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September 18, 2018

California Man Indicted for his Role in an IRS Impersonation Scam

On July 10, 2018, in the District of Minnesota, Yu Zhang was indicted for wire fraud in connection with an interstate scheme to defraud by falsely impersonating Internal Revenue Service (IRS) employees.

Zhang, or persons acting in concert with him, contacted victims throughout the United States by telephone, falsely claimed to be IRS agents, and threatened to arrest them unless they made immediate payment for delinquent taxes. The caller instructed the victims to purchase Target gift cards from local Target stores and provide the caller with the gift card numbers and activation codes. Zhang traveled to Target stores in multiple States to purchase third-party gift cards using the Target gift card numbers and activation codes obtained from the victims.

In furtherance of the scheme to defraud, on May 31, 2018, an individual claiming to be an IRS employee contacted a victim, said the victim owed over $4,000 in taxes, and threatened the victim with arrest. The IRS impersonator then demanded that the victim go to the nearest Target store and purchase two $2,000 gift cards, which the scammer claimed that the IRS used as "Taxpayer Identification Forms." The victim complied, used cash to purchase the gift cards, and provided the card numbers and activation codes to the IRS impersonator. The impersonator then instructed the victim to purchase an additional gift card for $2,000 to have the "arrest warrant" removed. The victim did as instructed.

According to the indictment, Target surveillance showed the victim leaving the Target store in Iowa after purchasing the third gift card. Shortly thereafter, Zhang used that same gift card at a Target store in Minnesota to purchase $1,000 worth of prepaid, third-party gift cards issued by Google Play and Steam. He then traveled to another Target store in Minnesota and used the remaining $1,000 to purchase additional Google Play and Steam cards. Zhang was arrested at a Target store in Andover, Minnesota, by local law enforcement. At the time of his arrest, Zhang had in his possessions several hundred third-party gift cards worth tens of thousands of dollars.

Between May 28, 2018 and June 8, 2018, Zhang redeemed approximately $220,000 worth of Target gift cards by conducting hundreds of transactions at Target stores in Minnesota. Zhang was ordered to forfeit any property derived from proceeds traceable to the wire fraud scheme. A trial date is scheduled for September 17, 2018.

    Source:  The facts in this case narrative come from the following publicly available documents: D. Minn. Crim. Compl. filed June 8, 2018; D. Minn. Indict. filed July 10, 2018; D. Minn. Crim. Docket as of July 24, 2018.