Alleged gift card scammer caught in act at local store

A 52-year-old man accused of trying to scam gift-givers out of money by planting tampered-with gift cards at a Grafton store earlier this month has been charged with seven felonies in Ozaukee County Circuit Court.

Guangguo Zhu, a Chinese citizen who lives in an apartment in Chicago’s Chinatown, was charged with three counts of forgery, three counts of identity theft and one count of financial transaction card forgery after he was seen placing gift cards on racks at the Walgreens store in Grafton and arrested outside the Walgreens in Cedarburg on Nov. 7.

Zhu, who authorities believe recently traveled to several cities in Wisconsin and two in Indiana, is being held in the Ozaukee County jail in lieu of $250,000 bail.

Authorities are familiar with the gift card scam. Perpetrators obtain gifts cards, either by stealing them or from what authorities call “inside sources,” then carefully cut the packaging open. They remove the scratch-off coating over the identification numbers and record them before covering the numbers up again and resealing the packaging. Then they put the tampered-with cards in stores.

When the cards are purchased, a set amount of money or an amount chosen by the buyers are put on the cards. The scammers then use the card numbers to steal the money. The recipients of the gift cards discover there is no money on the cards when they try to use them.

According to a criminal complaint, a manager of the Grafton Walgreens told a police officer that on Nov. 7 a man entered the store and placed several gift cards on the card rack, walked around the store, then drove away in a gray Lexus SUV with Illinois license plates.

Because of the widespread gift card scam, Walgreens did a “reset” of gift cards. The manager of the Grafton store showed the officer that the backs of valid gift cards were different than the ones that were tampered with and said all the cards placed by Zhu had been removed from racks.

Zhu was also seen at the Cedarburg Walgreens on Nov. 7, and officers pulled his SUV over as it was leaving the store. Zhu does not speak English, so an officer used a translating device to communicate with him in Mandarin. Zhu denied doing anything wrong, the complaint states.

Surveillance video from the Grafton Walgreens shows the Lexus SUV pulling into the store parking lot at 1:12 p.m. Two minutes later, Zhu enters the store, places several cards on a rack, then leaves at 1:19 p.m., according to the complaint.

When Zhu got out of his vehicle, an officer saw there were several gift cards in the driver’s door pocket. Authorities discovered that Zhu had 1,807 gifts cards, many of which were in two duffel bags and in bundles with rubber bands around them, the complaint states.

The gift cards were for several stores and businesses, including Visa, Amazon, Nike, Nordstrom and Xbox, and either had set values or ranges — in many cases $25 to $500 — that could be selected by the buyer.

By the time Zhu was charged on Nov. 8, authorities had inspected 60 of the cards recovered from him and determined the packaging had been tampered with and the identification number scratch-off coating removed, according to the complaint.

Flock camera license plate readers showed the Lexus SUV Zhu was driving was in the Chicago area, Green Bay, Appleton, Oshkosh and Sheboygan, as well as South Bend and Indianapolis, Ind., during the 30 days prior to his arrest, the complaint states.

The 2022 SUV had 99,590 miles on it.

In addition to setting Zhu’s bail at $250,000, Ozaukee County Circuit Judge Steve Cain ordered him not have contact with Walgreens stores and not to possess gift cards if released from jail.

Forgery and identity theft are each punishable by a maximum three years in prison and three years of extended supervision. Financial transaction card forgery is punishable by a maximum 1-1/2 years in prison and two years of extended supervision.