Last Wednesday, an engineering student pleaded guilty for trafficking and importing fake iPhones and then exchanging them for new ones by abusing the warranty.
The Warranty Scheme Cost Apple Nearly $1 Million
Quan Jiang was an exchange student in the USA, originally from China. Quan admitted he was guilty under the accusations. He also agreed to pay $200,000 and to forfeit his car, Mercedes-Benz, all before August 28.
The prosecutors will demand three years in prison, but Jiang and his lawyer will probably argue for probation. It is yet to be seen which side will the court favor. He is also only one of the two students charged for this fraud.
He was studying engineering at Linn Benton Community College. He was in the USA under a student visa, and since it got revoked, Jian is no longer allowed to reside in the U.S. Moreover, due to being convicted, Jiang will also probably be deported from the country, back to his homeland.
In a span of two years, from 2016 to 2018, Jiang imported thousands of fake iPhones from Hong Kong to the USA. Then, he and his associates would send these phones to individual Apple stores, claiming they wouldn’t power on. According to Apple’s warranty, this makes them eligible for the phone exchange.
After they were replaced, they would send the phones back to China, where they could sell them for actual market value. Federal Agents in Portland became suspicious of these activities back in 2017, so they started to investigate. That’s when the U.S. Customs and Border Protection seized five suspicious Apple shipments from China. The design of the phones, as well as the logo, seemed to be fake.
In December that same year, agent Thomas Duffy identified Jiang at the border and interrogated him. That’s when Jiang admitted everything. As a reward for the effort he’s doing, the associates paid his mother, who would then send this money via bank transfer to him. He admitted that he submitted over 2,000 phones to different Apple stores.
Jiang also used different names, e-mails, phone numbers, and IP addresses. Apple was willing to replace nearly 1,500 of the phones. Each iPhone that the stores replaced had a market value of $600. The loss of the company was estimated to be $895,000.
The reason this con worked is that Apple employees don’t have the time to check each and every iPhone that consumers submit thoroughly. Brad Bench, special agent of the Homeland Security Investigations, explained that dealing false goods is a crime. He added that it implies the maximum punishment of 10 years in prison. Additionally, doing this brings direct damage to the company, economy, and consumers.