America's Biggest Scam—Who's Really Behind It?

The money on a gift card you purchase at an American supermarket may already be gone before you ever spend it. This is not an isolated incident. It's happening across the country, and every year it costs the U.S. retail market more than a billion dollars. To combat the scheme, the Department of Homeland Security launched a nationwide investigation known as Project Red Hook. But what investigators uncovered went far beyond gift cards. On June 17, 2026, an investigative report released by the Global Service Center for Quitting the Chinese Communist Party brought new attention to this largely overlooked case and revealed a series of disturbing findings. I followed the report's leads, examined the evidence, and continued the investigation. What emerged is a story that reaches far beyond ordinary fraud. This is a story every American family needs to hear. Welcome back to Final War with Catherine Hu. Let's start with a question. What exactly is the mysterious operation known as Project Red Hook? In December 2023, Homeland Security Investigations, HSI, the investigative arm of the Department of Homeland Security, officially launched Project Red Hook. The operation was created to confront the growing wave of crime that posed a direct threat to America's economic security and public confidence in the retail sector. The name Project Red Hook was chosen for a reason. The word red points to the strong mainland Chinese ties behind the transnational criminal networks involved in the operation, and hook refers to the criminal's signature technique. Their targets were the physical gift cards hanging from the familiar J-shaped display hooks found in supermarkets, pharmacies, and major retail chains across the United States. Those gift cards became the entry point for a multi-billion dollar fraud operation. According to Adam Parks, one of the key leaders of the Project Red Hook task force, and former acting ICE Director Todd Lyons, the gift card fraud network facing U.S. law enforcement today is no longer an ordinary criminal operation. It is highly professionalized, organized across multiple layers, and coordinated across national borders. According to an in-depth investigation published by the independent non-profit news organization ProPublica, on April 10, 2024, Parks said that over the previous 18 months, approximately 100 individuals connected to the scheme had been arrested across the United States. With 80 to 90 percent of them being Chinese nationals or ethnic Chinese. But he estimated that another 1,000 low-level runners are still operating across the country. Their job is to steal gift cards, tamper with them, and then place them back onto store shelves. Parks warned that the scale of the losses is enormous. We're talking hundreds of millions of dollars, possibly even billions. In his view, those losses pose a real risk to both the U.S. economy and public confidence in the retail sector. Parks also described the network as being remotely managed from command and control centers in mainland China, using tools such as WeChat. It operates through a strict division of labor and reaches thousands of retail locations across the United States. In other words, this is not traditional scattered street crime. It is a professionalized supply chain style transnational fraud network. More troubling still, these enormous illicit proceeds do not remain confined to ordinary criminal activity. According to information published by Homeland Security Investigations HSI in its official report, Tackling the Rise in Gift Card Fraud, hundreds of millions of dollars extracted through gift card fraud have created a vast money laundering pool that, in turn, finances other forms of transnational criminal activity that pose a serious threat to American society. This type of fraud erodes Americans' confidence and funds the illicit activities of Chinese organized crime groups, such as fentanyl production and smuggling, illegal migration, human trafficking. At a 2026 congressional hearing, Todd Lyons placed the case in a much broader context. According to Lyons, what HSI has described as the largest gift card fraud case in U.S. history was not simply a retail crime operation. He testified that the network involved organizations linked to transnational criminal groups associated with the Chinese Communist Party. More strikingly, Lyons stated that some of the illicit proceeds ultimately made their way back to military units in China. The CCP is a huge threat, as well as their transnational criminal organizations that have come over here to just wreak havoc. I'll give you an example. HSI actually broke the largest gift card fraud case ever, and it was from transnational gangs within the CCP that were sending that money back to military units in China. And that all came from gift card fraud here in the United States. So we're literally funding our own adversaries. Taken together, the