Two men defrauded Apple by tricking the company into sending them thousands of iPhones worth $2.5 million asking them to fix fake ones, according to the feds.
Haotian Sun, a Chinese national living in Baltimore, and Pengfei Xue, who also immigrated from China and settled in Germantown, Md., managed to trick Apple into thinking the iPhones were real while running what the feds called a “sophisticated” scheme. between 2017 and 2019, the Justice Department said Thursday.
Sun, 33, was sentenced to 57 months in prison and ordered to pay more than $1 million in restitution to Apple, while Xue, 33, was sentenced to 54 months and told to pay back $397,800 to the company .
Both men and their associates were convicted of sending 6,000 counterfeit iPhones they received from Hong Kong to Apple, along with fake serial numbers, to Apple retail stores and other licensed service providers.
They were arrested after an Apple informant tipped off the feds, according to a statement from Postal Inspector Stephen Cohen.
Law enforcement was able to intercept packages and confirm that thousands of counterfeit phones were being shipped from China.
Apple offers a one-year warranty for iPhone users who return their devices and have them repaired. But Sun and Xue would send phones that were either out of warranty or contained counterfeit parts.
According to Cohen, Apple “mistakenly” believed the phones were under genuine warranty. The company often replaced dozens of fraudulently returned fake phones in a single shipment.
The two men also used different aliases and opened new mailboxes to cover their tracks so that it would appear that Apple was not receiving phones from the same person.
When federal agents began intercepting the packages, they were able to trace Sun and Xue’s addresses.
Agents did not immediately arrest the two men. Instead, they wrote the serial numbers of each phone on each intercepted package and then “allowed the shipments to be delivered to their recipients,” according to Cohen.
The government then gave Apple the serial numbers. The company in turn provided Apple with the names, addresses and email addresses that were used to process the returns.
According to investigators, Sun submitted more than 1,000 repair requests using several email addresses — some of which were registered under his real name.
Police even rummaged through garbage cans outside the two men’s homes and conducted raids to track them bringing intercepted packages to Apple Stores.
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