Two Chinese nationals, Haotian Sun and Pengfei Xue, were sentenced to prison for their involvement in a scheme that defrauded Apple out of over $2.5 million. The pair, along with their co-conspirators Wen Jin Gao and Dian Luo, carried out the fraud between July 2017 and December 2019.
They exploited Apple’s device replacement policy, which allows customers to exchange defective iPhones for new ones under warranty. By submitting counterfeit iPhones, they were able to receive genuine devices from Apple, which they later sold for profit.
The counterfeit iPhones were imported from Hong Kong and shipped to various mailboxes in the U.S. These mailboxes were located at United Parcel Service (UPS) stores and were opened using the conspirators’ legitimate university IDs and driver’s licenses.
Two Chinese Nationals Sentenced to Prison for $2.5 Million Apple Warranty Fraud Scheme
Investigators found that these fake phones were equipped with falsified IMEIs and serial numbers, which allowed them to pass as legitimate devices when submitted to Apple for replacement.
Once Apple provided genuine replacements, the new iPhones were sent back to the conspirators through private carriers such as FedEx, DLH, and UPS. From there, the authentic iPhones were shipped back to Hong Kong, where they were sold in the black market.
The proceeds from these sales were then split among the members of the scheme. This operation was made possible by Apple’s warranty program, which offers replacements for faulty devices within one year of purchase.
The scale of the fraud was significant, with more than 6,000 counterfeit iPhones being submitted to Apple during the operation. The U.S. Department of Justice reported that Apple suffered losses exceeding $2.5 million as a result of the scam. The scheme was uncovered in late 2019, leading to the arrests of Sun and Xue by U.S. postal inspectors in December of that year.
Following their convictions for mail fraud and conspiracy to commit mail fraud in February, Sun was sentenced to 57 months in prison, and Xue was sentenced to 54 months. Both were also given three years of supervised release after serving their prison terms. In addition, the court ordered them to pay restitution to Apple, with Sun owing $1,072,200 and Xue $397,800.
