I am trying to create a new account in Apple itunes store USA

I have purchased an itune gift card from USA (thru an american friend)

I created a new apple ID
using a gmail address
using my friend's US postal address, phone number and Zip code
also using unotelly dns

However the itune USA store tells me that the gift certificate is invalid

What have I done wrong?

I notice they sent a massive 32 page new terms and conditions and paragraph on GIFTS states
"Gifts purchased from the Services may be purchased only for, and redeemed only by, persons in the United States, its territories, and possessions. "

Does itune USA know that I am not in USA? 

any suggestions?