A carefully orchestrated “gift card draining” scam allowed two men from Southern California to access the funds from activated gift cards that were sold at more than 200 CVS stores across California, police announced on Tuesday.
Yongsheng Zhao, 29, of El Monte and Zhipeng Li, 33, of Monterey Park were spotted on Aug. 7 stopping at numerous CVS stores in Sonoma County and then followed by a sergeant into a Santa Rosa location where Zhao was seen manipulating gift cards on the shelves while concealing other gift cards in his possession, the Santa Rosa Police Department posted on Facebook.
Detectives then coordinated a traffic stop where Zhao and Li were found with approximately 10,000 gift cards bundled and coded by store location. Notes and ledgers documenting the operation spanning over 200 CVS locations in California, and about $7,000 in cash were also discovered in their vehicle, police said.
Both suspects were arrested without incident and taken to the Sonoma County Main Adult Detention Facility.
A search warrant served a week later at their hotel also turned up nine “Bankers Boxes” containing approximately 15,000 gift cards. Investigators believe the suspects had been conducting these scams across California for several months.
Zhao and Li were booked on suspicion of burglary, grand theft, theft and forgery of access card information, forgery and conspiracy.
The suspects allegedly used a practice called “gift card draining” to collect their money.
“This is accomplished by removing legitimate gift cards from retail displays, recording or altering the activation information, then resealing the gift card in the original packaging before returning them to the displays. Unsuspecting victims purchase the tampered gift cards only to have the funds drained moments after activation,” police said.
Bail was set at $100,000 for each suspect. At the time of the Police Department’s release on Tuesday, Li remained in custody while Zhao had been released on bail.
Anyone who believes they have been a victim of gift card fraud should report it to their local law enforcement agency.
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