Man convicted & sentenced for million-dollar fake iPhone return scheme

AppleInsider · February 1, 2022 9:58PM

A Chinese national has been sentenced to 26 months in a US prison for his role in a scheme to defraud Apple out of more than $1 million with counterfeit iPhones.

Apple iPhone 12

Haiteng Wu, 32, immigrated to the U.S. in 2013 to study engineering. He received his Master's Degree in 2015 and secured lawful employment two years later. However, the Justice Department said that, at the same time, he embarked on a three-and-a-half year scheme to defraud Apple.

The scheme involved receiving shipments of counterfeit clones from Hong Kong that had spoofed IMEI and serial numbers corresponding to authentic Apple devices. Wu, together with other conspirators, would then return these inauthentic devices to Apple, claiming that they were legitimate devices still under warranty. The goal was to receive authentic iPhone devices as replacements.

Those authentic replacements models were then shipped back to conspirators overseas, including in Hong Kong.

Wu recruited others, including his wife Jiahong Cai, to take part in the scheme. In addition to the conspiracy itself, Wu also secured fake identification documents, opened multiple commercial mail receiving mailboxes, and arranged for members of the scheme to travel through the U.S.

In total, Wu acknowledged that he had defrauded Apple out of nearly $1 million, adding that he intended to continue the scheme. Wu and his conspirator were arrested in December 2019. He has been in custody since.

Wu pleaded guilty to one count of conspiracy to commit mail fraud in May 2020. On Tuesday, Judge Emmet G. Sullivan sentenced Wu to the 26 months he has already served in custody and ordered him to pay $987,000 in restitution, and and an identical amount in a money forfeiture judgement.

Like her husband, Cai also pleaded guilty to one county of conspiracy to commit mail fraud in May 2020.

The case was investigated by the U.S. Department of Homeland Security, Homeland Security Investigations, and the U.S. Postal Inspection Service.

Read on AppleInsider

lkrupp · February 1, 2022 10:08PM

Only 26 months for $1,000,000.00? Not bad. And good luck, Apple, getting the $987,000.00 in restitution. Crime does apparently pay in the U.S. at least.

edited February 2022

xed · February 1, 2022 10:15PM

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

sflocal · February 1, 2022 10:54PM

Many years ago, a founder/CEO friend of mine caught his CFO embezzling from him for also $1M. The thief was ordered to pay restitution of that $1M. My friend told me he'll never see that money again. With the thief fired, jailed, and now released he couldn't get a job anywhere. My friend get's a sporadic check for $20 every few months but that's about it. Last thing I heard, the thief moved back to his home country of the Philippines and disappear like a fart in the wind.

This Chinese national if he doesn't get deported, will most likely still go back to his China and Apple will never see a penny from him. I can only assume he may still find employment in his field in China, but I don't think any respectable country/company will hire this guy ever so...

ronn · February 1, 2022 11:15PM

He was essentially sentenced to time served since he's been jailed since arrest. And AI should've included this tidbit:

Judge Sullivan previously ordered Wu to forfeit his interests in two condominium units, one in McLean, Virginia, the other in Arlington, Virginia. Wu purchased the Arlington condominium for cash during the conspiracy.

What a dope buying a condo with cash. Nothing says ill-intent more than a large cash purchase coupled with high activity with the same damn company.

xed · February 1, 2022 11:51PM

ronn said:

He was essentially sentenced to time served since he's been jailed since arrest. And AI should've included this tidbit:
Judge Sullivan previously ordered Wu to forfeit his interests in two condominium units, one in McLean, Virginia, the other in Arlington, Virginia. Wu purchased the Arlington condominium for cash during the conspiracy.
What a dope buying a condo with cash. Nothing says ill-intent more than a large cash purchase coupled with high activity with the same damn company.

I wouldn't read into the "for cash" comment. It's likely only implying that he didn't get a mortgage, not that he showed up caring a sack with a dollar sign on it.

viclauyyc · February 2, 2022 12:29AM

ronn said:

He was essentially sentenced to time served since he's been jailed since arrest. And AI should've included this tidbit:
Judge Sullivan previously ordered Wu to forfeit his interests in two condominium units, one in McLean, Virginia, the other in Arlington, Virginia. Wu purchased the Arlington condominium for cash during the conspiracy.
What a dope buying a condo with cash. Nothing says ill-intent more than a large cash purchase coupled with high activity with the same damn company.

