Five arrested after stealing $12 million in fake iPhone exchange scheme

Five people have been arrested in California for stealing over $12 million from Apple by exchanging fake iPhones for real ones.

iPhone exchange scams are quite common. Earlier this year in February, two men were convicted for defrauding Apple out of 5,000 iPhones, but the latest one in question is of a particularly large scale.

The arrested individuals are Chinese nationals who managed to scam Apple by fraudulently returning thousands of iPhones, iPads, and other Apple goods, causing the Cupertino company at least $12.3 million in losses.

“All of the defendants are charged with one count of conspiracy to commit wire fraud and mail fraud, one count of aggravated identity theft, seven counts of wire fraud, 12 counts of mail fraud, and one count of conspiracy to traffic in counterfeit goods,” read the case notes.

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The group ran the scheme from December 2014 to March 2024, working with groups in China that supplied the counterfeit devices. The fake phones used stolen identification numbers to make them appear to be legitimate Apple products sold in the US and covered under AppleCare warranty.

“The real identification numbers and serial numbers on the counterfeit devices that defendants allegedly returned [Sic] were designed to essentially impersonate the real Apple devices owned by real people throughout the United States, which defrauded Apple’s warranty programs and potentially deprived the Apple devices’ lawful owners of the warranty benefits to which they were entitled,” said the US Attorney’s office.

They managed to return over “16,000 fraudulent devices” by visiting multiple Apple stores throughout Southern California.

“In many cases, they would drive all over Southern California in a single day and visit as many as 10 different Apple stores where they would allegedly return counterfeit devices,” noted the US Attorney’s office.

All five individuals were arraigned in US district court in downtown Los Angeles. If convicted, they face up to 20 years imprisonment for conspiracy to commit mail and wire fraud, wire fraud, and mail fraud; a mandatory minimum of two years for aggravated identity theft; and up to 10 years for conspiracy to traffic counterfeit goods.