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Palo Alto couple accused of big 'rebate' fraud
Yezhou 'Jack' Zhao and Sheng Qiang face federal charges -- he is being sought as a fugitive

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A Palo Alto husband and wife have been charged in federal court in San Jose with defrauding a computer networking company by submitting more than $80,000 worth of false claims for rebates, federal prosecutors announced Thursday.

U.S. Attorney Joseph Russoniello said Sheng Qiang, also known as Becky Qiang, was arrested at her Palo Alto home on July 24.

She was arraigned before a federal magistrate that day and pleaded not guilty to 25 fraud and money laundering counts in a previously sealed grand jury indictment issued on July 15. The indictment was unsealed after her arrest.

Qiang's husband, Yezhou Zhao, also known as Jack Zhao or Jake Chao, is a fugitive and is being sought by federal authorities, Russoniello said.

Qiang and Zhao are accused of submitting 11 false claims totaling more than $80,000 to 3Com Corp., a computer networking equipment maker, between 2003 and 2008 under the company's Trade-Up program.

The program gave customers a 15 percent rebate when they replaced old equipment with new 3Com computer parts.

At the time, the couple lived in Milpitas, the indictment said.

Qiang and Zhao allegedly created fraudulent invoices, sent the rebate requests to 3Com under phony company names, established private mailbox addresses to receive the rebates, and deposited the checks in bank accounts under the phony company names, according to the indictment.

The two are also accused of laundering proceeds of the alleged scheme by transferring rebate money to accounts they controlled in Hong Kong and the People's Republic of China.

They face one count of conspiracy to commit mail fraud, 11 counts of mail fraud, one count of conspiracy to launder money and 12 counts of money laundering. Prosecutors are also seeking forfeiture of their alleged proceeds.

The charges each carry possible maximum sentences ranging from five to 20 years in prison, but the actual penalty, if the defendants on convicted, would be determined after consideration of federal sentencing guidelines.

Qiang was granted release by a magistrate on Wednesday on a $500,000 bond and is due to appear before U.S. District Judge Ronald Whyte on Aug. 24 for a hearing on the next steps in the case.


Comments

Posted by A Palo Alto parent, a resident of the Duveneck/St. Francis neighborhood, on Jul 30, 2009 at 11:43 pm

I kind of hope this sort of thing makes companies think twice about rebate deals. They're a pain and often require following really complicated and difficult instructions (cut the bar code out of the original box and the inner product box, staple the receipt to a copy of the first page of the instruction booklet, etc.) How about a straight-forward percentage off the price?! It's called a sale.


Posted by Another Parent, a member of the Duveneck School community, on Jul 31, 2009 at 12:50 am

A Palo Alto Parent: Because the companies know that most people buy something intending to send in for the rebate but never do. If they offer straight discounts, then they lose money for sure.


Posted by rebates are a scam, a resident of the Downtown North neighborhood, on Jul 31, 2009 at 9:29 am

Half the time, even if you carefully fill out all the paperwork and meet all the requirements, the scam companies never send you rebate check. They always say "wait 2 months" for the rebate, hoping that you will forget about it by then. The worst scammers are the cell phone companies, but Frys Electronics is a close second.

What is the point of a rebate anyway? All that paperwork is expensive for both the customer and the company. Everyone would be better off if the companies just discounted their prices. If department stores can have sales, why can't cell phone companies do the same?


Posted by MAIL IN REBATES are a scam, a resident of the Community Center neighborhood, on Jul 31, 2009 at 10:59 am

Now, I NEVER buy a product hoping to get a rebate. I have never received a rebate in my entire life in spite of trying a couple of times.

Mail-in-rebate is a fraud that the feds should investigate. Fry's is the worst offender.


Posted by computer scientist, a resident of the Greenmeadow neighborhood, on Jul 31, 2009 at 11:26 am

Well obviously 3Com honors their rebate promise.......this article is about how they were scammed not how terrible other companies are at NOT sending rebates.

And for the record, I have received the rebates companies offer. Fry's does not usually offer the rebates, they just carry the products and the coupon to redeem the rebate. The last computer I built, I received over $200 dollars in rebates by buying the parts at Fry's.


Posted by Dennis, a resident of the Downtown North neighborhood, on Jul 31, 2009 at 11:37 am

My experience mirrors that of compu sci - I have always gotten rebates when I bothered to comply with requirements. As for this particular case, shouldn't Russoniello and the Feds place Hank Paulson and his ilk at Goldman Sachs in the docket?


Posted by It's Pat, a resident of the Midtown neighborhood, on Jul 31, 2009 at 1:47 pm

Thats the whole point these companies love rebates. Half the people forget to send it in. Then cut that in half, for the number of people who will fill it wrong. Then their is always a good chance it might get lost in the mail.

If you do get the rebate. The company still has a one up on you. They now have your legal name and address + phone. They can sell the list with your name, and all the other rebate applicants.


Posted by Resident, a resident of Another Palo Alto neighborhood, on Jul 31, 2009 at 3:28 pm

I can't believe the news is regarding two people that broke the law and all everyone here can talk about is rebates. I guess being in a different "class" when you commit a crime matters? Look at this thread of comments vs. the other areas where a lower class citizen commits a crime. Amazing.


Posted by Hmmm, a resident of East Palo Alto, on Aug 1, 2009 at 12:42 am

They are getting in a huge amount of trouble for just 80k. Stupid!


Posted by Hmmm, a resident of East Palo Alto, on Aug 1, 2009 at 12:45 am

You're right, Resident, these posts are kind of lame in that there is no focus on the *cost* of this crime. Federal charges are no joke & we have to all pay the price for this lousy, stupid, foolish, but costly scheme of these people. How come people aren't questioning if they're here legally, or shouting for them to be sent back to their country of origin?


Posted by Cynthia, a resident of East Palo Alto, on Aug 3, 2009 at 2:50 am

I've said the same thing many times and was totally ignored! But god forbid a $50 dollar bike comes up missing. The racist post span for miles!

How plastic/superior/boring! Kind of sad and entertaining at the same time! It also proves who is real and who is fake. Thanks for sharing!


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