information released by Homeland Security Investigations, HSI, along with the accounts provided by Lyons and Parks, points to a sophisticated criminal enterprise that spans thousands of retail locations across the United States, including Walmart, Target, CVS, and other major chains. Its operations encompass an entire fraud cycle, including theft, tampering, reintroduction of compromised gift cards into the retail system, and the automated draining of funds. The network is also intertwined with other forms of transnational criminal activity. Now let's return to the case itself. How exactly have Chinese criminal organizations extracted billions of dollars from unsuspecting American consumers? In materials gathered through HSY's Project Red Hook investigation, particularly official testimony submitted to the Kansas Legislature's Judiciary Committee, in February 2025, law enforcement officials detailed how Chinese organized crime groups use gift card fraud to extract money from American consumers. The scheme is built around four specialized stages. Each operates separately. Yet together, they form a tightly coordinated criminal system. Step 1. Theft and Collection. Takers. Chinese organized crime groups operating inside the United States recruit large numbers of individuals, primarily Chinese nationals, holding either legal or illegal visas. These individuals are known as takers. Their sole task is to travel from store to store across the country, stealing large quantities of unactivated physical gift cards from Walmart, Target, Apple Stores, CVS, and other major retail chains. Because the cards have not yet been loaded with funds, retail theft detection systems typically do not flag them. Step 2. Tampering and Cloning. Tamperers. The takers then send hundreds or even thousands of unactivated gift cards to technical specialists operating behind the scenes, known as tamperers. These individuals possess highly specialized skills. Using tools such as heat guns, they carefully open the original packaging of the gift cards and extract the information stored on the cards, including the magnetic stripe data, card numbers, and the security pins hidden beneath the scratch-off coating. They then use high-precision printing equipment to place counterfeit barcodes over the original barcodes and restore the packaging to a condition that shows virtually no visible signs of having been opened. Step 3. Redistribution. Placers. Low-level operatives known as placers then take these gift cards, already embedded with a backdoor, back to retail stores and quietly hang them once again on J-hooks in high-traffic areas. A typical example is the case of Dong Hui Liao. Between 2023 and 2024, Liao was responsible for returning gift cards with stolen card data to the shelves of Target stores in multiple states, including Florida, Ohio, and Georgia. When he was arrested in October 2023, law enforcement officers discovered more than 6,032 compromised gift cards in his vehicle, representing approximately $1.88 million in fraudulent value. In late 2024, Liao pleaded guilty. He was ultimately sentenced to approximately 33 months in federal prison. Step 4. Automated card draining. Checkers. When an unsuspecting American consumer picks up one of these seemingly untouched gift cards in a store and pays cash, or uses a credit card to activate it at checkout, the funds are effectively loaded onto a card number already under the criminal's control. Hidden in mainland China or elsewhere overseas, hacker teams use automated scripts to monitor these card numbers in real time. The moment funds are detected, the balance is transferred or spent down within seconds. Behind this highly sophisticated four-stage operation, Homeland Security Investigations, HSI, uncovered something that shocked even seasoned investigators. The enormous scale of the illicit profits involved, and the intelligence value generated by the network. Hidden in mainland China or elsewhere overseas, hacker teams use automated scripts to monitor these card numbers in real time. After seeing just how sophisticated this four-stage operation was, and the extraordinary level of organizational discipline behind it, I couldn't help but ask, what kind of transnational criminal organization was really pulling the strings behind all of this? Neither the project Red Hook Materials released by Homeland Security Investigations, nor ProPublica's investigation went any further. But it was already clear that there was a much bigger story behind this criminal network. And that was the story I wanted to keep digging into. As I continued tracing the international criminal network behind the gift card fraud scheme, one report caught my attention. It was published by the World Journal on April 28, 2025. The story was about three Chinese nationals who had been sentenced in federal court for their roles in a large-scale gift card fraud conspiracy. According to the report, they purchased stolen gift