Criminal gang with gift card fraud; Chicago man charged in Ozaukee County

GRAFTON, Wis – Police arrested a man Thursday in connection with a gift card scam, and Ozaukee County prosecutors say he was part of a crime ring that reached far beyond state lines.

The bust began when a Walgreens store manager in Grafton noticed something strange Thursday afternoon.

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“(The manager) alerted us to a man in the store who he believed was putting gift cards back on the shelf,” said Grafton Police Public Information Officer Patrick Brock.

When officers arrived at the store, they said the man – now identified as 52-year-old Guangguo Zhu of Chicago – was missing. But he wasn't far.

Gift cards are issued at Walgreens

“Cedarburg, which is right next to us, also got the call that the man was over there,” Brock said.

Officers stopped Zhu as he was leaving the Cedarburg Walgreens. They then searched his car and found duffel bags containing 1,807 gift cards. Prosecutors said Zhu did not intend to use the gift cards for his own purchases.

Court documents indicate Zhu is part of a large-scale gift card fraud. Scammers steal or illegally obtain gift cards, capture the card numbers and PIN, and leave them in stores for people to purchase.

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“Once activated, the money is transferred to the fraudster via the dark web or a so-called 'bot'. Then the money is theirs,” Brock said.

While officials put an end to the fraud in Ozaukee County, investigators said Zhu's vehicle had been spotted throughout Wisconsin – as well as in Indianapolis and Chicago – over the past month.

“The gentleman who was arrested was likely one of the lower echelons of this criminal enterprise,” Brock said.

Places associated with gift card scams

Police are urging people to check all gift cards before purchasing them from a store.

“If you feel a sticker or barcode placed over it, the gift card is likely at risk,” Brock said.

Zhu is now charged in Ozaukee County with four counts of forgery and three counts of identity theft. A court commissioner set his bail at $250,000.