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July 28, 2010

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Cops nab 21 suspects in credit-card fraud case

TWENTY-ONE suspects have been caught for credit-card fraud and touting invoices in a case involving 40 million yuan (US$5.9 million), city police said yesterday.

Police said 170 stores in several suburban districts were involved in the scam and the suspects made use of credit cards, value-added invoices as well as prepaid fuel cards to make money.

Police said it's the first time they have solved such a complex credit-card fraud case.

The main suspect surnamed Ji, who owns a shell company, was said to help his clients get cash from their credit cards by purchasing prepaid fuel cards through POS machines at gas stations.

Ji paid his clients cash, got the fuel cards and charged 1 to 1.5 percent as a service fee, police said.

Ji then used the fuel cards to make invoices, which would later be sold illegally to companies looking to evade taxes, police said. The gang would earn a 3.5 to 4 percent fee on the amount of each invoice, officers said.

The gang would also sell the fuel cards at a 10 percent discount, police said. Although they would lose some money on the fuel cards, the overall profit was still considerable as the gang could earn as much as 10,000 yuan per day, police said.

More than 700 sets of invoices, 115 credit cards and 292 fuel cards were found at Ji's company, police said.

Officers said such illegal cash advances could be applied to other prepaid cards such as the Lianhua OK Card and smart cards.


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