Two students seize $ 900,000 from Apple in a counterfeit iPhone fraud

In a desperate situation for a long time, two engineering students would have scammed Apple for hundreds of thousands of dollars. It's hard to say if the students were very smart or if Apple is really bad at preventing this sort of thing.

Yangyang Zhou and Quan Jiang, two engineering students from Oregon, allegedly brought thousands of fake iPhones to the United States. They filed a warranty claim against the fact that they were not going to light up. They then received real smartphones instead. The students then returned the real phones to their friends and relatives abroad for them to make a profit, of which they collected a percentage. Fun fun: The deposit against Jiang claims that an "associate" paid Jiang mother, who then deposited his cup in his bank account. Zhou and Jiang are both Chinese nationals holding a valid F-1 student visa.

Prosecutors claim that 3,069 iPhones were submitted to Apple under warranty claims, of which 1,493 led Apple to provide replacement phones. Since Apple calculates its loss for this type of fraud at a standard rate of $ 600 per iPhone, it results in a huge loss of $ 895,800. The remaining 1,576 claims were rejected for tampering, and Apple allegedly returned the counterfeit phones with letters explaining why the warranty claims had been denied.

This prevents the two students from defending themselves and not knowing that the phones in question were counterfeits. Federal agents began investigating this counterfeit scam in 2017, and Customs and Border Protection seized more than five shipments of counterfeit goods from China to Zhou and Jiang. In addition, the documents show that the police found more than 300 fake iPhones, shipping records and warranty submission records at Jiang's residence. Officials also found at least four different mailboxes associated with Zhou, one of them containing a package containing 25 fake iPhones. The investigators also cited Apple's own records, which detailed 16 warranty returns addressed to Zhou, along with his mailing address. Oops.

Apple did not immediately respond to a request for comment, any more than Zhou and Jiang's lawyers.

Jiang faces charges of trafficking in counterfeit goods and wire fraud. This means that he could be fined up to $ 2,000,000, 10 years imprisonment, or both, for forgery. It could also face an unspecified fine and an additional 20 years for wire fraud. At the same time, Zhou is accused of "giving false or misleading information in an export declaration". A fine of up to $ 10,000, a five-year sentence or both is also provided.

We must appreciate the chutzpah required for a seizure of this magnitude. Maybe Zhou and Jiang should both graduate from law degrees to a law degree. At least then, court experience could count for some credits.

[United States District Court via CNet]