The U.S. department of Justice has unsealed a federal grand jury indictment against a Chinese group which allegedly committed fraud and money laundering in a scheme involving counterfeit Apple products.
Engadget reports the alleged scammers would submit counterfeit iPhones and iPads under warranty and get them replaced with genuine Apple devices.
The Feds raided two businesses and several homes in Mira Mesa and Mission Hills, California, seizing $250,000 in cash as well as 90 iPhones, which are being analyzed for fake parts. Three brothers, Zhiwei Loop Liao, Zhimin Liao and Zhiting Liao, are allegedly the leaders of the scheme, and are accused of importing more than 10,00 counterfeit iPhones and iPads from China.
The counterfeit goods were received in the U.S. and Canada, where they were “intentionally damaged” and then taken to Apple stores to be exchanged under warranty for genuine items. The real goods were then sent back to China for sale there.
14 people have been charged with wire fraud, mail fraud, conspiracy, identity theft and money laundering. Apple estimates that the scam cost the company approximately $6.1 million.
“While a significant amount of money in any circumstance, this prosecution is about more than monetary losses,” said US Attorney Robert Brewer. “The manufacture of counterfeit goods — and their use to defraud US companies — seeks to fundamentally undermine the marketplace and harms innocent people whose identities were stolen in furtherance of these activities.”
Earlier this year, a Chinese man – who tricked Apple into replacing hundreds of fake iPhones with genuine handsets through its warranty program – pled guilty in Oregon to one count of trafficking in counterfeit goods.