Federal prosecutors in Brooklyn have charged five individuals in connection with an alleged scheme to fraudulently obtain and resell over $20 million in building materials and appliances from hardware and home improvement stores across Brooklyn, Queens, Long Island, and other locations. The indictment was unsealed in federal court today, detailing accusations of conspiracy to commit wire fraud, bank fraud, access device fraud, and money laundering.
The defendants—Kai Xu, Zhi Bin An, Xiang Chen, Songhak Lee, and Kang Zhang—were arrested this morning. They are scheduled for arraignment before United States Magistrate Judge Seth D. Eichenholtz.
Joseph Nocella, Jr., United States Attorney for the Eastern District of New York; Matt McCool, Special Agent in Charge at the United States Secret Service (USSS); and Jessica S. Tisch, Commissioner of the New York City Police Department (NYPD), announced the arrests.
“For these defendants, the tools of their trade were not hammers and nails, but fraud and deception. They enriched themselves by targeting programs designed for hard working consumers and small businesses to buy materials for construction and home improvement,” stated United States Attorney Nocella. “Today’s arrests serve as a warning to those who try to profit from retail fraud: crime doesn’t pay.”
“The Secret Service is proud to help disrupt an alleged criminal syndicate that carried out an elaborate fraud scheme here in New York City, siphoning millions of dollars into its coffers through bad checks in order to procure construction-related materials for illegitimate resale," stated USSS Special Agent in Charge McCool. “I want to congratulate our agents and our partners at both the Eastern District of New York and the NYPD for their hard work in holding these criminals accountable.”
“These defendants allegedly deceived credit lenders with bogus bank checks to steal more than the $20 million of merchandise from hardware and home improvement businesses,” stated NYPD Commissioner Tisch.“Schemes like this don’t just affect retail corporations – they hurt honest consumers who rely on these programs to purchase trade supplies. I am thankful to the NYPD investigators, our federal partners at the United States Secret Service and HSI, and the U.S Attorney’s Office for shutting this scam operation down and holding these fraudsters accountable.”
According to court filings, between July 2023 and September 2025 the accused allegedly opened hundreds of lines of credit at various hardware stores using both consumer credit cards intended for individuals as well as commercial lines meant for small businesses. Many accounts were reportedly set up under false names or shell companies without legitimate business operations. The group is accused of using paper checks tied to accounts with insufficient funds to increase credit limits or pay off purchases; before those checks could be rejected by banks, they would acquire large quantities of goods which were delivered to their warehouses.
Authorities allege that after obtaining merchandise valued at over $20 million through these methods—much of which was later resold—the proceeds were laundered through offshore bank accounts or used for further warehouse operations.
All five defendants are presumed innocent unless proven guilty. If convicted on all charges each faces up to 30 years imprisonment.
The prosecution is being handled by Assistant United States Attorney James R. Simmons from the Office’s Business and Securities Fraud Section with support from Paralegal Specialist Asher Martin-Rosenthal.
