Multi-million-dollar gift card tampering ring busted in Texas; 3 arrested

BUDA, Texas - Three people were arrested and thousands of gift cards were recovered after authorities dismantled a multi-county gift card tampering operation.

Timeline:

The investigation started with a report of suspicious activity by a retailer in March. A store employee had seen a man loitering near the gift card display, which later was discovered to have 15 altered cards.

Investigators were about to identify a rental vehicle associated with the suspects and tracked them between Houston and Austin.

TDLR says that the suspects had entered the US with Taiwanese passports, rented a vehicle in Austin, and established a base of operations in Houston. Over five days, they were seen visiting more than 20 retail locations per day.

The suspects allegedly used a calculated four-step process:

1. Theft: Suspects remove large quantities of gift cards from retail displays at stores, including Walgreens, CVS, and Dollar Tree
2. Compromise: Suspects then peel back security scratch protectors to record activation codes and serial numbers and then repackage the cards to appear intact
3. Return: The tampered cards are returned to store shelves
4. Draining Funds: Consumer purchases and activates the card at the register, prompting the suspects to drain the funds electronically, leaving the victim with a zero balance

On March 30, Houjie Lin and Yi-Hsun Wu were taken into custody at a Buda store where they were allegedly tampering with gift cards. 

On April 1, Hsai Lin was arrested during a search warrant execution at an Austin hotel room. She had allegedly been processing and dismantling stolen cards.

On April 10, investigators learned of a home in the Sharpstown area of Houston believed to be the primary base for the ring. 

The trio each face charges of first-degree felony enhanced engaging in organized criminal activity, with a predicate offense of fraudulent use, possession, or tampering with gift card data.

Under Texas law, these enhanced charges carry a minimum sentence of 15 years in prison.

By the numbers:

Investigators were able to recover 11,563 gift cards in total.

The potential value of the recovered cards means authorities prevented about $5.6 million in financial losses, says the Texas Department of Licensing and Regulation.

80 tampered gift cards, two Taiwanese passports and a glove box of rubber bands were recovered during a vehicle search in Buda when Lin and Wu were arrested.

More than 3,000 cards were recovered from the Austin hotel room.

Another 277 bundles of cards were found hidden in a closet at the Houston home.