The iPhone is a very lucrative device, which means that many people would try to fraud the system for their personal gains. It is now being reported that two fraudsters from Maryland who cheated Apple for $2.5 million worth of iPhones have been given prison sentences along with a restitution fine. The fraud was a clever one, but we have seen it in the past, involving fake iPhones traded against new ones directly from Apple.
Duo sentenced to years in prison after defrauding Apple of thousands of iPhones over the course of many years
The duo was ordered to pay a fine of a little under $1.5 million, while one was sentenced to spend 57 months in prison, and the other was sentenced to 54 months. We have previously seen fraudulent activity, as people order fake or non-functional iPhone clones and swap the serial numbers so they seem real. Once the serial numbers have been replaced, the devices will appear as real iPhones that are covered under AppleCare.
The devices would then be taken to the Apple Store for repairs, and when the technicians failed to fix the devices, they would replace them with a new iPhone; the process was repeated countless times and cost Apple almost $2.5 million. The duo was found guilty back in February and at that time almost 5,000 devices have been replaced.
Haotian Sun, 33, and Pengfei Xue, 33, were found guilty of the scheme by a federal jury. The two Chinese nationals, who resided in Maryland, were charged with conspiracy to commit mail fraud and mail fraud […]
Trial evidence showed that conspirators submitted more than 5,000 inauthentic phones to Apple during the conspiracy, intending to cause a loss of more than $3 million to Apple.
After the sentence, the scale of the crime was more significant than initially anticipated, and the US Attorney's Office for the District of Columbia reports:
Trial evidence and evidence developed after trial showed that members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing an intended loss of approximately $3.8 million and an actual loss of more than $2.5 million […]
District Court Judge Timothy J. Kelly sentenced Sun to 57 months in prison, and sentenced Xue to 54 months in prison […]
Kelly today ordered Sun to serve three years of supervised release and pay $1,072,000 in restitution. Judge Kelly ordered Xue to serve three years of supervised release and pay $397,800 in restitution.
The sum that is to be paid back will be the amount that the duo received after selling the iPhones, instead of the total losses incurred by Apple. We have seen various fraudulent activities in the past related to the iPhone and other Apple products, and the scale of the sentence could have been higher than the duo received. We will share more details on the subject, so do stick around.
About the author: Ali Salman is a technology reporter for Wccftech mobile section with a specialized focus on Apple and the intellectual property that drives mobile innovation. He has cultivated a unique expertise in analyzing and deconstructing complex technology patents, translating dense legal and technical documents into clear, insightful reports on future products.
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