Two residents from Maryland have been found guilty of attempting to defraud Apple by submitting counterfeit iPhones for repair. The scheme, if successful, could have cost Apple over $3 million.

A Conviction for Apple Fraud:

Haotian Sun and Pengfei Xue, residents of Germantown, Maryland, were convicted by a federal jury for their involvement in a fraudulent scheme targeting Apple.

Between May 2017 and September 2019, Sun, Xue, and other conspirators defrauded Apple Inc. by submitting counterfeit iPhones to Apple for repair to get Apple to exchange them with genuine replacement iPhones, as per the evidence presented by the government.

The counterfeit iPhones shipped from Hong Kong were sent to UPS mailboxes in the Washington D.C. Metropolitan area. These devices, equipped with spoofed serial and IMEI numbers, were submitted to Apple retail and Apple Authorized Service Providers.

In total, they managed to submit over 5,000 fake phones, which could have resulted in a loss of more than $3 million for Apple.

Legal Ramifications:

The pair now face a maximum sentence of 20 years in prison for conspiracy to commit mail fraud and mail fraud. The U.S. District Court Judge Timothy J. Kelly scheduled sentencing for June 21 later this year.

Implications and Previous Cases:

This is not the first time that individuals have attempted to defraud Apple using counterfeit iPhones. In a similar case in 2022, a scammer duped Apple of $1 million in iPhones and was sentenced to prison. The scammer used a similar method of returning fake iPhones to Apple to receive authentic replacements, exploiting the company’s return policy.

These incidents highlight the vulnerability of Apple’s repair and replacement programs to fraudulent activities, posing a significant financial risk to the tech giant. It also underscores the need for robust measures to detect and prevent such scams, as they can potentially result in substantial losses for the company.