Two Oregon college students allegedly managed to scam Apple out of nearly $ 900,000 through a scheme involving counterfeit iPhones, according to the federal government.
Jiang, who was reportedly a student at Oregon State University at the time, estimated that he submitted over 2,000 warranty claims in 2017 alone, the government said, and Apple's records show over 3,000 claims in to number attributed to Jiang. In every case, Jiang claimed that the iPhones could not be turned on, which turned out to be the crux of the scam, according to the government.
" fraud, as the phone will not be able to be immediately examined or repaired by Apple technicians, "and the company will often have to send a replacement iPhone under its warranty policy, the government wrote a complaint.
While Apple was able be determined that many of the counterfeit iPhones were not authentic, the company still accepted 1,493 of the phones sent in as authentic and provided with replacement iPhones. At a cost of $ 600 per iPhone, according to the company estimates, those replacements resulted in a loss of $ 895,800 for the tech giant, the government said.
customs authorities regularly receive packages with 20 to 30 iphones from "an associate" in China with instructions to submit them to Apple under warranty claims. After receiving replacement iPhones, they would be back to China, where they could be sold. The unnamed "associate" would pay for the profits to Jiang's mother in China, who would deposit the funds into a bank account.
Last year, federal agents searched Jiang's Oregon home and found over 300 counterfeit iPhones, along with shipping records and documents for warranty claim submissions. They were found to have been addressed to Zhou, who has been named as Jiang's accomplice.
Zhou was studying engineering at Linn Benton Community College last spring, according to The Oregonian.
Apple records show that over 200 iPhone Warranty claims have been submitted in Zhou's name, filed in a complaint, filed in March 2019, which accuses Zhou of submitting false or misleading information on an export declaration. Zhou faces fines of up to $ 10,000 and five years in prison. He faces fines of up to $ 2 million and 10 years in prison for the trafficking accusation, and another possible 20 years in prison for wire fraud.