Chinese national gets 3 years in US Federal prison over iPhone trafficking scam that cost Apple $900,000

The counterfeit devices - image via AppleInsider

A 30 year old Chinese national has been sentenced to 37 months in US Federal Prison after pleading guilty to one count of trafficking in counterfeit goods. Quan Jiang, a former Linn Benton Community College engineering student, will also serve 3 years' supervised released after admitting he shipped counterfeit iPhones from Hong Kong to the U.S.

According to AppleInsider, between January 2016 and February 2018, Jiang recieved shipments of bricked, counterfeit iPhones from contacts in China, 20-30 at a time. He and a partner, Oregon State University student Yangyan Zhou, would take these phones to Apple Stores, or send them to Apple for warranty replacements. Somehow, Apple fell for this and shipped back hundreds of real, working iPhones. The working iPhones were returned to China for resale, the profits were sent to Jiang's mother, and the money was deposited in Jiang's bank account.

According to the report:

Law enforcement officials were made aware of Jiang's dealings in April 2017, when U.S. Customs and Border Protection seized a shipment of 28 iPhone 6 handsets addressed to the then-student. Another package containing 25 iPhone 7 Plus units was confiscated six months later. The CBP sent notices of seizure for both shipments, while Apple reportedly issued two cease-and-desist letters in June and July of 2017. Despite the warnings, CBP seized three additional shipments containing 29 iPhones each in November of that year.

After initially denying receipt of any such notices, Jiang admitted knowledge that the iPhones being imported were not real, and that he was aware that sending the goods to Apple for repair was illegal. It is estimated that over 2,000 counterfeit iPhones were imported over 2 years, a shocking 1,500 of which were traded for replacements worth roughly $600 each. As such Jiang managed to defraud Apple to the tune of roughly $900,000. The report notes that it is unclear whether Jiang's partner Zhou will be punished for his role in the scheme.

Perhaps the only thing more baffling than the scheme itself, is the fact that Apple was duped by one man into replacing 1,500 counterfeit iPhones with real ones. One can only assume that the counterfeits were so convincing that it would impossible to determine whether or not they were fake, or that Jiang used many different stores and postal locations when sending the iPhones to Apple, such that each only dealt with a few of the devices.