Two Chinese nationals were sentenced to federal prison for their roles in a scheme that defrauded Apple Inc. of at least $16.2 million, Immigration and Customs Enforcement announced on Sept. 22.
The investigation was conducted by ICE Homeland Security Investigations in Los Angeles. One of the defendants was an illegal alien, according to ICE.
The scheme exploited Apple’s warranty and replacement programs. The defendants submitted thousands of counterfeit Apple devices — including iPhones and iPads — through legitimate return channels as if they were genuine products, receiving authentic replacements or refunds for each fraudulent return, investigators said.
The counterfeit devices were manufactured overseas and shipped to the United States specifically for use in the fraud scheme, according to HSI. The sophistication of the counterfeits was sufficient to pass initial screening in many cases.
The case represents one of the larger consumer electronics fraud prosecutions in the Central District of California, according to ICE. Large-scale counterfeit device fraud schemes exploit consumer trust in major technology brands and cost U.S. companies hundreds of millions of dollars annually.
HSI said the investigation required extensive forensic analysis to trace the counterfeit devices and document the scope of the scheme. The $16.2 million loss figure represents confirmed fraudulent returns over the course of the conspiracy.
The sentencing concludes a case that highlights vulnerabilities in product return and warranty systems used by major technology companies. ICE said the prosecution demonstrates HSI’s capacity to investigate sophisticated transnational commercial fraud.
Both defendants received federal prison sentences. Additional details regarding the specific terms of their sentences were included in the court filings.