Oregon police bust crime ring attempting to ship $750K+ worth of iPhones to Hong Kong

Posted:
in General Discussion edited December 2015
Tipped off by a suspect buying hundreds of iPhones with Apple gift cards, police in Oregon have cracked down on an organized crime ring that they say was shipping handsets to Hong Kong where they were to be sold on the black market.


Photo via the Tigard Police Department.


A man in Tigard, Ore., was spotted at the Washington Square mall on Dec. 4 suspiciously buying numerous iPhones with a stack of gift cards, according to the Portland Tribune. That led investigators to follow him to his car, where they found Apple Store shopping bags filled with more than 470 iPhones worth $290,000, and Apple gift cards totaling more than $585,000.

The man followed by police, along with an accomplice, agreed to cooperate to find more suspects involved in the scam. They directed police to a nearby FedEx store, where "hundreds of boxes of iPhones bound for Hong Kong" were seized.

It's believed that the scam was tied to stolen credit card numbers, which were then used to buy Apple gift cards. The iPhones were purchased from the Tigard Apple Store, as well as the Apple retail outlet at Bridgeport Village in Tualatin, Ore.

With an average selling price approaching $700, Apple's iPhones are valuable hot ticket items, which makes them ideal candidates for thieves and scammers. iPhone smuggling and black market sales are not new, though having them stolen and shipped from the U.S. is less common, with most high-profile scams emanating from overseas.

The relatively high cost of Apple's devices combined with the company's limited worldwide distribution network -- Apple retail stores operate in just 16 countries -- provides lucrative arbitrage opportunities for smugglers. Devices purchased legally in a more affordable jurisdiction can be resold, often for a huge profit, in places with higher import duties or limited points of purchase.

Hong Kong is the canonical example of such activity, given its low-tax regime and proximity to the booming mainland China market. Smugglers line up to purchase new Apple products in Hong Kong and sneak them over the border to avoid China's hefty import and luxury taxes.

Earlier this year, a man was arrested at the Hong Kong border while attempting to smuggle 94 iPhones into mainland China by taping them to his body. Border guards were alerted after the man exhibited a "weird walking posture" while approaching the checkpoint.

Comments

  • Reply 1 of 14
    Jeez.
    hmjjydo
  • Reply 2 of 14
    Crime. .....Nothing to see here folks, move along, now
    acgmph
  • Reply 3 of 14
    This is not an isolated incidence. Very recently I was talking to a cop and they busted a similar ring; these people were more cunning, they stealed the identities of Verizon customers and created fake id's in their name and brought hundreds of iPhones as part of the customer upgrade program. They mainly brought the phones from Dallas and Austin and were caught while passing through other part of Texas when one of the officers stopped the car for irresponsible driving and started questioning them. In this case all the customer identities were compromised, they even have their fake ids which could potentially be used at other places.
    edited December 2015
  • Reply 4 of 14
    The arbitrage aspect of this story is completely irrelevant, since the phones, purchased with stolen credit card numbers, were themselves stolen.
  • Reply 5 of 14

    sneak them over the border to avoid China's hefty import and luxury taxes.
    It's amusing that they are basically taking them back to the place where manufactured. It is a messed-up world folks. It is cheaper to buy a phone that was produced nearby, flown/shipped 11,000km using multiple modes, sold at retail by the piece, flown back overseas, then sold again.
    The_Martini_Catchia
  • Reply 6 of 14
    linkman said:

    sneak them over the border to avoid China's hefty import and luxury taxes.
    It's amusing that they are basically taking them back to the place where manufactured. It is a messed-up world folks. It is cheaper to buy a phone that was produced nearby, flown/shipped 11,000km using multiple modes, sold at retail by the piece, flown back overseas, then sold again.
    That's on China and their protectionism. Meanwhile, they engage in the majority of IP theft at all levels of their society, from government on down.
    edited December 2015
  • Reply 7 of 14
    That's like all the iPhones sold this year! :P
  • Reply 8 of 14
    Credit card theft (the real issue here) is a serious problem, and worthy of attention by the police. 

    OTOH, if someone bought a thousand iPhones legitimately to ship to any damn place in the world, I couldn't care less. That would be an utter waste of police time and resources. People taking advantage of arbitrage opportunities across borders is no different from, say, companies minimizing taxes by arbitraging across tax jurisdictions.
    chia
  • Reply 9 of 14
    cornchipcornchip Posts: 1,037member
    Credit card theft (the real issue here) is a serious problem, and worthy of attention by the police. 

    OTOH, if someone bought a thousand iPhones legitimately to ship to any damn place in the world, I couldn't care less. That would be an utter waste of police time and resources. People taking advantage of arbitrage opportunities across borders is no different from, say, companies minimizing taxes by arbitraging across tax jurisdictions.
    True, and also, I wouldn't exactly call it "black market" either since iPhones aren't illegal. Anyway I thought that's how it works.


  • Reply 10 of 14
    What a coincidence, when my gf's Skype account was hacked, all her contacts were being requested (apparently by her) to send Apple Gift Cards. Now if a scam connected to a global hacking manages to cheat at least 10% of the contacted victims, how many Apple Gift Cards will the hackers receive? And how/where will they use them?
  • Reply 11 of 14
    xixoxixo Posts: 414member
    That's on China and their protectionism. Meanwhile, they engage in the majority of IP theft at all levels of their society, from government on down.
    and they're kicking our butts in teh marketplaze
  • Reply 12 of 14
    Er... does this mean the police did some work without requiring a back door golden key into Apple's encryption?
    Perhaps the Oregon police could pass on a few tips to other enforcement agencies on how to do their jobs without destroying privacy.

    YAY Oregon!
    (No, I don't know where that is!)
  • Reply 13 of 14
    xixo said:
    That's on China and their protectionism. Meanwhile, they engage in the majority of IP theft at all levels of their society, from government on down.
    and they're kicking our butts in teh marketplaze
    It's easy to be successful when all you do is scum off the successes of others.
    ronn
  • Reply 14 of 14
    Now what will happen to all these iPhones?
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