You will be surprised how many Chinese can buy million dollars house with “cash”, legal or not. These immigrants usually don’t have any credit history in the new country. So the only means to buy a house is cash.

viclauyyc · February 2, 2022 12:38AM

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

irenew · February 2, 2022 6:54AM

viclauyyc said:

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

Some of the comments here surprise and saddens me. My personal experience with Chinese (and South Korean) students and interns at our company is that they work _incredibly_ hard. Bright and ambitious individuals, all of them.
Could we please leave stereotypes (bordering on racism) out of the discussion?

ravnorodom · February 2, 2022 1:00PM

My wife works at Louis Vuitton retail store (the legit one). I frequently hear her stories how customers (and one employee) cheated and manipulate the system just to get that stupid bags in their hands. Some stole the merchandise while employees weren't looking. Sometimes she and her employees caught, detected the fraud and prevented it from happening but other times they slipped. This is nothing to do with race and surprisingly these are people from all walks of life, career (whether it's legal or not) and different ethnicity. Just her store alone they lost hundred thousands of dollars per year. But again these only make up very small percentage. At the end, her Louis Vuitton store still makes tons of profit every year like Apple. You will be surprise to find well known actors, basketball players and show hosts stopping by to get their bags, suitcases and trunks. These customers usually spend at least $10,000 and up every time they stop by. When I said cheat and manipulation, I mean fake credit cards (stolen identity), returning fake bags in exchange for real bags and bought products at employee discount price (80% off) and resell them at eBay or other sites. Louis Vuitton has active internal investigators. Any employee got caught will be fired on the spot.

edited February 2022

daalseth · February 2, 2022 1:14PM

Time served and a fine that he'll never pay. Sure he had to forfeit some property that he bought with illicit cash so in reality he isn't out anything. A few months from now he'll be back in China and his contacts will set him up in business. He's got a degree and some years of work experience.

macgui · February 2, 2022 7:17PM

Today, the Honorable Emmet G. Sullivan sentenced Wu to the time he already has served in custody, which amounts to approximately 26 months.

https://www.justice.gov/usao-dc/pr/chinese-national-sentenced-prison-defrauding-apple-inc

It's not uncommon at all to give credit for time served when a defendant has waited a lengthy time for sentencing. That's not a requirement though and the amount of money stolen as a result of the fraud should have received a sentence beyond time served IMO. The amount of profit realized shouldn't be a consideration.

What should be/should have been considered is the ability and likelihood of making the required restitution, as I imagine that will not happen. So half of the conditional sentencing would not be met. The time served portion of the sentence was probably a result of a plea deal, something else that bothers me. Plea bargains can be very useful, but used just to get a conviction and resolve the case as quickly as possible doesn't serve justice, at least to me.

laytech · February 3, 2022 1:10AM

There is hardly enough punishment to disincentive people from these sort of crimes. He absolutely should be stripped of any legal right for him and his wife to live in the US and deported back to China. He will, as he has already said, intends to carry on with the crime, so let him do that in China.

What an utter scumbag though. These dirty thieves just increase the cost of devices because Apple and other companies have to factor in fraud into their cost.

However, how a counterfeit phone gets past Apples own inspection is worrying, either the counterfeit phones are so good that Apple doesn't know or they are already second phones in the market.

An intelligent guy (assuming his degree was legitimate) takes the slimy easy route to wealth. My tolerance for such filthy people is zero. Maybe Saudi Arabia is the way to go, cut oft their hands!

edited February 2022

mplsp · February 3, 2022 2:59AM

IreneW said:

viclauyyc said:

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

Some of the comments here surprise and saddens me. My personal experience with Chinese (and South Korean) students and interns at our company is that they work _incredibly_ hard. Bright and ambitious individuals, all of them.
Could we please leave stereotypes (bordering on racism) out of the discussion?

