Man Who Duped Apple into Replacing Fake iPhones for Authentic Devices Worth $1 Million Convicted and Sentenced

[laptech]

Thank you for chiming in.

Those that participated were blood relatives, neighbors or a friend's friend who was looking for a side hustle. An American who never saw an ocean much less interacted much with Asians will not understand this familial connection.

News of this sort of fraud started in the 1st decade of the iPhone and was reported as early as 2013.

I know this because I've been reading on news about all things Apple since 2000.

Somewhat related, Apple HK used to be market outside of the US that had the highest sales of iPhones where in Chinese people were paid to line up outside of Apple Store & authorized Apple resellers to get around the 1-2 iPhone per customer limitation to collectively buy hundreds of iPhones for grey market export back to red China and countries like the Philippines that get their launches 3-4 months later nearing Christmas.

Why do they do this? Because of gaming the system to be able to sell the cheapest iPhones on the planet in markets that charge exuberant import duties, sales tax, GST & VAT.

After many years of complaints from Apple's partners in countries like the Philippines the launch of iPhones were moved up from nearly Christmas to 4 weeks after US launch. This only gave grey market sellers less than 5 weeks to liquidate inventory.

Apple does not disclose this loophole in US consumer laws so it does not help popularize this criminal act any further and hit their stock price unfairly.

Think of how RIAA & MPAA press releases about the Pirate Bay just made that website much more popular globally.

A cheaper solution to this would have them buying the Pirate Bay out.

The exact same thing happens in the UK regarding iphones on release day, being bought from Apple stores by Indian buyers who then send them off to India to be sold way before the iphone is released in India. There was a news article a few years back that highlighted the issue. Indian buyers would pay for students to stand in line on release day, give them the money to purchase the phone. A number of the man's acquaintances would hang around outside the store to make sure the students did not run off with the phone. Upon purchasing the phone, the student would then hand the iphone to the man. A reporter spoke to one of the men who had about 10-15 iphones and he admitted that he was sending them off to India where he could get triple the price for them.

What this all amounts to is that if there is a system that can be gained, it does not matter who the person is, they will gain it. It just so happens that in the cases mentioned, it's foreign nationals doing it.

 

[mikethemartian]

I would imagine that after persistence an Apple associate would cave in to a phone exchange that their little “checker device” said wasn’t valid, just so that they could deliver excellent customer service.

In other words, Apple has a reputation for excellent customer service, and rather than potentially denying a valid exchange and suffering the bad mouthing, the associate chooses to do it; even if their little device checker device tells them it’s bunk.

But then Apple couldn’t claim they were successfully defrauded if they knew already the device was counterfeit when they took it back.

 

[kemal]

If he is deported he will never pay the judgement.

 

[Adarna]

The exact same thing happens in the UK regarding iphones on release day, being bought from Apple stores by Indian buyers who then send them off to India to be sold way before the iphone is released in India. There was a news article a few years back that highlighted the issue. Indian buyers would pay for students to stand in line on release day, give them the money to purchase the phone. A number of the man's acquaintances would hang around outside the store to make sure the students did not run off with the phone. Upon purchasing the phone, the student would then hand the iphone to the man. A reporter spoke to one of the men who had about 10-15 iphones and he admitted that he was sending them off to India where he could get triple the price for them.

What this all amounts to is that if there is a system that can be gained, it does not matter who the person is, they will gain it. It just so happens that in the cases mentioned, it's foreign nationals doing it.

I think the Indians would have better luck doing that in the Middle East, TH or even SG.

UK has 20% VAT that is refundable at the airport. Pre-VAT prices also works against them as well.

Of course iPhones sold in India is much more expensive over all but there are cheaper & better places to buy iPhones for grey market export to India than the UK.

As for the nationality... The articles posted on MacRumors & Apple Insider for the past decade almost always concerns ethnic Chinese.

Less than 20% of the time its Indians.

I was able to provide citations for ethnic Chinese persons & nationals doing fraud, grey market exports and scalping.

Again, the article isn't racist. I'm 2/3rds ethnic Chinese. Pls stop insisting it is.

Is this article of the Philippine President talking to the Indian ambassador about their citizen's activities in loan sharking racist? If more than 50% of all loan sharks are of a certain ethnicity or citizenship then it becomes a relevant part of the story. By removing the country of origin or nationality of the loan shark it makes you wonder who about the 15 out of 100 Filipinos can act like a loan shark?

 

[Adarna]

If he is deported he will never pay the judgement.

If you keep him in the US then he'll enjoy the luxury of the US justice system.

Why a luxury? Because it's way better than CN's justice system.

 

[usagora]

I would imagine that after persistence an Apple associate would cave in to a phone exchange that their little “checker device” said wasn’t valid, just so that they could deliver excellent customer service.

In other words, Apple has a reputation for excellent customer service, and rather than potentially denying a valid exchange and suffering the bad mouthing, the associate chooses to do it; even if their little device checker device tells them it’s bunk.

That doesn't make any sense. Who is going to risk their job over that by not reporting it to their superior? The associate would have nothing to gain and everything to lose by knowingly replacing a device that was reported as counterfeit.

 

[chewbaka]

It's not a conspiracy if he was actually doing it. It's an operation.

Uh… yes it is.

 

[indychris]

Someone from china making large sums of money by trading in falsely branded, inauthentic merchandise?

