2 Chinese Nationals Indicted Over Alleged Possession of Counterfeit Gift Cards

The two defendants allegedly tried to swap out 25 gift cards at a CVS store in Alabama with ones they had brought with them.

The U.S. Department of Justice in Washington on July 21, 2025. Madalina Kilroy/The Epoch Times

Two Chinese nationals are scheduled to appear before a judge in Alabama next week, after being charged with allegedly possessing fraudulent gift cards, according to court documents.

Cao Jiadong and Zheng Xuejun face one count each of possession of counterfeit and unauthorized access devices, according to an indictment filed in the Northern District of Alabama on July 24.

On July 29, federal prosecutors filed a legal request, specifically a writ of habeas corpus, asking that the two defendants be transferred from the Shelby County Jail to federal court in Birmingham for their arraignment on Aug. 7.

The case exemplifies a type of fraud known as gift card tampering.

Last December, the Federal Trade Commission issued a consumer alert, warning shoppers to inspect gift cards carefully before buying. The agency said scammers had been removing protective stickers from gift cards to steal the card numbers and PINs. Once an unsuspecting customer purchases the tampered card and loads money onto it, the scammers use the stolen information to drain the funds, the agency stated.

According to the complaint, Cao is an illegal immigrant who entered the United States in September 2024, while Zheng holds asylum status after arriving during the same month.

The complaint details how a CVS store manager on June 20 reported to the Hoover Police Department in Alabama the suspicious activities of two Asian men, who were seen removing gift cards from the store’s kiosk and replacing them with 25 gift cards from the brands Nike, Macy’s, and Best Buy.

The manager provided the police with a photo of the men’s vehicle, a gray Lexus SUV with a California license plate.

On June 21, officers from the Pelham Police Department located the vehicle and pulled it over for a traffic violation. The driver was identified as Zheng, with Cao seated in the back seat. Officers then found several boxes containing thousands of gift cards inside the vehicle. Zheng and Cao were subsequently arrested on four counts of Encoded Data Fraud under an Alabama law.

Days later, Pelham police, in collaboration with the U.S. Secret Service’s Birmingham field office, determined that a total of 5,078 gift cards had been seized from the vehicle. The gift cards were from several retailers, including Amazon, Home Depot, Dicks Sporting Goods, Nike, Lululemon, Sephora, Macy’s, and Nordstrom.

Among the 5,078 gift cards, more than 300 cards were found to have been altered.

“Each card package had been resealed with glue, and, upon opening each of them, it was discovered that parts of the gift card numbers and/or PIN numbers on the cards had been obliterated/altered,” the complaint reads.

In recent months, there have been other gift card fraud cases involving Chinese nationals.

In April, three Chinese nationals were sentenced to between 24 and 60 months in New Hampshire for being part of a Chinese transnational criminal organization in a gift card fraud scheme, with the illicit money being used to buy expensive electronic products and ship them to China. The trio faces deportation upon completing their prison sentences.

In March, a Chinese national named Liao Donghui, 32, was sentenced in Florida to 33 months in prison, after pleading guilty in December 2024 to possessing more than 6,100 unauthorized gift cards in a scheme that defrauded consumers and retailers out of about $1.9 million.

Also in March, the U.S. Attorney’s Office for the Western District of Kentucky announced that four Chinese nationals had been indicted for allegedly being part of gift card tampering schemes.

Two of the four defendants, Lin Chaoming and Chen Tianlong, were arrested in October 2024, after being observed placing gift cards on the shelves of a Kroger store in Louisville.