Five arrested after stealing $12 million in fake iPhone exchange scheme

Five individuals in California were taken into custody for allegedly obtaining more than $12 million from Apple through a scheme involving the exchange of counterfeit iPhones for authentic ones.

It is not uncommon to see scams involving iPhone exchanges. In February of this year, two individuals were found guilty of deceiving Apple and obtaining 5,000 iPhones. However, the most recent one being investigated appears to be on a much larger scale.

The detained individuals are Chinese citizens who successfully tricked Apple by deceitfully returning numerous iPhones, iPads, and other Apple products, resulting in losses of at least $12.3 million for the Cupertino-based company.

According to the case notes, all defendants have been accused of one count of conspiracy to commit wire fraud and mail fraud, one count of aggravated identity theft, seven counts of wire fraud, 12 counts of mail fraud, and one count of conspiracy to traffic in counterfeit goods.

Image showing iPhone 15 Pro from the side — Unsplash

The group collaborated with Chinese organizations that provided the counterfeit devices and carried out the scheme from December 2014 to March 2024. The counterfeit phones were equipped with stolen identification numbers to give the impression that they were authentic Apple products sold in the US and eligible for AppleCare warranty.

“According to the US Attorney’s office, the defendants intentionally used fake identification and serial numbers on the counterfeit devices in order to deceive Apple’s warranty programs and possibly deprive legitimate owners of their entitled warranty benefits. These fraudulent actions were designed to imitate the real Apple devices owned by individuals across the United States.”

They successfully retrieved “16,000 fraudulent devices”by making trips to multiple Apple stores across Southern California.

“According to the US Attorney’s office, they would frequently travel throughout Southern California within one day, visiting up to 10 Apple stores and purportedly making fraudulent returns of counterfeit products.”

Five people were brought before the US district court in downtown Los Angeles for arraignment. If found guilty, they could receive a maximum sentence of 20 years for conspiring to commit mail and wire fraud, wire fraud, and mail fraud, a mandatory minimum of two years for committing aggravated identity theft, and a maximum of 10 years for participating in a conspiracy to traffic counterfeit goods.