A Chinese man – who tricked Apple into replacing hundreds of fake iPhones with genuine handsets through its warranty program – has pled guilty in Oregon to one count of trafficking in counterfeit goods.
Bloomberg reports Quan Jiang, 30, a former engineering student at a community college in Albany, Oregon, delivered in person in Apple Stores or shipped to Apple around 3,000 counterfeit devices.
Jiang used fake identities, and claimed the devices would not turn on and claimed the devices should be replaced under warranty. Apple replaced nearly 1,500 of the fake iPhones with genuine ones. Each handset has a value of around $600 on the Chinese market.
Jiang would import the counterfeit devices from Hong Kong and submit them to Apple using various assumed names. The genuine replacement iPhones he received would be sold in China.
Court documents say Jiang received packages containing between 20 and 30 counterfeit iPhones from associates in Hong Kong between Jan. 1, 2016, and Feb. 1, 2018.
Apple began realizing something was up as early as June 30, 2017, when its lawyers sent a “cease and desist” letter to Jiang at a Corvallis address where 150 of the warranty claims had originated.
“Submission of an iPhone that will not power on is critical to perpetuating iPhone warranty fraud, as the phone will not be able to be immediately examined or repaired by Apple technicians, triggering the Apple iPhone replacement process as part of its product warranty policy,” wrote Homeland Security Investigations Special Agent Thomas Duffy in a court document, quoting quoting Apple brand protection representative Adrian Punderson.
Although Apple rejected 1,576 warranty claims associated with Jiang, they approved 1,493 claims, which amounted to an $895,000 loss to the company.
Sentencing for Jiang will take place on August 28. He faces a maximum sentence of 10 years in prison, and a maximum fine of either $2 million or twice his proceeds, whichever is greater.
Bloomberg says the U.S. Attorney’s office is expected to recommend a prison sentence of three years and at least $200,000 in restitution to Apple. Jiang will also be required to give up his 2015 Mercedes-Benz CLA 250 coupe.