$2.5M iPhone fraudsters imprisoned and ordered to pay restitution

Two Maryland-based iPhone fraudsters who cheated Apple out of $2.5M were handed prison sentences yesterday, and ordered to pay restitution.

One was sentenced to 57 months, the other to 54 months, with the pair ordered to repay a total of a little under $1.5M …

The fraud was one we’ve seen before, where the scammers bought realistic but non-functional iPhone clones and spoofed the serial numbers to give them the identity of real devices covered by AppleCare. They then sought “repairs” for the counterfeits, and when Apple technicians were unable to get them to power on, they were replaced with new iPhones.

They were found guilty of fraud back in February, at which time it was reported that they had obtained replacements for more than 5,000 devices.

Haotian Sun, 33, and Pengfei Xue, 33, were found guilty of the scheme by a federal jury. The two Chinese nationals, who resided in Maryland, were charged with conspiracy to commit mail fraud and mail fraud […]

Trial evidence showed that conspirators submitted more than 5,000 inauthentic phones to Apple during the conspiracy, intending to cause a loss of more than $3 million to Apple.

By sentencing, the scale was known to be even greater than thought, as the US Attorney’s Office for the District of Columbia reports.

Trial evidence and evidence developed after trial showed that members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing an intended loss of approximately $3.8 million and an actual loss of more than $2.5 million […]

 District Court Judge Timothy J. Kelly sentenced Sun to 57 months in prison, and sentenced Xue to 54 months in prison […]

Kelly today ordered Sun to serve three years of supervised release and pay $1,072,000 in restitution. Judge Kelly ordered Xue to serve three years of supervised release and pay $397,800 in restitution.

The sums required to be repaid will represent the amounts they actually obtained by selling the iPhones, rather than the full extent of Apple’s loss.

The prison sentences seem relatively light given the scale and duration of the fraud. The maximum sentence could have been 20 years.

Photo by Christian Lue on Unsplash