And my personal experience is that they are very willing to cheat to succeed. Which stereotype is accurate?

xed · February 3, 2022 6:32PM

MplsP said:

IreneW said:

viclauyyc said:

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

Some of the comments here surprise and saddens me. My personal experience with Chinese (and South Korean) students and interns at our company is that they work _incredibly_ hard. Bright and ambitious individuals, all of them.
Could we please leave stereotypes (bordering on racism) out of the discussion?

And my personal experience is that they are very willing to cheat to succeed. Which stereotype is accurate?

Let's see, his use of the pronoun they is referring to specific students that he specifically knew and had a relationship with, whereas as your they isn't made clear. Either you're ambiguously globing onto his they to claim that the students to which he's referring are liars and cheats (and you've made no other statement to indicate that you know the students to which he's referring) or you're using they to refer to all Chinese people. Which one do you think sounds like a racist stereotype and which one is a fair and balanced response based on personal experience.

mplsp · February 3, 2022 8:28PM

Xed said:

MplsP said:

IreneW said:

viclauyyc said:

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

Some of the comments here surprise and saddens me. My personal experience with Chinese (and South Korean) students and interns at our company is that they work _incredibly_ hard. Bright and ambitious individuals, all of them.
Could we please leave stereotypes (bordering on racism) out of the discussion?

And my personal experience is that they are very willing to cheat to succeed. Which stereotype is accurate?

Let's see, his use of the pronoun they is referring to specific students that he specifically knew and had a relationship with, whereas as your they isn't made clear. Either you're ambiguously globing onto his they to claim that the students to which he's referring are liars and cheats (and you've made no other statement to indicate that you know the students to which he's referring) or you're using they to refer to all Chinese people. Which one do you think sounds like a racist stereotype and which one is a fair and balanced response based on personal experience.

Well, I actually said "personal experience" but I'll modify/clarify my statement: "My personal experience from working with Chinese students in graduate school was that they were very willing to cheat to succeed. Which stereotype is accurate?"

You are implying that @IreneW 's stereotype is not racist just because it's not negative?

xed · February 3, 2022 8:39PM

MplsP said:

Xed said:

MplsP said:

IreneW said:

viclauyyc said:

Xed said:

Apple was defrauded out of $1M, but the time, effort, many varying costs of the scam, and all the people involved that would need to get paid means that this was not a very profitable "business" for going on for nearly 4 years.

PS: If he's going to do be this unethical I would question if he cheated on his work to get his masters degree.

Many of these Chinese get their degree by shady methods. 1. Hire someone to do the research/school work for them. 2. translate a Chinese language paper into English. Even if the paper was published before, but since it is in Chinese or other languages. The professor has no way to know if it is a direct copy.

My ex study electrical engineering master degree in canada. One of her fellow student is from China. She can barely able to communicate with the professor with English. It makes you wonder how can she get accepted by the program in the first place.

Some of the comments here surprise and saddens me. My personal experience with Chinese (and South Korean) students and interns at our company is that they work _incredibly_ hard. Bright and ambitious individuals, all of them.
Could we please leave stereotypes (bordering on racism) out of the discussion?

And my personal experience is that they are very willing to cheat to succeed. Which stereotype is accurate?

Let's see, his use of the pronoun they is referring to specific students that he specifically knew and had a relationship with, whereas as your they isn't made clear. Either you're ambiguously globing onto his they to claim that the students to which he's referring are liars and cheats (and you've made no other statement to indicate that you know the students to which he's referring) or you're using they to refer to all Chinese people. Which one do you think sounds like a racist stereotype and which one is a fair and balanced response based on personal experience.

Well, I actually said "personal experience" but I'll modify/clarify my statement: "My personal experience from working with Chinese students in graduate school was that they were very willing to cheat to succeed. Which stereotype is accurate?"

You are implying that @IreneW 's stereotype is not racist just because it's not negative?

That comment clarifies it better. Thank you for that.

No, being positive does not negate racism. As you're aware, they are not mutually exclusive. I'm sure that most of us here grew up hearing about model minority, especially in regards to Asians and their study habits.

https://www.nbcnews.com/news/asian-america/behind-model-minority-myth-why-studious-asian-stereotype-hurts-n792926
https://www.learningforjustice.org/magazine/what-is-the-model-minority-myth

Man convicted & sentenced for million-dollar fake iPhone return scheme

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