Apple loses RM10.55m to scammers: repair scheme had them replacing fake iPhones with real replacements

WASHINGTON, Oct 5 – Two Chinese nationals were sentenced to serve prison time and ordered to pay restitution for defrauding Apple Inc. out of US$2.5 million (RM10.55 million) worth of iPhones.

US District Court Judge Timothy J. Kelly sentenced Pengfei Xue, 34, to 54 months in prison. three years of supervised release and ordered to pay US$397,800 (RM1.68 million) in restitution.

Meanwhile Haotian Sun, 34, received 57 months in prison, three years of supervised release and ordered to pay US$1,072,000 (RM4.52 million) in restitution.

In a press release issued by the US Attorney's Office District of Columbia on Thursday, it was stated that on February 20, after three-and-a-half days of testimony, Sun and Xue, of Germantown, MD, were found guilty by a federal jury in US District Court in the District of Columbia of conspiracy to commit mail fraud and mail fraud.

According to evidence, between May 2017 and September 2019, Sun, Xue, and others conspired to defraud Apple Inc. by submitting counterfeit iPhones to Apple Inc. for repair to get Apple to exchange them with genuine replacement iPhones.

Sun and Xue received shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the DC metropolitan area.

“They then submitted the fake iPhones, with spoofed serial numbers and/or IMEI numbers, to Apple retail stores and Apple Authorized Service Providers, including the Apple Store in Georgetown.

“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 US$3.8 million (RM16 million) and an actual loss of more than US$2.5 million (RM10.55 million).”