 

[w5jck]

That's probably what happened. It's not surprising to me that Apple didn't notice, the guys who handle returns probably don't have the time nor do they care since they are probably not paid very well anyway. If the fakes looked authentic enough and had "real" IMEI numbers, how would they notice?

They probably did notice it on multiple occasions when a customer wanted to return the real phone the IMEI belonged to, but to notice it is a scheme (they used different names and probably different locations) probably took a while.

I doubt that scenario. More likely the shipments from China probably got the attention of Homeland Security who then got the USPS inspectors involved. It sounds like the ring leaders in China haven't been caught, or at least the article didn't mention them. My guess is the Chinese ringleaders were using multiple Chinese nationals living in the US to run a much larger illegal operation than just these few bozos who got caught. I bet it was/is going on in other countries too.

 

[TheYayAreaLiving 🎗️]

Per the article, the court also "ordered him to pay $987,000 in restitution and an identical amount in a forfeiture money judgement." Apple is entitled to no more than the restitution, so the nearly $1M in addition compensates the state for its expenses in imprisoning him previously. Sounds about right to me -- he's out much more than what he gained, and he spent enough time in prison that the experience would achieve any deterrence effect that a longer sentence would serve.

Correct! But that’s probably easy money for him. Probably has that in the savings account to pay that off. Justice is served. Yes, but I think he’ll be out.

 

[MrMojo1]

After serving jail time, all should also be deported.

 

[scheinderrob]

ordered him to pay $987,000 in restitution and an identical amount in a forfeiture money judgement.

hope he kept some of the money he stole

 

[kennyt72]

Let’s assume a value of $500 per phone (obviously they’ve gotten more expensive over time, but let’s start low).

$1,000,000 / $500 = 2,000 phones. (you use commas not periods to separate thousands places in English). It might be less if they used higher value phones, but even 2,000 is not that hard to turn over given the 3.5 years they were at it. With 3 known conspirators and 3.5 years your down to about 190 phones per year per person, or 16 a month.

It's actually called a full stop in English and a Period in American English

 

[Adarna]

I bet it was/is going on in other countries too.

If consumer protection laws are almost as liberal as those of the US then yes.

if its as bad as in the Philippines... then no

 

[jazz1]

Per the article, the court also "ordered him to pay $987,000 in restitution and an identical amount in a forfeiture money judgement." Apple is entitled to no more than the restitution, so the nearly $1M in addition compensates the state for its expenses in imprisoning him previously. Sounds about right to me -- he's out much more than what he gained, and he spent enough time in prison that the experience would achieve any deterrence effect that a longer sentence would serve.

I was a Probation Officer, back in the day, and restitution rarely actually got paid.

 

[mansplains]

Wow people never learn I guess getting a job and earn money the right way is dead now

Have you never seen r/antiwork?

 

[mjs916]

It's actually called a full stop in English and a Period in American English

When I was a child I would be so confused when someone in a film was dictating a message and would say “stop” or “full stop” and continue dictating their message ??

 

[Naraxus]

I wouldn't worry. As soon as Xi Jingping hears word of this Comrade Timmy will do his best to ensure these convictions are overturned

 

[CarlJ]

It's not a conspiracy if he was actually doing it. It's an operation.

The actual definition of "conspiracy" is, "a secret plan by a group to do something unlawful or harmful". Which describes the situation at hand quite well. One can conspire with others to commit a crime.

The word gets used too often these days as a sort of shorthand for "conspiracy theory", which is defined as, "a belief that some covert but influential organization is responsible for a circumstance or event".

 

[CarlJ]

I'm surprised they are not being deported. It does not indicate if they are a US citizen or still on a green card, but when I lived overseas, had I done something like this, I would surely have been deported after serving time.

It's a lot harder to collect the restitution if they're not in the country.

 

[JM]

Let’s assume a value of $500 per phone (obviously they’ve gotten more expensive over time, but let’s start low).

$1,000,000 / $500 = 2,000 phones. (you use commas not periods to separate thousands places in English). It might be less if they used higher value phones, but even 2,000 is not that hard to turn over given the 3.5 years they were at it. With 3 known conspirators and 3.5 years your down to about 190 phones per year per person, or 16 a month.

Maybe Reggaenald has a butterfly keyboard and the comma is broken

How many phones must they have faked and gotten from Apple for $1.000.000? That’s impressive. They were very smart, but not smart enough to stop. In the end arrogance, ignorance and thirst for more and more ??? tightened their nooses.
I wonder if they had more motivation than just $.

 

[JM]

That doesn't make any sense. Who is going to risk their job over that by not reporting it to their superior? The associate would have nothing to gain and everything to lose by knowingly replacing a device that was reported as counterfeit.

I only surmise that there is some leniency from managers when it comes to delivering an exceptional customer service experience.

KNOWING the phone is a counterfeit is very different than SUSPECTING it is.

If there’s any doubt, I just imagine that they would lean towards trusting the customer.

 

[JM]

It's actually called a full stop in English and a Period in American English

And after changing the Siri dialect to “British” and having her only understand “full stop” (this is before they separated accent from the understanding of country specific lingo), I still sometimes say “full stop” instead of period ?

 

[CarlJ]

It's actually called a full stop in English and a Period in American English

No, see, we, uh, improved it by replacing two words that together take up two syllables, with one word that takes up three syllables. See how much better that is?

 

[_Spinn_]

Good, I'm glad he was caught. People like this just make things worse for everyone.