After an older St. Paul man fell victim to a $670,000 scam last week, his daughter called FedEx to try to intercept the two cashier’s checks he sent to a Lakeville address through overnight delivery. She was told the checks were out for delivery, and could not be stopped.
Lakeville police did surveillance of the address, a 1940s rambler that was recently sold and vacant. A man pulled up near the house in a black BMW X5 with New York license plates, grabbed a parcel from the front porch and drove off, court documents said.
Officers stopped the car and detained the man, Hong Zhang, a 40-year-old Chinese national from Queens, N.Y.
The next day, Dakota County prosecutors charged Zhang with one count of aiding and abetting felony theft by swindle in connection with the Sept. 10 incident, which police believe is part of a scheme that stretches far beyond Lakeville.
Search warrant filings said investigators have seized uncashed cashier’s checks totaling more than $2 million, bank deposit slips and other evidence of a “large complex fraud scheme believed to be orchestrated overseas.”
No one else has been arrested, Lakeville Police Chief Brad Paulson said Friday, adding, “We’re likely only scratching the surface of this group.”
Authorities are working to identify other victims from multiple states, Paulson said, adding federal authorities have helped in the criminal investigation.
Zhang traveled to the state solely to “swindle hundreds of thousands of dollars from innocent victims,” prosecutors said in a Sept. 11 court filing while arguing for $1 million bail.
Evidence found in the BMW includes several “high value” cashier’s checks, four New Jersey driver’s licenses with Zhang’s photo and names “that appear to be fake” and four Social Security cards with the same phony names, according to prosecutors.
Hong Zhang (Courtesy of the Dakota County Sheriff’s Office)
“If released, it is unlikely the defendant will appear at future court hearings,” prosecutors said.
Zhang remained jailed Friday afternoon in lieu of $500,000 bail or $250,000 with conditions including staying in Minnesota and surrendering his passport. An attorney was not listed in his court case file Friday.
Court records show Zhang has one conviction in Minnesota: In late June, he was pulled over for going 79 in a 60 mph zone in a BMW X3 on U.S. 169 in Brooklyn Center. He paid the $118 fine the next month.
Stakeout, arrest
According to the criminal complaint and search warrant affidavits, the St. Paul man’s daughter on Sept. 10 reported the alleged theft to St. Paul police, who contacted Lakeville police. She said the checks were written out to two purported businesses the previous day.
“Our involvement stemmed from this very alert family member who realized that family members were potentially being scammed … like, in progress,” Paulson said.
Officer Mike Lamm went to the vacant home along 210th Street to watch for the FedEx delivery, parking across the street on Huntsville Trail.
Sgt. Alex Johannes called FedEx, who said the checks could not be stopped, despite being told of the situation. FedEx also said they had another package addressed to the same construction company and the Lakeville home at a local depot. That delivery was stopped, at the request of a customer from Queens, N.Y.
Johannes then joined Lamm in the stakeout. Zhang was spotted parking the BMW around the corner from the house, walking up to the home’s front door and back to the car. He was pulled over, and identified by his New York driver’s license.
A parcel addressed to the Lakeville home was in plain view on the front passenger seat, the complaint said.
An affidavit said Zhang spoke Mandarin and was questioned through a phone interpretation service. He said he was in Minnesota for a business trip and was asked by his partner to pick up packages that were “sent to the wrong address.”
Zhang said he picked up a package at the same address the day before, the affidavit said, which adds he then handed the parcel to Johannes.
Zhang was arrested and gave investigators a statement at the police station. He said the package was for him, even though the name on it was not his, the complaint said.
He said he was staying at an Airbnb in Richfield, and had picked up two packages in Minnesota that contained “company documents and maybe a check.”
“He eventually admitted he knew he was picking up cashier’s checks that were not for him,” the complaint continued.
Later, the St. Paul man’s package was delivered to the Lakeville home and seized by police.
A man who recently bought the house told police he did not live there but was making repairs. He said an Asian man picked up a UPS package on Sept. 9. He said other packages had also been delivered and that he returned some to the U.S. Postal Service and sent one back with a FedEx driver.
Affidavits said a search of the BMW turned up six cellphones and a trove of documents, including envelopes with cashier’s checks totaling $68,760, $54,000 and $149,000. Also found: A $120,500 wire transfer receipt through Bank of America, and Minnesota Secretary of State paperwork, dated Sept. 2, that incorporated two purported businesses with addresses in Shoreview and Inver Grove Heights.
Lakeville police Detective Jim Dronen, who prepared the search warrant affidavits, wrote in one that schemes involving theft by swindle “frequently involve setting up false businesses and bank accounts to funnel money through before it is sent overseas.”
Airbnb discoveries
Richfield police saw two packages outside the Airbnb where Zhang said he was staying. One was addressed to the same business included on one of the St. Paul man’s cashier’s checks, while the other had the name of a business that was incorporated in Minnesota on Sept. 2, according to the court filings.
Lakeville and Richfield investigators and agents from the Department of Homeland Security Investigations executed a search warrant at the Oliver Avenue home. Two men told authorities they rented bedrooms through Airbnb, and that an Asian man started renting a basement bedroom about a week ago. “Both advised the packages at the residence were not sent to them,” the affidavit said.
Authorities gathered five packages from the front steps, or just inside the home. Cashier’s checks totaling over $550,000 were inside the parcels.
A black backpack found under a bed in the basement bedroom Zhang rented included envelopes similar to ones found in the BMW, the affidavit said. Authorities also discovered 11 more New Jersey driver’s licenses with the same picture of Zhang, but different names; 11 more Social Security cards with the same names as on the driver’s licenses, and 12 debit cards.
‘Timing was really critical’
Paulson, Lakeville’s police chief, credited the St. Paul man’s daughter for her awareness and his officers for jumping into the case and taking Zhang into custody.
“Timing was really critical to intercept these cashier’s checks, and the individual, or this money would have likely been gone and unlikely to ever be recovered,” he said.
Although money scams are certainly not new to Lakeville, “this one stands out because of the dollar loss,” he said.
He said the case is a “good reminder” that people should “verify, triple verify” the legitimacy of phone calls or emails.
“Take the extra time to make a couple extra phone calls, or even call the police department,” he said. “I’d much rather answer 20 of those phone calls a day and say, ‘Yeah, this is legitimate,’ than see people that are scammed out of this kind of money.”