2 Students Allegedly Cheated Apple Out Of Nearly $900,000 In Fake iPhone Scheme
Two men allegedly scammed Apple out of nearly $900,000 by essentially trading the company fake iPhones for legitimate devices.
According to federal prosecutors it was an elaborate scheme that involved roping in friends and family, while using nonsensical pseudonyms and a slew of mailing addresses.
Court documents outline a scenario in which the two men imported thousands of counterfeit iPhones from China then filed warranty complaints with Apple, claiming the smartphones were broken and wouldn't turn on. Apple would then replace the knock-offs with genuine models — in most cases, brand new phones — that the pair would ship those items back to China to be resold for a profit, of which they received a cut.
Yangyang Zhou and Quan Jiang, who were both engineering students in the U.S. on F-1 student visas at the time, attempted the switcharoo with 3,069 iPhones between April 2017 through March 2018, prosecutors said in a criminal complaint filed in Portland, Ore.
It turns out it was nearly a 50-50 gamble whether Apple would be duped.
Apple told investigators, 1,493 warranty claims linked to Jiang and/or Zhou, were processed and issued replacement devices at loss of $600 per iPhone, according to a "brand protection specialist" who spoke with a Homeland Security special agent.