Two people have been found guilty of a “sophisticated scheme to defraud Apple out of millions of dollars’ worth of iPhones,” according to the United States Department of Justice. The scam was based around submitting counterfeit iPhones to Apple for repair, which were then replaced by Apple with genuine iPhones.
In a press release on Tuesday, the US Attorney’s Office announced that Haotian Sun, 33, and Pengfei Xue, 33, were found guilty of the scheme by a federal jury. The two Chinese nationals, who resided in Maryland, were charged with conspiracy to commit mail fraud and mail fraud. They could face up to 20 years in prison. Sentencing is scheduled for June 21, 2024.
In total, Sun and Xue submitted more than 5,000 fake iPhones to Apple over the course of two and a half years:
According to the government’s evidence, between May 2017 and September 2019, Sun, Xue, and other conspirators defrauded Apple Inc. by submitting counterfeit iPhones to Apple for repair to get Apple to exchange them with genuine replacement iPhones. Sun and Xue received shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the D.C. Metropolitan area.
They then submitted the fake iPhones, with spoofed serial numbers and/or IMEI numbers, to Apple retail stores and Apple Authorized Service Providers, including the Apple Store in Georgetown. Trial evidence showed that conspirators submitted more than 5,000 inauthentic phones to Apple during the conspiracy, intending to cause a loss of more than $3 million to Apple.
This isn’t the first time a repair scam like this has made headlines and led to an arrest. In fact, it’s pretty much the exact same method that has been used by other fraudsters in the past.
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