Two Chinese nationals in the US have been jailed and forced to pay nearly $1.5 million in fines for running a ‘bait and switch’ scam involving Apple retail stores and thousands of fake iPhones.
The US Department of Justice (DoJ) said the two men, both living in Maryland, tried to pass off more than 6,000 counterfeit iPhones as authentic devices to Apple stores and authorized Apple repair service providers.
Now, the scammers will spend a combined nine years plus in federal prison and have to pay restitution and fines totaling over 1.5 million, a judge decided on Thursday.
Multimillion Dollar Scheme to Defraud Apple Inc. out of 6,000 iPhones Nets Prison Terms for Two Maryland Residents https://t.co/hWL1AznKoM @USPISpressroom @HSI_DC
undefined U.S. Attorney DC (@USAO_DC) October 2, 2024
DoJ officials say between May 2017 and September 2019, Haotian Sun from Baltimore and Pengfei Xue from Germantown, both 34 years old, received over $2.5 million worth of fraudulent iPhones shipped by co-conspirators from Hong Kong.
The counterfeit Apple iPhones – complete with either spoofed serial or IMEI numbers – were sent via UPS mailboxes throughout the Washington, DC, metropolitan area.
Once in their possession, the scammers would bring the counterfeit devices to authorized Apple repair shops in hopes the employees would mark the iPhone as a total loss and replace it with a genuine iPhone.
The men and others involved would submit the devices to Apple retail stores, including an Apple Store in Washington, and other authorized Apple service providers, the DoJ said.
“Members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing a loss of more than $2.5 million,” Thursday’s release stated.
After a five day jury trial, Sun and Xue were convicted on eight counts of conspiracy to commit mail fraud and mail fraud back in February.
A judge sentenced both men on Thursday; Sun will serve just under 5 years in prison, while Xue was sentenced to 4.5 years.
Sun was ordered to pay Apple $1,072,200 in restitution, as well as a forfeiture money judgment of $53,610. Xue was ordered to pay $397,800 in restitution and a forfeiture judgment of $19,890.
After serving time, both men will be subjected to three years of supervised release.
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