A syndicate is squeezing billions out of gift cards; a new federal effort aims to stop the scam – NBC Bay Area

Video of a sheriff's deputy knocking down a man at a Target store piqued our curiosity.

“Like a piñata, the gift card flew out of his clothing,” said Sacramento Sheriff's Detective Andy Carter.

Following this unusual arrest, the Sacramento District Attorney charged Ning Ningsun with attempted theft. Investigators allege Sun quietly removed thousands of gift cards from store shelves and then replaced them, but only after someone tampered with the cards, stealing money that shoppers then loaded onto the cards.

“The way it was done was very complicated,” said Deputy District Attorney Adrianne McMillan. “The cards were taken without any value, they were tampered with in an undetectable way and then they were put back on hold.”

Even to the deputies who arrested him, Sun's case seemed unusual. “When we watched him on camera, we weren't sure what he was doing.”

Since then, we’ve discovered this wasn’t a one-off. Not by a long shot. Our team combed through dozens of news reports and police reports from coast to coast. We've recently uncovered at least two dozen other cases in which police arrested people with large amounts of believed stolen gift cards: from 800 gift cards seized in Ventura County, Calif., a week ago, to as many as 6,900 gift cards in March Shipping in South Carolina.

Overall, we have locations in California, Massachusetts, New Hampshire, Kentucky, Ohio, Minnesota, Missouri, Virginia, Arizona, South Carolina, Rhode Island and Texas found at least 30 people arrested and more than 45,000 cards confiscated.

NBC sister station Dallas' response team recently highlighted a case in Plano, Texas.

“This is not a one-time incident. This is not just a Plano situation. This is a global situation,” said Officer Jerry Minton of the Plano Police Department.

Just like us, the detectives are connecting more and more dots.

“Our phones were blowing up,” Carter, of Sacramento, said of the reaction to Sun's arrest and subsequent news coverage. “We're getting calls from all over the United States.”

Carter said NBC Bay Area has confirmed that a federal investigation is ongoing.

“In the name of Operation Red Hook,” Carter said. The U.S. Department of Homeland Security is working with local law enforcement to investigate the gift card case. Carter said the once-unusual theft, which first appeared on our radar and was perpetrated by Sun Microsystems in Sacramento, could total billions of dollars.

“Nobody does that,” Carter said. “This is clearly a group of people who are well organized, fair and have some financial backing to do a large-scale operation.”

Despite so many arrests, Carter believes thieves still target gift card racks, and they all use the same tactics. “The stores targeted are all similar. The types of target cards are similar. The methods of tampering with the cards are also similar.

Sun remains in jail. He has yet to enter a plea. His attorney has not yet responded to NBC Bay Area.

Sun is due back in court in three weeks. We plan to go there.

Detectives say to protect yourself, buy gift cards online or from stores that lock them. After purchasing a prepaid card, please spend the remaining balance as soon as possible.

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