Pair found guilty of trying to defraud Apple of more than $3 million

AppleInsider

Two individuals hatched a scheme that involved submitting fake iPhones to Apple for repair in an attempt to get them replaced with real ones -- and could be jailed for 20 years for doing so.

Pair found guilty of defrauding Apple in repair scheme

Haotian Sun and Pengfei Xue, residents of Germantown, Maryland, were found guilty by a federal jury on Tuesday for attempting to defraud Apple of millions of dollars worth of iPhones. They were convicted of conspiracy to commit mail fraud and mail fraud, which are serious offenses carrying a maximum sentence of 20 years in prison, according to a press release from the D.C. U.S. Attorney's office.

Between May 2017 and September 2019, it was found that Sun, Xue, and other co-conspirators attempted to obtain genuine iPhones from Apple by submitting counterfeit devices through Apple's repair program. The counterfeit devices were received from Hong Kong and mailed to UPS mailboxes in the Washington D.C. Metropolitan area.

They then submitted the fake iPhones, with spoofed serial and IMEI numbers, to both Apple retail and Apple Authorized Service Providers. Evidence showed that they submitted more than 5,000 inauthentic phones, which would have caused a loss of more than $3 million to Apple. The pair were arrested in December 2019.

District Court Judge Timothy J. Kelly scheduled sentencing for June 21, 2024.

Recently, a security researcher was thanked by Apple in OS patch notes just days after being indicted in a scheme that allowed him to steal millions of dollars worth of Apple products, gift cards, and services.



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macxpress

How dumb can you be? Why would anything think Apple wouldn't catch this? They have specific systems in place to prevent this exact thing. They deserve everything that is coming to them. 

ronn

macxpress said:

How dumb can you be? Why would anything think Apple wouldn't catch this? They have specific systems in place to prevent this exact thing. They deserve everything that is coming to them. 

Not very effective if it took Apple more than two years to "prevent this exact thing" from working out for the criminals' benefit into the millions. It's greed that got them caught, not robust systems in place to catch fraud of this nature. Criminals are always dum-dums driven by greed.

laytech

High the prison sentence the better. A deterrent for one but justification for another. These scumbags increase costs for everyone as Apple and other manufacturers have to factor in fraud, theft and other costs into the purchase price. Like insurance fraud, it costs everyone. 

It is amazing how good the counterfeit products are. Are these counterfeit product rejected iPhones during manufacture and simple recycled or some very good quality fake manufacturers. Image what positive work they could be doing if they weren't trying to product counterfeits. 

jellybelly

ronn said:

Not very effective if it took Apple more than two years to "prevent this exact thing" from working out for the criminals' benefit into the millions. It's greed that got them caught, not robust systems in place to catch fraud of this nature. Criminals are always dum-dums driven by greed.

Apple may have noticed the first attempt.  Apple and law endorsement would also want to discover others involved both here and the supplier of the fakes—and any other recipients of the fake phones elsewhere in the world.  That could easily take two years considering it’s international.  

I’m not sure why you jumped to assume it took Apple two years to ‘prevent’ this. Apple and law enforcement couldn’t blow their cover.  They most likely intercepted sales of the phones and likely recovered most of the money. 

ronn

jellybelly said:

ronn said:

Not very effective if it took Apple more than two years to "prevent this exact thing" from working out for the criminals' benefit into the millions. It's greed that got them caught, not robust systems in place to catch fraud of this nature. Criminals are always dum-dums driven by greed.

Apple may have noticed the first attempt.  Apple and law endorsement would also want to discover others involved both here and the supplier of the fakes—and any other recipients of the fake phones elsewhere in the world.  That could easily take two years considering it’s international.  

I’m not sure why you jumped to assume it took Apple two years to ‘prevent’ this. Apple and law enforcement couldn’t blow their cover.  They most likely intercepted sales of the phones and likely recovered most of the money. 

Did you not see the quoted text? I was responding to an earlier post about Apple's effort to "prevent this exact thing" (notice the quote marks again?) from happening. Despite there being at least three prior similar large-scale, multi-year fraud cases by other criminals similar to the one in this story. 

sflocal

As Chinese nationals (no surprise), I hope their passports were confiscated.  I read too many stories of Chinese nationals getting arrested and skipping back to China before appearing in front of a judge.