Homeland Security investigation into Chinese "gift card scam" centered on Baton Rouge

As if we don't have enough problems, we got the Chinese mafia running around stealing money off my Applebee's gift card.

Chinese Organized Crime’s Latest U.S. Target: Gift Cards

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Chinese crime rings already dominate the illegal marijuana trade in the U.S. and launder cocaine and heroin profits. Now a federal task force is investigating their role in a burgeoning form of gift card fraud.

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Federal authorities are investigating the involvement of Chinese organized crime rings in gift card fraud schemes that have stolen hundreds of millions of dollars or more from American consumers.

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The U.S. Department of Homeland Security has launched a task force, whose existence has not previously been reported, to combat a scheme known as “card draining,” in which thieves use stolen or altered card numbers to siphon off money before the owner can spend it. The initiative has been dubbed “Project Red Hook,” for the perpetrators’ ties to China and their exploitation of cards hung in store kiosks on “J-hooks.”

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Over the past 18 months, law enforcement across the country has arrested about 100 people for card draining, of whom 80 to 90 are Chinese nationals or Chinese Americans, according to Adam Parks, a Homeland Security assistant special agent in charge based in Baton Rouge, Louisiana. Parks, who is leading the task force, estimates that another 1,000 people could be involved in card draining in the U.S., mostly as runners for the gangs.

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Card draining is when criminals remove gift cards from a store display, open them in a separate location, and either record the card numbers and PINs or replace them with a new barcode. The crooks then repair the packaging, return to a store and place the cards back on a rack. When a customer unwittingly selects and loads money onto a tampered card, the criminal is able to access the card online and steal the balance.

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The DHS team in Baton Rouge led an investigation that resulted in the conviction and 2023 sentencing to prison of a Canadian man who stole more than $22 million by operating an illicit online gift card marketplace that victimized American consumers and businesses. As arrests for card draining began piling up around the country, Parks and special agent Dariush Vollenweider saw the need for a national response.

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