HOLLYWOOD, Fla. — Federal agents arrested two Chinese nationals in Hollywood on Wednesday, accusing them of being part of an international refund fraud scheme that’s cost retailer Target millions of dollars over the past few years.
Homeland Security Investigations agents said Migui Li, 28, of Levittown, New York, and Ziyu Zhao, 20, of Flushing, New York, were members of a “transnational criminal organization” and personally responsible for about $94,000 in losses to Target stores in the Southeast, including stores in Miami-Dade and Broward counties.
According to a federal criminal complaint, the “post-purchase markdown” scheme has cost Target $4.6 million since 2022.
Agents said members of the group “employed a social engineering tactic where they would purchase high-value electronics at actual retail price” and then would manipulate the HTML code on Target’s website “to make the same item they purchased appear to be for sale at a significant discount” on their devices.
They would then ask customer service staff for a price match and be given gift cards with the difference, authorities said. They would then repeat the process by buying new merchandise with the fraudulently-obtained gift cards.
The ill-gotten electronics would then be shipped to China.
Federal agents said they identified Li and Zhao as part of the organization and said they were back in South Florida, engaging in more than $3,000 in fraudulent transactions on Tuesday and Wednesday.
Authorities said they surveilled the pair at a hotel in Dania Beach as Li put two packages in their rental car. The two then drove to a FedEx store in Hollywood, according to the complaint.
After the two arrived there, agents said they saw Li take out the two packages and then saw “Target shopping bags with additional merchandise” in the car.
Li left the packages with FedEx for overseas shipment, destined for Hong Kong, authorities said.
Authorities said they approached Li and Zhao before they could leave the store. The two, they said, “consented to a search of the parcels, which contained packaged electronics, including Polaroid cameras, film, Nintendo Switches and other items.”
According to the complaint, both admitted they were paid to buy electronics in the U.S. and send them to China via Hong Kong.
Li said he used the Chinese application WeChat, “where he received the gift card serial numbers he utilized.“
“When asked about changing the advertised price of certain items, he either claimed he didn’t understand the question or refused to answer,” the complaint states.
The complaint states that Zhao was “more forthcoming,” admitting to changing advertised prices.
Agents arrested both on charges of conspiracy to commit mail and wire fraud.
As of Friday morning, records show both were being held by the Broward Sheriff’s Office on behalf of the U.S. Marshals Service at the former agency’s Paul Rein Detention Facility in Pompano Beach.
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