A criminal network has replaced fake iPhones with real devices

A scam involving the “return” of around 16,000 counterfeit iPhones and iPads to Apple stores has led to five arrests that could result in decades behind bars.

A criminal ring operating throughout Southern California has been accused of stealing approximately $12.3 million worth of Apple products by “returning” real-looking counterfeits that did not work to Apple Stores. The stores then replaced the non-functional clones with the original iPhones and iPads, which were then shipped overseas.

On May 30, 2024, five Chinese nationals living in the Los Angeles area were arrested. Yang Song, Junwei Jiang, Zhengxuan Hu, Yushan Lin and Shuyi Xing will stand trial on charges of aggravated identity theft, conspiracy to traffic in counterfeit goods and conspiracy to commit wire and mail fraud.

“The defendants are accused of exploiting Apple’s customer service policies to steal more than $12 million in merchandise,” said United States Attorney Martin Estrada. “Companies should not be harassed or defrauded for being responsive to customer needs, and these federal charges send a signal that our office will take decisive action to detect and prosecute those who commit fraud.”

The hearing date has not yet been set.

If convicted, each defendant faces up to 20 years in prison for each of the conspiracy to commit fraud charges and up to two years in prison for the identity theft charge. Each of them could face up to 10 years in prison on charges of conspiracy to trade in counterfeit goods.

As in previous similar cases, the defendants worked with co-conspirators in China to receive counterfeit Apple products at various locations in Southern California. They would then bring the non-working devices to various Apple stores and receive genuine replacement products.

The targets were Apple stores in Southern California

The counterfeit Apple products imported by the group had identification numbers that matched existing products owned by real people in the US and still under warranty. The indictment states that in total, the defendants fraudulently returned and attempted to return more than 16,000 counterfeit Apple devices.

More than 10 different Apple Stores were affected in various parts of Southern California, including areas such as Beverly Hills, Northridge and Rancho Cucamonga. In multiple cases, the indictment alleges, the group visited as many as 10 different Apple stores in Southern California in a single day to return counterfeit devices.

A similar criminal group using the same technique “returned” over 10,000 fake iPhones made in China in 2019, defrauding Apple of an estimated $6.1 million. The leaders were ultimately sentenced to four to five years in prison.