Students accused of cheating Apple out of nearly $1m in fake iPhone scheme

Two Oregon college students allegedly submitted thousands of repair requests over the course of a year using counterfeit phones

Many of us have waited trepidatiously in the Apple Store, clasping our broken iPhone weve long since lost the receipt for, while the Genius Bar overlords decide whether to take pity on us and give us a new one or show us the gladiatorial thumbs down.


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    But two Oregon students had rather a lot more riding on Apples replacement policy. They allegedly frauded Apple of nearly $1m by sending the company counterfeit iPhones, claiming they were faulty, and receiving brand-new genuine models as replacements.

    A criminal complaint filed last month by federal prosecutors describes a scheme in which the students, Yangyang Zhou and Quan Jiang, who are both Chinese citizens, would receive shipments of thousands of fake iPhones from an accomplice in China. The pair would then send the phones to Apple with fake repair requests, often claiming the phones wouldnt turn on.

    Forged iPhones can now be made to be so convincing that even Apple engineers believe they are authentic and so, out of 3,069 repair requests made by Zhou between April 2017 and March 2018, prosecutors claim Apple completed 1,493 of them at a cost of $895,800 (687,000). The rest were returned to the pair because Apple engineers believed they had been tampered with, invalidating the warranty, although none were recognised by the company as counterfeits.

    According to prosecutors, Zhou and Jiang would then mail the real iPhones to China to be sold. Jiangs mother is named in the complaint shes alleged to have wired the profits back to Jiangs US bank account once the iPhones were sold.

    According to an affidavit provided by homeland security agent Thomas Duffy and submitted by prosecutors, the scheme was discovered after Customs and Border Protection siezed 95 fake phones being sent to the pair. In March 2018, a search of Jiangs home turned up more than 300 counterfeit devices as well as incriminating paperwork. Duffy says that Jiang explained the entire operation to him in an interview in December 2017. Duffy says Jiang admitted that he sent thousands of phones to Apple and was paid by his Chinese associate, via his mother, for doing so but stopped short of admitting the iPhones he sent were counterfeit.

    Jiang has been charged with trafficking counterfeit goods and wire fraud, and Zhou with submitting false information on export documentation.

    Jiangs attorney confirmed to the Guardian that he has entered a not guilty plea, but said she could not comment further. Zhous lawyer did not immediately respond to a request for a comment, but told the Oregonian that Zhou was not aware of any alleged counterfeiting and that he believes Mr Zhou will be vindicated.


     

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