Chinese nationals conspired to defraud Apple Inc. out of 6,000 iPhones
WASHINGTON — An investigation conducted by Homeland Security Investigations (HSI) Washington, D.C. and the U.S. Postal Inspection Service’s (USPIS) Washington Division led to the Oct. 3 sentencing of two Chinese nationals to more than four years in federal prison each for their roles in a scheme to defraud Apple Inc. out of millions of dollars’ worth of iPhones.
Haotian Sun, 34, a Chinese citizen residing in Baltimore, received a sentence of 57 months in federal prison, three years of supervised release, an order 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, received a sentence of 54 months in federal prison, three years of supervised release, an order to pay $397,800 in restitution to Apple and a forfeiture money judgment of $19,890.
“The two Chinese nationals in this case engaged in an elaborate scheme that cost a major American company millions of dollars,” said HSI Washington, D.C. Special Agent in Charge Derek W. Gordon. “Furthermore, they potentially caused a myriad of problems for their customers. HSI Washington, D.C. will continue to work collaboratively with our law enforcement partners to investigate and apprehend anyone involved in similar financial fraud conspiracies.”
According to the investigation, 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 received 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 and other authorized Apple service providers. Members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing the company a loss of more than $2.5 million.
After a five-day trial, a jury convicted Sun and Xue Feb. 20 of conspiracy to commit mail fraud. Sun received an additional conviction for mail fraud. Xue received additional convictions for six counts of mail fraud.
HSI Washington, D.C. and USPIS Washington, D.C. investigated this case. The Justice Department’s Criminal Division and the U.S. Attorney’s Office for the District of Columbia prosecuted the case.
Anyone with information regarding criminal activity or crimes against members of their community is encouraged to call the HSI Tip Line at 877-4-HSI-TIP.
Learn more about HSI’s mission to increase public safety in your community on X, formerly known as Twitter, at @HSI_DC.