SRPD Property Crimes Investigations Team dismantles major gift card fraud operation

On August 7, 2025, detectives with the Santa Rosa Police Department (SRPD) Property Crimes Investigations Team (PCI) arrested two suspects responsible for “gift card draining” scams throughout California. SRPD PCI worked closely with the SRPD Real Time Crime Center (RTCC) to conduct the complex, multi-agency investigation that resulted in the seizure of approximately 25,000 compromised gift cards, one of the largest known seizures of its kind in the state.  
 

The suspects, Yongsheng Zhao, a 29-year-old male resident of El Monte, and Zhipeng Li, a 33-year-old resident of Monterey Park, are linked to an international criminal network operating a fraud scheme known as “gift card draining.” This is accomplished by removing legitimate gift cards from retail displays, recording or altering the activation information, then resealing the gift card in the original packaging before returning them to the displays. Unsuspecting victims purchase the tampered gift cards only to have the funds drained moments after activation. In many cases, the card’s account number or PIN has been damaged or defaced, preventing the purchaser from accessing the funds as well. Because many cards are purchased as gifts, the recipients of the gift cards do not report the loss to the retailer or the person who gifted them the card. Because gift cards typically range from $25 to $500, losses associated with this type of fraud can amount to hundreds of millions of dollars nationwide each year.  
 

Crime Analysts working in the RTCC, familiar with the fraud scheme, utilized the Flock Safety Automatic License Plate Readers (ALPR) to identify a vehicle entering Sonoma County that had been associated with prior fraud incidents. ALPR technology is used by SRPD to capture objective evidence without compromising individual privacy and has been vital in helping combat organized retail theft in Santa Rosa. Crime Analysts were able to track the suspect vehicle in real time, relaying location updates to detectives from multiple Sonoma County law enforcement agencies. The vehicle was observed stopping at numerous CVS locations in Sonoma County. When the vehicle stopped at the CVS location at 2700 Yulupa Avenue, an undercover detective sergeant followed Zhao into the store and witnessed him manipulating gift cards on store shelves while also concealing a large stack of gift cards that were in his possession. Detectives coordinated a traffic stop of the suspect vehicle by an SRPD patrol officer near the intersection of Bennett Valley Road and Warm Springs Road in Glen Ellen. 

Both Zhao and Li were detained without incident. A search of their vehicle uncovered approximately 10,000 gift cards bundled and coded by store location. Also found were notes and ledgers documenting an extensive operation spanning more than 200 CVS locations in California, and approximately $7,000 in cash.  

Detectives conducted an extensive follow-up investigation with other officers and CVS Asset Protection personnel and identified compromised gift cards from CVS stores in Rohnert Park, Petaluma, Sebastopol, and Santa Rosa that had been visited by the suspects on August 7th. The investigation also led SRPD PCI detectives to a hotel in the 400 block of West A Street in Hayward, where the suspects had rented a room. On August 14, 2025, detectives served a search warrant at the hotel and located nine "Bankers Boxes" containing approximately 15,000 gift cards. Investigators concluded the suspects had been conducting these operations across California for several months, striking dozens of communities.  

As a result of these arrests, investigators have already worked with retail partners to identify and remove suspected altered cards from store shelves, preventing future victimization. Law enforcement continues to coordinate with statewide and federal partners to trace the full scope of the conspiracy. 

Yongsheng Zhao and Zhipeng Li were arrested and booked into the Sonoma County Main Adult Detention Facility for the following felony charges: 

Burglary (PC § 459) 

Grand Theft (PC § 487(a)) 

Theft and Forgery of Access Card Information (PC § 484e, § 484f)  

Forgery (PC § 470(d)) 

Conspiracy (PC § 182(a)(1)) 
 

Detectives requested bail enhancements and source of bail hearings for both suspects at the time of their arrests.  A Sonoma County Superior Court Judge set bail at $100,000 for each suspect.  At the time of this press release, Li remained in custody while Zhao was released on bail.  
 

We want to remind the public to always purchase gift cards from reputable retailers and to carefully inspect packaging for signs of tampering. The cards seized by SRPD in this investigation appeared legitimate on face value, and many could only be determined to be compromised after opening the cardboard containers and accessing the card and/or PIN numbers underneath the metallic screens.   
 

Anyone who believes they have been a victim of gift card fraud should report it to their local law enforcement agency. 
 

Here are some red flag indicators that a gift card has been tampered with: 

1. Visibly evident tears in the zigzag cuts around the perimeter of the secure pack or visible paper fibers around the borders, where a sharp knife may have cut through an edge. 

2. Visibly evident tears or exposed nicks along the pull tab, or a pull tab that has been compromised or cut with a knife and then laid back down. A slight bend back and forth can show if this has occurred. 

3. Product and brand logos, colors, or marks closely resemble, but do not match, a company's intellectual property. 

4. The personal identification number (PIN) cover has pieces missing, is fully missing, is not flat/smooth, or contains wrinkles. 

5. The product's packaging or PIN covering deviates from the company's standard gift card packaging. Compare the packaging and PIN to others on the shelf. 

6. There may be no physical signs of tampering, but the balance does not match what you purchased. 
    

We also encourage retailers issuing gift cards to keep them near the registers or behind the check-out counters. 
 

The volume of compromised cards seized in this investigation is significant, underscoring the extraordinary impact of this case and the dedication of local law enforcement resources and collaboration.  This case highlights the sophistication of modern organized crime groups and the devastating impact they can have on unsuspecting victims.  It also demonstrates the remarkable effectiveness of our RTCC Crime Analysts, whose quick thinking and precise intelligence guided detectives along the way. 
 

The success of this case was made possible through seamless cooperation between multiple agencies, and we extend our sincerest gratitude to the Petaluma Police Department, Sebastopol Police Department, CVS Asset Protection and corporate investigators, and numerous partnering agencies from across California for sharing investigative information. 
 

Santa Rosa Police Department case number 25-8732.  
 

Media inquiries can be made to Sgt. Patricia Seffens, Public Information Officer, at 707-543-3634 or pseffens@srcity.org.