Duplicate IPhones Fraud Costs Apple More Than $6.1 Million

Mobile

FBI has busted and charged 14 members of an international criminal gang for counterfeit iPhone and iPad scheme that reportedly cost Apple over USD 6.1 million.

Written By Press Trust Of India | Mumbai | Updated On:
Iphone

The FBI has busted and charged 14 alleged members of an international criminal gang in the US with fraud, conspiracy, identity theft and money laundering charges related to their counterfeit iPhone and iPad scheme that reportedly cost Apple over USD 6.1 million.

According to a federal grand jury indictment unsealed on Wednesday in San Diego, California, the gang was led by three brothers and they imported more than 10,000 counterfeit iPhones and iPads from China.

They then exchanged them for the real thing at Apple stores throughout the US and Canada, and then shipped the authentic devices back to China and other foreign countries to sell at a premium, according to the release from the US Attorney's Office in the Southern District of California.

Genuine Apple (AAPL) iPhones and iPads have International Mobile Equipment Identity (IMEI) and serial numbers that are unique to each device. As part of the scheme, the counterfeit devices were equipped with IMEI and serial numbers that matched those of real devices covered by an Apple warranty in the US or Canada, according to the release.

"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," US Attorney Robert Brewer said.

Using other people's IMEI or serial numbers is a form of aggravated identity theft, according to the indictment, because the perpetrator "knowingly and without lawful authority, transferred, possessed, and used a means of identification of another person, that is, telecommunication identifying information."

Apple did not immediately respond to a request for comment, CNN reported. 

However, the press release noted that Apple conservatively estimates that the loss associated with the counterfeit items that were fraudulently exchanged at Apple Stores for genuine Apple products exceeds USD 6.1 million.

The FBI's investigation took years and spanned across many jurisdictions. The scheme allegedly involved 14 people who now face dozens of fraud, conspiracy, identity theft and money laundering charges. The FBI arrested 11 people but is still looking for three others.

The release noted that the bust occurred early Wednesday in San Diego,  where law enforcement seized about USD 250,000 in cash and 90 iPhones that may be counterfeit.

It also noted that the alleged ringleaders, three brothers, were arrested with their wives. The brothers are naturalised US citizens born in China.

Most of the others allegedly involved are US citizens, naturalized from China, Vietnam and Russia, the press release said.

READ | Second-hand iPhone is most preferred smartphone buying choice on OLX

Published:
By 2030, 40% Indians will not have access to drinking water
SAVE WATER NOW
PEOPLE HAVE PLEDGED SO FAR
DO NOT MISS