but unexpectedly lost his restaurant job during the pandemic. While shopping at Target, he noticed many Chinese people queuing to use gift cards to buy electronic products and was recruited after talking to one of them and buying an iPad using a card provided by the person. He later discovered that these individuals obtained gift cards at discounted prices from China, bought electronics to resell in China, and profited from it.
Initially unaware of the illegal origins of the gift cards, Hou gradually realized they were acquired through fraudulent means but did not discontinue his involvement. He admitted his mistakes to the judge, saying, “I know my actions hurt others and disappoint myself.”
The defense proposed a one-year sentence for both defendants, emphasizing they were not the masterminds and did not directly defraud the victims. They now face losing their green cards, being detained by immigration after serving their sentences, and facing potential deportation to China, which the defense argued would be punishment enough. They also mentioned that the government already seized more than the defendants had gained from their crimes.
In contrast, the prosecution advocated for harsher sentencing, citing the large scale of the case and the serious harm caused to vulnerable groups. They argued that unlike scams targeting corporations or investors, this case mainly preyed on ordinary people who could not afford the losses, especially the elderly. Moreover, the defendants were fully aware and chose to continue the criminal activities.
The prosecution pointed out that while the defendants did not directly contact the victims, without them converting the cards into goods and reselling them overseas, the fraud could not have occurred. Despite repeatedly forwarding news of others’ arrests, they decided to “take a chance,” indicating they were not ignorant but rather “calculating criminals.”
The prosecution also noted that the defendants transferred over $4 million to their family members’ accounts in China, making it nearly impossible for the government to recover the funds. Even after serving their sentences and returning to China, they could still enjoy their ill-gotten gains. A lenient sentence, they argued, would encourage international fraudsters to “serve short terms for long-term wealth,” sending the wrong message to other potential offenders.
Ultimately, the judge decided to impose heavy sentences on both defendants and forfeit their illegal assets.