Ex-student pleads guilty to $895,000 fake iPhone scam

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iPhone X Product Red Wallpaper
The scam involved swapping out counterfeit iPhones for real ones.
Photo: Ste Smith/Cult of Mac

An ex-Oregon engineering student from China has pleaded guilty to a scam involving counterfeit iPhones.

Quan Jiang and another student, Yangyangg Zhou, were involved in a scheme featuring imported fake iPhones. They then swapped them out for legit devices under Apple’s warranty scheme. The scam cost Apple a massive $895,800.

In total, Jiang attempted to return more than 2,000 iPhones. He also sent more than 3,000 warranty claims. Apple rejected 1,500 of these claims, but issued 1,493 replacement phones. The pair then allegedly sent the working iPhones to China, and were rewarded with a cut of profits. Each new iPhone had a resale value of around $600.

Investigators had been looking into this case since 2017. Federal agents in Portland were originally tipped off after Customs seized suspicious shipments of counterfeit iPhones coming from Hong Kong.

What happens next?

Trafficking of counterfeit goods comes with a maximum jail sentence of 10 years. It also carries a maximum $2 million fine or 2x the proceeds of the scam.

As part of a plea deal, Quan Jiang has agreed to pay $200,000 in restitution. He will additionally forfeit a 2015 Mercedes-Benz investigators seized in March. Prosecutors are seeking a prison term of three years and one month. He and his lawyers are arguing in favor of probation. As a result of the crime, Jiang could also be deported. His sentencing will take place August 28.

Through a Mandarin interpreter, Jiang answered “I”m guilty” to a single counterfeit trafficking charge.

Jiang’s co-defendant, Yangyang Zhou, has pleaded not guilty to the charge of submitting false or misleading information on an export declaration. Like Jiang, he was in the U.S. on a student visa. He completed his engineering studies at Oregon State University this past winter.

Source: Seattle Times