Two Foreign Nationals Sentenced for Multimillion-Dollar Scheme to Defraud Apple Inc. Out of 6,000 iPhones

 

Two men were sentenced yesterday for participating in a scheme to defraud Apple Inc. (Apple) out of millions of dollars worth of iPhones. Haotian Sun, 34, a Chinese citizen residing in Baltimore, was sentenced to 57 months in prison, three years of supervised release, and ordered to pay $1,072,200 in restitution to Apple and a forfeiture money judgment of $53,610. Pengfei Xue, 34, a Chinese citizen residing in Germantown, Maryland, was sentenced to 54 months in prison, three years of supervised release, and ordered to pay $397,800 in restitution to Apple and a forfeiture money judgment of $19,890.

According to court documents and evidence presented at trial, from May 2017 to September 2019, Sun and Xue, along with their co-conspirators, submitted counterfeit iPhones to Apple for repair to induce Apple to replace the counterfeit phones with genuine iPhones. As part of the scheme, Sun and Xue would receive shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the Washington, D.C., metropolitan area. They then submitted the fake iPhones, with spoofed serial numbers or IMEI numbers, to Apple retail stores, including an Apple Store in Washington, and other authorized Apple service providers. Members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing a loss of more than $2.5 million.

On Feb. 20, Sun and Xue were both convicted after a five-day jury trial of one count of conspiracy to commit mail fraud. Sun was also convicted of one count of mail fraud and Xue was convicted of six counts of mail fraud.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Matthew M. Graves for the District of Columbia; Inspector in Charge Damon E. Wood of the U.S. Postal Inspection Service (USPIS) Washington Division; and Special Agent in Charge Derek W. Gordon of the Homeland Security Investigations (HSI) Washington Field Office made the announcement.

USPIS and HSI investigated the case.