A project to exchange fake iPhones leads to a $ 900,000 loss for Apple, prosecutors say

The con was simple: send a fake iPhone to Apple saying that the device would not turn on and that it was under warranty, shortly after, a real replacement arrived in the mail.

Federal prosecutors told a ploy that two Oregon students had repeated on such a scale that Apple's losses amounted to nearly $ 900,000 because they had sent hundreds of counterfeit phones .

The two students, identified as Quan Jiang and Yangyang Zhou, would then ship the iPhones overseas where they would be sold for hundreds of dollars, and in return they would get a smaller share of the profits, according to court documents. recently filed in the United States. District Court of Oregon.

The investigation began two years ago, after customs officials seized several shipments 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 suspicions of officials who determined that the phones were counterfeits, the authorities said.

The investigators discovered that the cell phones were destined for Mr. Zhou's mailing address and that they were part of an import operation that was also attended by Mr. Jiang, Mr. Zhou's neighbor in Corvallis, Oregon. , about 90 km south of Portland.

The records provided to investigators by Apple allowed them to connect Mr. Jiang to 3,069 iPhone warranty claims through his name, email, e-mail addresses, and IP addresses. . All indicated "No problem of electric / wired load" as the reason for the complaint.

More than 1,500 claims were rejected, but almost as many were approved, with the dispatch of a new phone. A representative of Apple told an investigator, according to court records, that the success of the system was that the phones were unusable, which meant that the replacement process would begin before the technicians could determine that they were fake.

In an interview, Mr. Jiang told investigators that he had submitted some 2,000 phones in 2017. He also said that he was employing friends and relatives in the United States to help to exchange phones. He said that a partner in China who had sold the genuine phones had paid the mother of Mr. Jiang, who lives in China; she deposited the money in a bank account to which he could access the United States.

With a phone costing $ 600, losses for Apple amounted to $ 895,800, officials said.

Apple, which did not respond to a request for comment Saturday, is not the only technology giant targeted by fraudsters. A Lithuanian man recently pleaded guilty to an effort in which he had sought to evade millions of dollars from Facebook and Google by presenting fraudulent bills to businesses. Prosecutors said that between 2013 and 2015, companies had paid more than $ 100 million to the man and his associates.

Mr. Jiang's lawyer declined to comment on Saturday. Mr. Zhou's lawyer did not respond to a message asking for comment, but the lawyer, Jamie S. Kilberg, told The Oregonian, the Portland newspaper, that first reported the allegations, that "we believe that Mr. Zhou will be justified."