Five Chinese men were arrested in Brooklyn and appeared in federal court yesterday for allegedly carrying out a two-year-long theft and fraud scheme through hundreds of shell companies, illegally obtaining and reselling over $20 million worth of construction materials and household appliances, and laundering the proceeds to overseas accounts.
According to the indictment, the five defendants—44-year-old Kai Xu, 56-year-old Zhi Bin An, 39-year-old Xiang Chen, 35-year-old Songhak Lee, and 30-year-old Kang Zhang—are charged with conspiracy to commit wire fraud, conspiracy to commit bank fraud, bank fraud, access device fraud, and money laundering conspiracy. If convicted, they could face up to 30 years in prison.
The indictment states that from July 2023 to September 2025, the defendants and their accomplices used shell companies established under other people’s identities to apply for consumer and business credit limits offered by major hardware and home improvement retailers. They deposited false bank checks into the accounts, falsely claiming that the funds were pre-deposited or payment for previous purchases, in order to temporarily raise credit limits, then made large purchases of building materials and appliances, transported them to warehouses in areas like Queens, and resold them for profit.
Prosecutors emphasized that the checks used to “pad” credit limits mostly came from accounts with insufficient funds or that were unable to be cashed. By the time the checks bounced, the defendants had already moved a large amount of merchandise. In the end, they opened over 250 fraudulent accounts, illegally obtained at least $20 million worth of construction and construction materials and equipment, and transferred the funds to offshore accounts through bank transfers and cash withdrawals to pay for rent, storage, and dividends.
Eastern District of New York Federal Prosecutor Joseph Nocella, Jr. said, “The tools of these defendants are not hammers and nails, but fraud and deceit. They specialize in profiting from financial mechanisms designed for hardworking consumers and small businesses. Today’s arrests send a warning to anyone looking to profit from retail fraud: crime doesn’t pay.”
Prosecutors also requested forfeiture, arguing that anyone convicted of such crimes should forfeit all assets involved, whether movable or immovable, and any assets traceable to those assets.