Two men scammed Apple by tricking the company into sending them thousands of iPhones worth $2.5 million by asking them to fix bogus ones, according to the feds.
Haotian Sun, a Chinese national living in Baltimore, and Pengfei Xue, who also emigrated from China and took up residence 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 on Thursday.
Sun, 33, has been sentenced to 57 months in prison and was ordered to pay more than $1 million to Apple in restitution while Xue, 33, was given a 54-month sentence and told to pay back the company $397,800.
The two men and their co-conspirators were convicted of shipping 6,000 counterfeit iPhones that they received from Hong Kong to Apple along with spoofed serial numbers to Apple retail stores and other licensed service providers.
They were arrested after an Apple tipster notified the feds, according to an affidavit from postal inspector Stephen Cohen.
Law enforcement managed to intercept packages and confirm that thousands of counterfeit phones were being shipped from China.
Apple provides a one-year warranty for iPhones users who return their devices and have it repaired. But Sun and Xue would ship phones that were either out of warranty or contained counterfeit parts.
According to Cohen, Apple “wrongly” believed that the phones were under real warranties. The company would often replace dozens of bogus phones that were fraudulently returned in a single shipment.
The two men also used different aliases and opened new mailboxes in order to cover their tracks in order to make it seem so that Apple would not receive phones from the same individual.
When federal agents began intercepting packages, they were able to trace the addresses to Sun and Xue.
The agents did not arrest the two men immediately. Instead, they wrote down serial numbers of every phone in every intercepted package and then “allowed the shipments to be delivered to their intended 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 in his real name.
Police even dug through the trash receptacles outside the two men’s homes and conducted stakeouts to track when they brought intercepted packages to Apple Stores.
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