Scammer sentenced to prison for swindling $370 million out of Apple with counterfeit iPhones

Two Chinese nationals have been sentenced to prison for defrauding Apple out of $2.5 million (approximately 370 million yen) in a scheme to return about 6,000 counterfeit iPhones in exchange for real iPhones.

District of Columbia | Multimillion Dollar Scheme to Defraud Apple Inc. out of 6,000 iPhones Nets Prison Terms for Two Maryland Residents | United States Department of Justice

On October 3, 2024, the US Department of Justice announced that Haotian Sun and Pengfei Xue (both 34 years old at the time of writing) had been sentenced to prison for defrauding Apple of approximately 6,000 iPhones between 2017 and 2019.

According to court documents, Sun and Xue sent counterfeit iPhones from Hong Kong, using the serial numbers and International Mobile Equipment Identity (IMEI) numbers of genuine iPhone owners who were still under warranty to make them look genuine, and then took them to Apple stores to have them exchanged for genuine iPhones.

The counterfeit iPhones were so sophisticated that Apple employees were unaware of the damage for some time. In addition, the two men easily circumvented the measures that Apple took to prevent fraudulent returns, such as refusing to repair or replace smartphones from certain individuals or addresses, by using false names and switching post office boxes.

The Justice Department described the tactics as a 'sophisticated scheme' in court documents.

Sun and Xue were arrested in 2019 after a painstaking investigation that included rummaging through the duo's trash and staking out addresses under false names to deliberately deliver packages to them. They were convicted in February 2024 and await sentence.

Two Chinese nationals convicted for forcing Apple to replace more than 5,000 counterfeit iPhones with genuine ones, causing damages of more than 450 million yen - GIGAZINE

In this case, Judge Timothy J. Kelly of the District of Columbia District Court sentenced Sun to 57 months in prison, ordered Apple to pay $1,072,000 in restitution and $53,610 in forfeiture.

Xue was sentenced to 54 months in prison, ordered to pay $397,800 in restitution and $19,890 in forfeiture. Both men will be on three years of supervised release, meaning they will be on supervision for three years after the completion of their sentences.