cards and used them to buy Apple products, laundering proceeds from pig-butchering scams and other online fraud operations. This case may look like an ordinary fraud scheme, but what makes it unique is that it openly and directly connects two major forms of transnational crime, gift card fraud and the notorious pig-butchering scam. So what exactly is a pig-butchering scam? A pig-butchering scam is a highly industrialized form of online fraud that is most commonly associated with scam compounds in Southeast Asia. The scammers first build long-term relationships with victims through social media and messaging apps such as WeChat, Telegram and Tinder, a process they call fattening the pig. They pose as romantic partners, successful investors or trusted friends in order to earn the victim's trust. Once that trust has been established, victims are persuaded to invest money in fake investment platforms, typically involving cryptocurrency, stocks or foreign exchange trading. After the victim has transferred a substantial amount of money, the scammers suddenly disappear with all the funds. In other words, what they call butchering. These operations are often carried out by people forced to work inside scam compounds. They rely on AI face-swapping technology, scripted conversations and multilingual teams to target middle and high-income individuals around the world. A single victim can lose anywhere from tens of thousands to millions of dollars. Today, pig butchering is one of the world's most widespread and most damaging forms of transnational online fraud. Pig butchering scams are the core business of the scam compounds operating across Southeast Asia, including Myanmar's notorious KK Park in Mayawati and similar compounds in Cambodia. According to estimates by a panel of experts at the U.S. Institute of Peace, pig butchering scams generated an estimated $63.9 billion in illicit revenue worldwide in 2023. That puts it on a scale comparable to the global illicit drug trade. The U.S. Department of Justice estimates that in 2024 alone, scam compounds in Southeast Asia cost Americans at least $10 billion. When we also look at U.S. Department of Justice indictments, Treasury Department sanctions, and independent investigative reports, the picture becomes much clearer. The Chinese Transnational Criminal Organizations, or TCOs, behind gift card fraud are deeply and repeatedly connected to the scam compounds operating across Southeast Asia. In other words, gift card fraud is now part of the core profit chain that sustains those scam compounds. In the past, scam compounds in Southeast Asia relied mainly on bank transfers. But as the global crackdown on money laundering intensified, criminal networks shifted to cryptocurrency, a more concealed, anonymous, and much harder-to-trace way of laundering money. That meant the money stolen through gift card fraud in the United States also had to be converted into cryptocurrency before it could be fully laundered. So the criminal network found the perfect tool, peer-to-peer, or P2P, cryptocurrency trading platforms with little regulatory oversight. Take the U.S.-based platform Paxful, for example. It allowed users to buy Bitcoin using more than 400 different payment methods, including gift cards. At its peak between 2017 and 2019, Paxful processed roughly $3 billion in transactions while requiring little to no identity verification. In fact, no KYC was one of the platform's selling points. Investigators later found that senior executives at Paxful had even instructed employees on how to help customers bypass regulatory requirements. As a result, in 2026, Paxful was ordered to pay a $4 million criminal fine and a $3.5 million civil penalty to the U.S. Treasury Department's Financial Crimes Enforcement Network, better known as FinCEN. By the end of 2025, the platform had ceased operations, and its co-founder and former CTO, Arthur Schaeback, had pleaded guilty. And just like that, billions of dollars taken from the wallets of American consumers flowed into scam compounds across Southeast Asia, helping fund even more transnational criminal activity, with some of that money eventually flowing back to mainland China to support activities linked to the Chinese military. Which brings us to an even bigger question. Who is really behind this vast transnational criminal network? One man can help us follow the trail to the people really behind this criminal network. His name is Chen Zhe, a Fujian businessman from China. In October 2025, U.S. and British authorities jointly seized $15 billion worth of Bitcoin linked to Chen Zhe and froze his assets. The unprecedented international operation shocked the world and began pulling back the curtain on the vast scam network operating across Southeast Asia. Chen's Prince Group has been accused of running a massive transnational cryptocurrency based pig butchering network involved in human trafficking, unlawful detention, forced labor, money