Scheme to swap fake iPhones adds up to $1.2 million loss for Apple, prosecutors say

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NEW YORK (NYTIMES) - The con was simple: Send a fake iPhone to Apple claiming that the device would not turn on and that it was under warranty, and not long after, a genuine replacement arrived in the mail.. Read more at straitstimes.com.

NEW YORK - The con was simple: Send a fake iPhone to Apple claiming that the device would not turn on and that it was under warranty, and not long after, a genuine replacement arrived in the mail.

The investigation started two years ago, after customs officials seized several shipments coming from Hong Kong containing mobile phones from China. The devices appeared to be Apple products, with the logos and design features of an iPhone, but the shipping methods and packaging raised the suspicions of officials who determined that the phones were counterfeit, authorities said.

More than 1,500 of the claims were rejected, but nearly just as many were approved, with a new phone sent out. An Apple representative told an investigator, according to court records, that a key element of the scheme's success was that the phones were inoperable, which meant the replacement process would begin before technicians could figure out they were counterfeit.

In Apple's case, both of the men named in court records are Chinese citizens who were lawfully in the United States on student visas. Jiang was finishing studies in electrical engineering at Linn-Benton Community College in Albany, Oregon, and Zhou was an engineering student at Oregon State University in Corvallis.

Last year, federal agents searched Jiang's house, where they found more than 300 fake iPhones and shipping and warranty submission records.

 

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