Scammers in the slammer for years after ripping off Apple with fake iPhone returns Two fraudsters will spend nearly five years behind bars each and pay a combined $1.5 million for bilking Apple out of millions of dollars worth of iPhones. Haotian Sun, 34, a Chinese citizen living in Baltimore, Maryland, was sentenced to 57 months in prison followed by three years of supervised release, and ordered to pay $1 …
So, basically, go ahead and do crimes like this if you don't mind 5 years in jail when you can split a few million dollars in profit afterward. (Or a bit less since they likely sold them cheaper than Apple did. But even at 3/4 or half the price, that's a lot of money for 6000 iPhones.) Kind of the American corporate motto: a million dollars in fines for criminal acts is okay when you made 5 million in profit by it.
Apple would have known exactly what phones were sent out in this scheme, at least most of them. Wouldn't they be able to remotely disable them, justified under "receiving stolen property" laws? Or have service providers block them based on IMEI?
Doesn't mean they made anywhere near that much profit. You can't sell stolen property at retail.
Most likely the forfeiture amounts were calculated based on showing how much money they'd made off the scheme, so they aren't going to have a fortune awaiting them when they get out of prison.
So long as you can find buyers who aren't suspicious of some random person selling "new" phones that don't have the full Apple packaging out of their trunk.
Once Apple figured out what happened they might disable those phones in some way. Maybe altering the buyer that they purchased stolen property or maybe just bricking them. Dunno how Apple handles stuff like that.
There are innumerable sites on the Internet, even big ones like eBay and Amazon, with no vetting of sellers, where the average person would be perfectly willing to buy these thinking it was a "reseller" or some such and just think it was a great sale, getting rid of inventory, whatever, not knowing that Apple wouldn't allow them to be sold like that. Grandma looking to buy a phone for a grandkid and all she knows is the word iPhone. Someone just determined that they need an iPhone but not knowing why and not being an "Apple person". And frankly, people have been buying brand new products out of the backs of vans in alleys for decades that "fell off the back of a truck" and not questioning the low price. VCRs used to be HUUUUUGE in that market, and cigarettes still are. (I would bet the phones came with basically all new packaging, too, just maybe labeled differently which not everybody would notice. They aren't just throwing a bare refurb phone into a brown box.)
I would bet the phones came with basically all new packaging
Well it has been a LONG time, but I had an iPhone 5 replaced under warranty when it developed the power button issue. The replacement was not sent in one of the nice boxes they used to use, or even anything as nice as the box they use now, and it had "Apple warranty replacement" or words that that effect on it. While it appeared to be new as far as I call maybe it was immaculately remanufactured. But despite its new appearance you'd never be able to sell it as new if it came in that packaging.
I suppose with enough money one could order boxes that might fool some buyers, buy whatever accessories that model came with appropriately packaged (i.e. not just tied up with a twistie like most stuff you order) but that's making more work and expense for you. Easier to just sell them at a significant discount to get rid of them soon - no one wants to have a million bucks worth of stolen property sitting in their basement if they get raided by the cops...makes it kind of difficult to plead innocent later!
Well, even 75% of retail when they cost you virtually nothing (except time and whatever the fake ones cost) is still a nice profit. And flagship phones now really don't come with any accessories even when new, just a short USB cable. A quick search indicates refurb iPhones did in fact come with everything a new one had, in 2017, and in a white box, and a video showed an Apple-Certified Pre-Owned iPhone 12 came in a box that basically looked like a new one other than having those words on it. The criminals in this case could quite easily have just sold them as Apple-Certified Pre-Owned phones for nearly the same price that you'd pay anywhere else. There's no reason to think they were selling them as new. Apple charges almost 80% of new for a refurb, and with no way of knowing that these weren't legitimate refurbs, someone buying them online would have little reason not to pay that amount, and would jump at paying only 75%.
"Apple would have known exactly what phones were sent out in this scheme, at least most of them. Wouldn't they be able to remotely disable them, justified under "receiving stolen property" laws? Or have service providers block them based on IMEI?"
My thoughts exactly. Was there no examination of the received devices, or did they simply throw them onto the e-waste pile? Did they even open the boxes to make sure they even contained 'phones?
I'd have thought that Apple would have been stripping returned phones for working parts and using them as repair parts for other broken phones tbh - this is how most computer hardware manufacturers provide their service parts. They strip incoming broken things to their logical units or have technicians do that on site for servers etc by removing the broken logical unit & replacing it, send the broken logical unit away for testing & repair (often to the component level), test what's left (if anything) for functionality, repair anything else broken, and send the unit out again as "reconditioned" or put it in a spares bin to be fitted to some other device to repair that.
Apple likes to make things unrepairable. After a certain point, it's so much work to disassemble them in a way that won't damage anything that it's more cost effective to just tear it apart roughly to get the larger chunks out then shred it and/or melt it down to get the rest. They might pull out some bigger parts like a battery and screen that are cabled in but the rest is soldered, so it gets trashed. It also probably gets sent by the truck-load to wherever this happens, and may have taken a while to get reported, by which point they may have had difficulty tracking where it all was coming from (if they even record things like individual serial numbers from individual components matched up with what phone they came from in the first place and where that one came from).
"Apple would have known exactly what phones were sent out in this scheme, at least most of them. Wouldn't they be able to remotely disable them, justified under "receiving stolen property" laws? Or have service providers block them based on IMEI?"
Jailbreak phone, send to another country. Job done.
That assumes they got 6000 iphones back and that the scam wasn't discovered and stopped before that point.
It also assumes that the scammers got to sell all the phones they were sent rather than some being seized and returned when the scam was uncovered.
So the $2.5 million would be the retail value of the iPhones that would have been sent out to replace the fakes, if they were sent and if none were recovered. It seems to be common practice to quote the maximum value as damages rather than try to calculate the actual damages, and that's to maximise the penalty as they'd not be likely to get all of that $2.5 Million back.
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