Five Chinese nationals face federal charges alleging they operated a counterfeit Apple Inc. device scheme that included the fraudulent returns of thousands of bogus iPhones, iPads, and other products at stores throughout Southern California.
Prosecutors in downtown Los Angeles said the scheme cost Apple at least $12.3 million in losses.
According to the indictment, from roughly December 2015 until March 2023, alleged ringleader Yang Song, 40, of Corona and Junwei Jiang, 37, of East Los Angeles coordinated with associates in China to ship counterfeit Apple iPhones, iPads, and other devices to them and other U.S.-based co- conspirators.
The counterfeit Apple devices were designed to look like genuine products, including identification numbers matching the numbers on real products that had been sold in North America and were still under warranty, according to the indictment.
The defendants allegedly returned the counterfeit devices, purporting themselves to be the lawful owners.
Products were returned at Apple stores throughout Southern California, including Beverly Hills, Sherman Oaks, Pasadena, Irvine, Northridge, Manhattan Beach, Brea, Rancho Cucamonga, Cerritos and at shopping malls such as The Grove in Los Angeles, South Coast Plaza in Costa Mesa, Fashion Island in Newport Beach, and The Americana at Brand in Glendale, prosecutors said.
In many cases, Song, Jiang, Zhengxuan Hu, 26, of Alhambra and Yushan Lin, 30, and Shuyi Xing, 34, both of Corona would visit as many as 10 Apple stores in a single day to return counterfeit devices, court papers allege.
The defendants allegedly claimed that the devices were genuine but broken and covered by the company’s warranty programs, according to the U.S. Attorney’s Office.
Apple employees would then either repair the counterfeit Apple device or replace it in the same visit or, on other occasions, take the counterfeit devices and ship them to a repair center, leading to eventual shipment of genuine products.
After obtaining genuine products, the defendants allegedly shipped them to associates in the United States and abroad, primarily in China, where they were sold at a substantial profit, the indictment states.
In total, the defendants fraudulently returned or attempted to return more than 16,000 counterfeit Apple devices, causing Apple at least $12.3 million in losses, prosecutors said.
“The defendants are accused of taking advantage of Apple’s customer- service policies to steal more than $12 million in merchandise,'‘ U.S. Attorney Martin Estrada said in a statement. “Companies should not be victimized and defrauded for being responsive to customer needs.’’
All of the defendants are charged with one count of conspiracy to commit wire fraud and mail fraud, one count of aggravated identity theft, seven counts of wire fraud, 12 counts of mail fraud, and one count of conspiracy to traffic in counterfeit goods.
If convicted, they would each face up to 20 years in prison on each of the conspiracy to commit mail and wire fraud, wire fraud, and mail fraud charges; a mandatory minimum of two years imprisonment for the aggravated identity theft charge; and a maximum sentence of 10 years imprisonment on the conspiracy to traffic counterfeit goods charge, according to the U.S. Attorney’s Office.
