US authorities have busted a sophisticated fraud scheme involving the return of counterfeit Apple devices, leading to losses of at least $12.3 million for the tech giant.
Apple iPhone 15 series devices are displayed for sale at The Grove Apple retail store on release day in Los Angeles, California, on September 22, 2023.
Five Chinese nationals have been arrested and charged in connection with the scheme, which spanned several years and targeted Apple Stores across Southern California.
5 Chinese Nationals Nabbed for Massive Apple Crime Ring
The five individuals, identified as Yang Song, 40, of Corona; Junwei Jiang, 37, of East Los Angeles; Zhengxuan Hu, 26, of Alhambra; Yushan Lin, 30, and Shuyi Xing, 34, both of Corona, are accused of orchestrating this elaborate crime operation taking advantage of Apple's customer support.
From December 2015 to March 2023, they allegedly returned around 16,000 of counterfeit iPhones, iPads, and other Apple products to various Apple Stores, including those in Pasadena, Beverly Hills, Sherman Oaks, and Irvine, among others.
LONDON, ENGLAND - JULY 26: Iphone 13's on display during a press preview of Apple's new Knightsbridge store on July 26, 2022 in London, England.
Elaborate Apple Warranty Fraud
The scheme was meticulously planned and executed. According to prosecutors, Song and Jiang coordinated with associates in China to ship counterfeit Apple devices to the US.
According to prosecutors, these knockoffs closely resemble genuine Apple devices, including matching identification numbers from items still under warranty.
The defendants would pose as legitimate owners of these devices, returning them to Apple Stores and claiming they were faulty and covered under warranty.
Apple Store employees, unaware of the fraud, would either replace the counterfeit devices with genuine ones or repair them and eventually provide the fraudsters with authentic Apple products. These genuine products were then shipped to associates in the US and abroad, primarily in China, where they were sold at a substantial profit.
The scale of the fraud is staggering. Prosecutors revealed that the defendants fraudulently returned or attempted to return more than 16,000 counterfeit Apple devices, resulting in significant financial losses for Apple.
"The defendants are accused of taking advantage of Apple's customer-service policies to steal more than $12 million in merchandise," stated US Attorney Martin Estrada.
The counterfeit devices used stolen identification numbers, potentially depriving real owners of AppleCare warranty repairs and support.
Suspects Face Up to 20 Years in Prison
The defendants face a series of serious charges, including one count of conspiracy to commit wire fraud and mail fraud, one count of aggravated identity theft, seven counts of wire fraud, twelve counts of mail fraud, and one count of conspiracy to traffic in counterfeit goods.
If convicted, they each face up to 20 years in prison for the conspiracy, wire fraud, and mail fraud charges, a mandatory minimum of two years for the aggravated identity theft charge, and up to 10 years for the conspiracy to traffic counterfeit goods charge.
Stay posted here at Tech Times.
