The U.S. Department of Justice recently announced the arrest of Zhong Shi Gao, Naifeng Xu, and Fei Jiang. These individuals face charges for their roles in a complex fraud operation.
The scheme, lasting from 2018 to 2022, involved over $10 million stolen from banks and financial institutions. These funds were then illicitly converted into cryptocurrency and transferred to foreign exchanges.
Gao, Xu, and Jiang, aged 31, 37, and 41, respectively, utilized a network of accomplices to execute their plan. They recruited people, primarily Chinese and Taiwanese nationals in the U.S., to open bank accounts across New York City and other locations. Control of these accounts was then transferred to the trio. Subsequently, they orchestrated a series of fund transfers between these accounts.
After initiating the transfers, they falsely reported them as unauthorized to the involved banks. Consequently, the banks credited the accounts with the transfer amounts, doubling the initial deposits.
The accused quickly withdrew these doubled funds. They converted them into cryptocurrency and moved them onto foreign crypto exchanges. This swift action aimed to prevent banks from detecting fraudulent reports. By doing so, Gao, Xu, Jiang, and their associates withdrew almost twice the money originally deposited.
The U.S. Attorney’s Office for the Southern District of New York emphasized the severity of the charges. The combined charges carry a maximum sentence of 82 years. This case underscores the growing concern over the misuse of cryptocurrency in financial crimes. Moreover, the incident highlights the vulnerabilities of financial institutions to sophisticated fraud schemes.
U.S. Attorney Damian Williams and FBI Assistant Director James Smith issued strong statements following the arrests. They warned fraudsters and cybercriminals about leveraging cryptocurrency to conceal illegal activities.
They reaffirmed their commitment to holding perpetrators accountable. This case serves as a reminder of the ongoing efforts to combat financial crimes and the potential legal repercussions for those involved.