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A federal grand jury has convicted two Chinese nationals for trying to use 5,000 counterfeit iPhones to dupe Apple into replacing them with real products.
The duo, Haotian Sun and Pengfei Xue, were based in Maryland when they tried to swindle over $3 million from Apple, according to the Justice Department.
“Sun and Xue received shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the DC Metropolitan area,” the DOJ said. “They then submitted the fake iPhones, with spoofed serial numbers and/or IMEI numbers, to Apple retail stores and Apple Authorized Service Providers.”
According to court documents, Sun and Xue committed the fraud starting in June 2017 to September 2019, with two other accomplices in Maryland named Wen Jin Gao and Dian Luo. The group would pretend that the counterfeit iPhones had been damaged in some way and that Apple needed to replace them to honor the warranty.
The criminal complaint suggests Apple fell for the scheme for over 2,700 of the submitted counterfeit iPhones. This same devices also used spoofed serial numbers and IMEI numbers taken from real iPhones. However, an Apple brand investigator later caught on to the scheme, realizing the fake parts and deceptive serial numbers, and notified law enforcement.
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This led the US Postal Inspector to uncover the counterfeit iPhones shipments that the group was receiving. “In 2017, Sun opened eight UPS Store mailboxes using his Maryland driver’s license and university identification card. US postal inspectors arrested Sun and Xue in December 2019,” the Justice Department added.
Sun and Xue, who are both 33, were convicted of mail fraud and conspiracy to commit mail fraud. Each faces a maximum of 20 years in prison with their sentencing scheduled to be held on June 21.
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