Former UWM scientist guilty in international gift card scam
A Chinese scientist who worked at the University of Wisconsin-Milwaukee was found guilty Thursday of laundering more than $300,000 as part of a worldwide scam that duped victims into buying gifts cards to pay off fake debts.
Fan Xia, 31, researched nanotechnology at UWM on a visitor exchange program, known as a J-1 visa, but now faces a possible jail term, deportation or both.
He was charged in August 2017 with being a bit player in a multilayered international fraud unraveled after an Illinois victim of a popular IRS scam quickly contacted police there.
After a three day trial, the jury returned its verdicts late Thursday morning. Fan, who remains free on bail, was convicted of one felony theft, one misdemeanor theft and two misdemeanor counts of receiving stolen property. His sentencing is set for Dec. 5.
Witnesses included IRS scam victims from Illinois and New York and various law enforcement officials, including those who did the forensic analysis of Fan's computer and phone. Fan presented no evidence in his defense.
"Usually we get involved in these cases when a local victim calls us," said Wauwatosa Police Detective John Milotzky, the lead investigator. "This time, the suspect was here and we learned from him what happened to the cards."
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How the scam works
Criminals claiming to be with the IRS call people and tell them they owe back taxes or penalties but can pay them with Target gift cards. Victims then buy the cards and report the numbers back to the callers.
According to the criminal complaint against Fan, he was seen using the Illinois victim's numbers at stores in the Milwaukee area to buy iTunes cards. Police then tracked him as he visited Target, Best Buy and Walmart stores 23 times over eight days. He was arrested in July 2017 as he drove to another Target store.
Fan told police he got the card numbers from people in India who he said told him they were legal. Because they always worked, Fan assumed they were. He denied any knowledge of the IRS scam.
Once he got iTunes cards, he said, he'd scratch the covering off the activation codes, take photos of the cards, and send the photos to China and get paid. The Chinese recipients then sell the iTunes or Google Play cards one last time to end users.
Messages police found on Fan's phone suggested he was buying up to $3,000 of new cards a day with the Indian numbers and that some numbers he tried to use had been reported stolen and blocked. At his Shorewood apartment, police found more than 200 scratched off gift cards worth about $10,000.
Milotzky said the case taught investigators just how deeply layered and widespread gift card frauds can be. He said the callers in India appeared to be pushing the scammed gift card numbers out to runners like Fan all over the country; in fact, some of the same numbers Fan was using were found to be in use in Florida.
The rings are sophisticated, he noted, illustrated by the fact that the callers in India, runners in the U.S. and the final sellers in China all were getting their cuts of the profits.
Investigators were skeptical that someone as smart as Fan didn't know what was really going on.
Fan has an undergraduate degree from a Chinese university and earned a doctorate from Hanyang University in South Korea in 2016, according to announcements from UWM about him joining the Energy Storage research group led by professor Junjie Niu, of the College of Engineering & Applied Science in 2016.
Fan left UWM employment in January, spokewoman Michelle Johnson said.