DOJ investigates the use of gift cards in financial schemes

Department of Justice

Any fan of The Real Housewives of Salt Lake City is familiar with the news about Jen Shah, a cast member, allegedly participating in a telemarketing scheme defrauding victims including the elderly. The Federal Trade Commission (FTC) calculated that in 2020 alone Americans 60 years or older lost at least $602 million dollars due to fraud, scams, and other financial exploitation schemes. Occasionally, fraudsters use gift cards to launder the proceeds from these schemes. Now may be a good time to review recent Department of Justice (DOJ) action targeting the use of gift cards for money laundering.

Recently, the Northern District of Georgia, a DOJ jurisdiction participating in the Transnational Elder Fraud Strike Force, announced the indictment of six defendants for fraud targeting the elderly and using gift cards to launder the proceeds. The DOJ alleges the defendants scammed victims into providing gift cards or other methods of payment:

Once the scammer on the telephone scared the victims, the scammer would instruct the victim on how to pay money. Sometimes the scammer directed the victim to withdraw cash, package the cash in shipping boxes, and deliver the package as instructed. Other times, the individual on the phone would tell the victim to obtain gift cards and provide the redemption code on the back of the card. Oftentimes, the individual on the phone would tell the victim to wire money to a particular bank account; withdraw their money for cashier’s checks made payable to a specific company; or deposit cash directly into a specific company’s bank account.

In a separate case, the Consumer Protection Branch of the DOJ and the DOJ’s Central District of California, working with the Transnational Elder Strike Force, indicted four other defendants, accusing the defendants of  purchasing electronic appliances and gift cards to launder the proceeds of criminal activity:

 

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