Chinese man found guilty of trafficking 1,500 counterfeit iPhones worth $895,000

Jian sent fake iPhone devices to Apple stating some fault and asked to replace them under warranty.

A 30-year-old Chinese man, Quan Jiang, in Oregon has been reportedly found guilty of trafficking counterfeit iPhone devices.

Over a span of two years, Jian used to send fake iPhone devices, either hand delivered or shipped to Apple saying that they are not turning on and should be replaced by the company as they were under warranty. These devices were not limited to one or two but around 3,000, for which Apple did replace 1,500 devices costing around $600 (Rs 42,000) each. The accused pleaded guilty in the Federal court for trafficking counterfeit iPhone devices on Wednesday.

“Submission of an iPhone that will not power on is critical to perpetuating iPhone warranty fraud, as the phone will not be able to be immediately examined or repaired by Apple technicians, triggering the Apple iPhone replacement process as part of its product warranty policy,” wrote Homeland Security Investigations special agent Thomas Duffy, quoting Apple brand protection representative Adrian Punderson.

Apple iPhone XR. Image: tech2/Omkar Patne

Apple iPhone XR. Image: tech2/Omkar Patne

The US Attorney's office in Portland announced that Jiang, a former engineering student from a community college in Albany, Oregon, used to send the devices under different fake names from Hong Kong. He used to sell replaced devices in China. Jiang’s associate used to send the money to Jiang’s mother in China and she used to send the money to her son. According to the court, Jiang received around 20-30 counterfeit iPhones from associates in Hong Kong between 1 Jan, 2016, and 1 Feb, 2018.

Apple did smell that something was fishy back on 30 June, 2017, only and so the legal counsel of the company sent a "cease and desist" letter to an address in Corvallis where around 150 warranty claims were issued. The lawyers said the company knew that Jiang was importing counterfeit Apple products, according to Duffy’s affidavit.

Jiang didn’t respond, so the Apple lawyers sent a second letter.

Apple did not immediately respond to requests for comment on the case.

Apple rejected 1,576 warranty claims associated with Jiang, Duffy said. The 1,493 claims that resulted in replacement iPhones being delivered by Apple represented an $895,000 loss to the Cupertino, California-based company, Duffy wrote.

Brad Bench, who heads the Homeland Security Investigations office in Seattle, said in a statement that trafficking in counterfeit goods hurts the economy, legitimate businesses and impacts consumers directly.

Jiang faces a maximum sentence of 10 years in prison, a $2 million fine or twice his proceeds, whichever is greater, when he is sentenced on 28 August. Under a plea agreement, the US Attorney’s office will recommend a prison sentence of three years, at least $200,000 in restitution to Apple.

With inputs from The Associated Press

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