Two Chinese students who exploited a loophole in the rail compensation system to fraudulently claim £140,000 have been jailed after running an elaborate scam from their shared flat in Leeds.
Li Liu, 26, and Wanqing Yu, 25, discovered that the national Delay Repay scheme had no automatic cross-checks to prevent customers claiming multiple refunds for the same journey.
The pair would first claim refunds for train tickets – pretending they no longer wanted to travel – then pocket extra cash by applying for Delay Repay compensation on the same journeys if the trains ran late, Leeds Crown Court heard.
When British Transport Police arrested them, Liu had illegally acquired £141,031 whilst Yu had received £15,712 through the sophisticated fraud operation.
30 Months and 17 Weeks
Liu was jailed for 30 months and Yu for 17 weeks after both admitted charges of conspiracy to defraud and possession of criminal property.
The duo, who had been held on remand since their arrest, ran the scam for three years from 2021 whilst living as flatmates in their student accommodation in West Yorkshire.
Judge Howard Crowson told them: “You identified a weakness in the system, and between you, you abused that weakness.”
“There was some sophistication, you created false identities and created a large number of bank accounts in order to conceal that you were behind the fraud.”
16 Fictitious People Created
The court heard Liu and Yu had multiple bank accounts and created 16 fictitious identities to help conceal their fraud operation.
The elaborate setup allowed them to spread compensation claims across numerous fake passengers, making detection far more difficult.
Their sophistication extended to using a 20-SIM card adapter in a single phone so they could closely monitor their scam and make it appear contact was coming from different phones and people.
Researched Late-Running Services
The pair conducted extensive research into train services across the country which were frequently late and would purchase tickets in advance for those routes.
When the trains inevitably ran late, they would apply through the national Delay Repay scheme for compensation, having already claimed a refund for the tickets.
This double-dipping approach maximised their fraudulent income from each delayed service.
CrossCountry First to Notice
The scam was first discovered by CrossCountry Trains, though several other rail companies were also affected by the fraud.
Investigations revealed the operation had been running since 2021 – three years during which Liu and Yu systematically exploited the compensation system’s weaknesses.
The lengthy duration suggests the pair grew increasingly confident as their scam went undetected.
Delay Repay Loophole
Under the national Delay Repay scheme, passengers can claim compensation when trains arrive late at their destination.
However, Liu and Yu discovered there were no automatic cross-checks to verify whether a customer had already received a ticket refund before processing delay compensation.
This fundamental weakness in the system allowed them to claim twice for the same journey – once as a refund for an unused ticket, and again as delay compensation.
Advanced Computer Science Student
Liu, who had no previous convictions, had started a one-year course at Leeds University last year.
He had previously applied for an advanced computer science course at Birmingham University – skills that likely helped him identify and exploit the technical loophole in the compensation system.
His computing background gave him the technical sophistication to set up the multi-SIM operation and manage multiple fictitious identities.
English Teaching Course
Yu, who also had no previous convictions, was enrolled on a one-year English-teaching course at Leeds.
Her language skills may have helped craft convincing compensation claims across the 16 fictitious identities they created.
No Comment Interviews
Both students gave no-comment interviews after their arrest, declining to explain their elaborate fraud scheme to investigators.
The silence suggests they hoped to avoid admitting the extent of their systematic exploitation of the compensation system.
“Carry Remorse and Shame for His Life”
Mitigating for Liu, Justin McClintock said his client would “carry the remorse and shame for his life.”
He argued there was a “much more positive side to his character than reflected by his offending.”
McClintock explained Liu hoped to return to China to reunite with his family after serving his sentence.
Little Mitigation for Yu
Little mitigation was offered for Yu after Judge Crowson indicated her 17-week sentence would mean immediate release due to time already served on remand.
The judge’s comments suggest Yu had already spent sufficient time in custody whilst awaiting trial to effectively complete her sentence.
System Weakness Exposed
The case exposes significant vulnerabilities in the rail industry’s compensation system that allowed fraud to continue undetected for three years.
The lack of automatic cross-referencing between ticket refunds and delay compensation claims created an obvious opportunity for exploitation.
Rail companies will now need to implement better verification systems to prevent similar frauds.
£141,000 From Single Individual
The fact that Liu alone fraudulently obtained £141,031 demonstrates the scale of the loophole and how profitable it proved.
Averaged over three years, Liu was generating approximately £47,000 annually from the scam – a substantial income stream from exploiting delayed trains.
Yu’s £15,712 suggests either lesser involvement or that she joined the operation later than Liu.
Sophisticated Operation
The judge’s comments about “sophistication” highlight this wasn’t opportunistic fraud but a carefully planned operation:
- 16 fictitious identities created
- Multiple bank accounts established
- 20-SIM card adapter to manage communications
- Research into chronically delayed services
- Systematic application for both refunds and delay compensation
Student Visa Implications
Both students face likely deportation to China after completing their sentences, with their student visas almost certainly cancelled due to criminal convictions.
Their fraud convictions will make future travel to the UK or other Western countries extremely difficult.
Deterrent Sentence
The 30-month sentence for Liu sends a strong message that sophisticated fraud targeting public systems will result in substantial prison time.
However, some may question whether 17 weeks for Yu – effectively time served – provides sufficient deterrent given she obtained nearly £16,000 illegally.
Proceeds of Crime
The court will likely pursue Proceeds of Crime Act proceedings to recover the fraudulently obtained funds from bank accounts and assets.
However, given the students’ likely limited assets and impending deportation, recovering the full £156,743 may prove challenging.
Rail Industry Response
Rail companies must now implement better verification systems including:
- Cross-checking refund and compensation claims
- Flagging multiple claims from same payment methods
- Verifying passenger identity more rigorously
- Automatic alerts for suspicious claiming patterns
Other Potential Victims
The case raises questions about whether other fraudsters have exploited the same loophole and remain undetected.
If Liu and Yu operated unnoticed for three years despite claiming over £140,000, others using more modest amounts might continue indefinitely.
As Liu and Yu begin their sentences for systematically defrauding Britain’s rail compensation system, their case serves as both a cautionary tale about exploiting system weaknesses and an embarrassing reminder that basic verification checks were absent from a scheme processing millions in annual claims.
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