Two Maryland-based mail fraudsters who cheated Apple out of $2.5 million were handed lengthy prison sentences and were ordered to pay restitution. One of the bad actors was sentenced to 57 months, while the other con man was given a 54 month sentence. The pair were also ordered to repay a total of a bit less than $1.5 million.
The fraudulent duo’s scam was nothing we haven’t seen before. The bad actors bought realistic-looking but non-functional iPhone clones, spoofed the serial numbers to reflect real devices that were covered by AppleCare, then sought repairs for the fake handsets. When Apple technicians could not get the devices to power on, they were replaced with new iPhones.
The pair were found guilty of mail fraud and conspiracy to commit mail fraud in February, at which time it was revealed that they had scammed Apple out of replacements for more than 5,000 counterfeit devices.
Haotian Sun, 33, and Pengfei Xue, 33, were found guilty of the scheme by a federal jury. The two Chinese nationals, who resided in Maryland, were charged with conspiracy to commit mail fraud and mail fraud
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Trial evidence showed that conspirators submitted more than 5,000 inauthentic phones to Apple during the conspiracy, intending to cause a loss of more than $3 million to Apple.
By sentencing, the scale of the fraud was found to be even greater than thought:
Trial evidence and evidence developed after trial showed that members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing an intended loss of approximately $3.8 million and an actual loss of more than $2.5 million.
District Court Judge Timothy J. Kelly sentenced Sun to 57 months in prison, and sentenced Xue to 54 months in prison. Sun is ordered to serve three years of supervised release and pay $1,072,000 in restitution. Meanwhile, Judge Kelly ordered Xue to serve three years of supervised release and pay $397,800 in restitution. The sums they are to repay represent the amount of money they received when selling the purloined iPhones, not the full amount of Apple’s loss for falling victim to the fraud.
The sums required to be repaid will represent the amounts they actually obtained by selling the iPhones, rather than the full extent of Apple’s loss.