Three Charged With Stealing and Laundering $10 Million

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  • Three individuals have been arrested for conning banks and financial institutions out of $10 million
  • Zhong Shi Gao, Naifeng Xu, and Fei Jiang were charged by the FBI for stealing over $10 million and laundering the proceeds through crypto
  • The trio claimed bank refunds for purported failed transfers and left the banks out of pocket

The FBI has charged three individuals with stealing and laundering over $10 million from banks and financial institutions and laundering it through cryptocurrencies. Zhong Shi Gao, Naifeng Xu, and Fei Jiang were arrested yesterday over the scheme which ran for around four years and saw them claim the huge sum through bank refunds over alleged failed transfers. The trio then laundered the cash through cryptocurrencies in an attempt to conceal them, an attempt that ultimately proved futile.

“Complex Scheme” Proved Successful 

The US Attorney’s Office for the Southern District of New York revealed the scam yesterday, revealing how, between approximately 2018 and 2022, Gao, Xu, and Jiang orchestrated a “complex scheme” to defraud financial institutions and banks. Initially, Gao, Xu, Jiang, and accomplices recruited foreign nationals, often from China and Taiwan residing temporarily in the US, to open bank accounts, control of which they would then hand over to the three ringleaders.

Subsequently, the group orchestrated the movement of funds between these controlled accounts, filing fraudulent reports with the banks and claiming unauthorized wire transfers. This led both the sending and the receiving bank to temporarily credit the accounts with the transferred funds, effectively doubling the initial deposit.

When the refunds arrived, Gao, Xu, Jiang, and their associates swiftly withdrew the credited funds as cash or converted them into cryptocurrency; this was done before the banks could detect the fraudulent nature of the unauthorized transfer reports. As a result, the perpetrators withdrew almost double the initial amount, leaving the bank accounts in a negative balance.

In total, the scheme caused losses exceeding $10 million to nearly a dozen banks and financial institutions.

Trio Face Lengthy Prison Sentences

The gang members have each been charged with one count of bank fraud conspiracy, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison; one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison to be served consecutively to any other sentence imposed. 

US Attorney Damian Williams warned, “These charges should serve as a warning to fraudsters and cybercriminals who think they can turn to cryptocurrency to hide their identities – together with our partner agencies, we will find you and hold you accountable for your crimes.”