Chinese Nationals Arrested for Alleged $12.3 Million Fraud Involving Return of Counterfeit iPhones, Other Devices

LOS ANGELES — Five Chinese nationals were arraigned May 31 after their arrest by Homeland Security Investigations (HSI) Los Angeles and the U.S. Secret Service on federal charges alleging they operated a large-scale, trans-Pacific counterfeit device scheme that included fraudulent returns of thousands of iPhones, iPads and other Apple goods, causing the Cupertino-based technology company at least $12.3 million in losses.

A federal grand jury charged the following defendants in a 22-count indictment that was returned on May 23 and was unsealed May 31:

• Yang Song, 40, of Corona, the alleged ringleader.
• Junwei Jiang, 37, of East Los Angeles.
• Zhengxuan Hu, 26, of Alhambra.
• Yushan Lin, 30, of Corona.
• Shuyi Xing, 34, of Corona.

All the defendants are charged with one count of conspiracy to commit wire fraud and mail fraud, one count of aggravated identity theft, seven counts of wire fraud, 12 counts of mail fraud, and one count of conspiracy to traffic in counterfeit goods. They were arrested May 30 and were arraigned May 31 in U.S. District Court in downtown Los Angeles.

“Protecting American ingenuity, ensuring economic security and shielding the consumers across the nation is a top priority for Homeland Security Investigations,” said HSI Los Angeles Special Agent in Charge Eddy Wang. “Due to the outstanding work of HSI Los Angeles with our law enforcement and private sector partners targeting this large-scale fraud operation, we have prevented millions of dollars from lining the pockets of this transnational criminal organization.”

According to the indictment, from at least December 2015 to March 2024, Song and Jiang coordinated with co-conspirators in China to ship counterfeit Apple iPhones, iPads and other devices to them and other U.S.-based co-conspirators. The counterfeit Apple devices shipped to Song, Jiang, and others in the U.S. were designed to look like genuine Apple devices and included identification numbers matching the numbers on real Apple products that had been sold in North America, were owned by real people, and were under warranty through Apple’s manufacturer warranty and AppleCare+, Apple’s extended warranty program.

The defendants allegedly fraudulently returned the counterfeit iPhones, iPads and other devices to Apple as if they were genuine and had been legitimately purchased, were eligible for Apple’s warranty programs, and they were the lawful possessors of the Apple devices. The real identification numbers and serial numbers on the counterfeit devices were designed to impersonate the real Apple devices owned by real people throughout the United States, which defrauded Apple’s warranty programs and potentially deprived the Apple devices’ lawful owners of the warranty benefits to which they were entitled.

The defendants allegedly knowingly and fraudulently represented that the counterfeit Apple devices they returned were genuine but were broken or non-operational and were covered by the company’s warranty programs. Some of the false reasons given to Apple store employees were because the devices purportedly would not power on, were physically damaged, or had other defects. As part of the scheme, the defendants allegedly visited multiple Apple stores throughout Southern California, including in Beverly Hills, Sherman Oaks, Pasadena, Irvine, Northridge, Manhattan Beach, Brea, Rancho Cucamonga, Cerritos and at shopping malls such as The Grove in Los Angeles, South Coast Plaza in Costa Mesa, Fashion Island in Newport Beach, and The Americana at Brand in Glendale. In many cases, they visited as many as 10 different Apple stores in a single day.

Once at the Apple stores, Apple employees then either replaced or repaired the counterfeit Apple device with a genuine Apple device in the same visit or, on other occasions, took the defendants’ counterfeit devices and shipped them to a repair center. Apple then shipped to the defendants a genuine replacement Apple device or a repaired device to either an Apple store, where the defendants returned to pick up the new device or at the dozens of mailboxes that the defendants allegedly rented across Southern California.

As part of the scheme, the defendants allegedly took multiple steps to disguise their identities and hide their fraud over the years. For example, they allegedly rented dozens of mailboxes at UPS stores across Southern California for use in the scheme, including to receive counterfeit devices from China and receive genuine replacement devices from Apple. They allegedly also misspelled the mailing addresses they provided to Apple and added or removed extra characters to the mailing addresses, to disguise the fact that they were processing numerous fraudulent returns of Apple devices. Other times, they allegedly used aliases to make appointments at Apple stores to process their fraudulent returns of devices.

After successfully returning the counterfeit Apple devices for genuine ones, the defendants allegedly shipped the genuine devices to co-conspirators both in the United States and abroad, primarily in China, where the genuine Apple devices were resold at a substantial profit.

In total, the defendants fraudulently returned and attempted to return more than 16,000 counterfeit Apple devices, causing Apple at least $12.3 million in losses.

An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted, the defendants each face a statutory maximum sentence of 20 years of imprisonment on each of the conspiracy to commit mail and wire fraud, wire fraud and mail fraud charges; a statutory mandatory minimum sentence of two years of imprisonment for the aggravated identity theft charge; and a statutory maximum sentence of 10 years of imprisonment on the conspiracy to traffic counterfeit goods charge.

HSI Los Angeles and IRS Criminal Investigation are investigating this matter with substantial assistance provided by the U.S. Postal Inspection Service and the Los Angeles Police Department. The U.S. Attorney’s Office for the Central District of California is prosecuting this case.

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