$3 mn Apple scam: Fake iPhones swapped for genuine devices in the US

Two Maryland men sent thousands of fake iPhones to Apple, tricking the company into providing $3 million worth of authentic replacements.

Apple scam: Two Maryland men convicted for sending fake iPhones to Apple in an eight-year scam, swindling more than $3 million worth of authentic phones. (Bloomberg)

Two individuals from Maryland have been found guilty by a federal jury on Tuesday for orchestrating a scam that involved sending thousands of fake iPhones to Apple under the guise of repairs, ultimately netting them approximately $3 million worth of authentic replacement iPhones. The Apple scam verdict was announced by the U.S. Attorney's Office for the District of Columbia.

Fake iPhone Scam Unveiled

Haotian Sun, a 33-year-old resident of Baltimore, and Pengfei Xue, a 33-year-old from Germantown, Maryland, initiated the scheme in 2017 by obtaining counterfeit iPhones from Hong Kong. The duo submitted around 5,000 fake phones to Apple and authorized service providers over a two-year period, employing tactics such as spoofing serial numbers to evade detection, according to a report by Times of San Diego.

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In addition to spoofing serial numbers, the duo employed various aliases to conceal their activities. The entire fraudulent operation amounted to about $3 million, as stated by government prosecutors. The case was led by Assistant U.S. Attorney Kondi J. Kleinman and trial attorney Ryan Dickey of the Criminal Division's Computer Crime and Intellectual Property Section, according to an official press release.

Sentencing documents revealed that Zhimin Liao, one of the culprits, personally visited 105 Apple stores across 22 states, attempting to exchange approximately 720 counterfeit iPhones and iPads. Meanwhile, Zhiting Liao visited at least 200 Apple stores in 18 states and Canada, seeking to exchange around 718 fake iPhones and iPads.

Furthermore, the wives of the Liao brothers were also implicated and have pleased guilty. Additionally, eight other co-conspirators involved in the scam pleaded guilty.

Prosecutors disclosed that the defendants attempted to exchange over 10,000 counterfeit products at stores during the eight-year operation. The authentic iPhones received in return were then exported to foreign countries, causing Apple a total loss of approximately $3 million.

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