laundering, and allegations of forced organ harvesting. But information from multiple sources suggests that Chen may have been nothing more than the One person who may help answer that question is Eric. He once worked for Prince Group and is now living in exile in Australia. He also says he previously served as an agent for the Political Security Protection Bureau under China's Ministry of Public Security, or MPS. Eric first made this claim in an interview with ABC Australia's Four Corners. Later, he repeated it to several overseas media outlets and on his own ex-account. Here is how he described Prince Group. Prince Group is one of the Chinese government's most important proxies for carrying out covert operations in Cambodia and across Southeast Asia. It provides comprehensive support for Chinese Communist Party's overseas operations, including funding, personnel, and transportation. At its core, Chen's business serves as both a financial reservoir and a logistical base for the CCP's intelligence apparatus. Eric's account is also backed up by U.S. Department of Justice documents. According to the DOJ indictment, Chen Zhi was protected by China's Ministry of State Security and Ministry of Public Security. The indictment states, Chen Zhi and his co-conspirators used their political influence in multiple countries to protect the scam operations from law enforcement in multiple countries, including from the Chinese Ministry of Public Security, MPS, and Ministry of State Security, MSS. Then, who has controlled China's Ministry of State Security and Ministry of Public Security over the years? The answer is no secret. Wang Xiaohong, one of the people Xi has relied on the most. Wang previously served as police chief in Fuzhou, the capital of Fujian province, and he is one of the central figures in Xi's Fujian faction. According to recent information emerging from senior CCP circles, the Central Commission for Discipline Inspection is now investigating two networks at the same time, the money laundering network tied to the family of Tsai Chi, Xi's second-in-command, and the profit chain linking Wang Xiaohong's family to scam compounds in Southeast Asia. Canadian pro-democracy activist Sheng Xue was another person who publicly described Chen Zhi's background. In a post on X last year, she wrote, Prince Group and Chen Zhi help some of the most powerful families in Beijing, including Xi's sister, Qi Chaochao, manage and conceal overseas assets. Sheng Xue also pointed to who she believed was really affected by the joint US-UK enforcement action. Recently, Xi's highly trusted sister, Qi Chaochao, has been deeply frustrated and furious. That's because she may have lost a quarter of her wealth overnight. The 127,271 bitcoin held by Chen Zhi, worth about $15 billion, have been confiscated. His assets in the United Kingdom, including 19 properties in London, have also been frozen. Although the Chinese government has consistently denied any connection to the scam compounds in Southeast Asia, the vast majority of the tens of thousands of criminals arrested and many of the leaders of these criminal syndicates have been Chinese nationals, particularly from the powerful Fujian-based criminal groups. Across Cambodia, Laos, and Myanmar, more than 350,000 people are believed to be working in the scam industry. Whether it is the takers stealing gift cards from retail stores across America, or the trafficked workers with Fujian accents making scam calls from inside compounds in Southeast Asia, the same shadow appears to stand behind them all, the Fujian faction at the center of power in Beijing. Whether on the international stage under the spotlight, or inside the closed world of scam compounds hidden from public view, they have used every tool at their disposal to oppress the Chinese people, prey on the international community, and corrode the foundations of the free world. The reason we're revisiting America's gift card fraud two years after the U.S. Department of Justice first took action is simple. The world's largest criminal network built on human suffering remains as active as ever. In the United States, countless families are still losing their life savings to online fraud. In China, hundreds of thousands of families have been devastated by these criminal operations. Meanwhile, scam compounds across Southeast Asia have rebranded themselves as life science parks and relocated to mainland China, where they have openly kidnapped and brutalized Chinese teenagers. Yet crimes of this magnitude, carried out with state backing, have received remarkably little attention from the international mainstream media. Whether Chinese or American, the farther people can stay from the CCP regime, the safer they will be. Get the real story behind the CCP's shifting power games and see where U.S.-China relations are headed next. Support the vision of a new China without communism. Subscribe now and join us in bringing the truth to light.