Man Who Tricked Apple into Replacing 1,500 Fake iPhones Pleads Guilty to Trafficking Counterfeit Goods

A Chinese man on Wednesday pleaded guilty in Oregon to one count of trafficking in counterfeit goods, after he managed to trick Apple into replacing hundreds of fake iPhones with authentic handsets through its warranty program (via Bloomberg).

apple store toronto eaton centre
Quan Jiang, 30, a former engineering student at a community college in Albany, Oregon, sent around 3,000 counterfeit devices to Apple, via one of the state's three Apple stores or online. Jiang used fake names and claimed the iPhones wouldn't turn on and should be replaced under warranty.

Apple replaced almost 1,500 of the fake handsets with authentic iPhones, each with an approximate resale value of $600 on the Chinese market, where counterfeit Apple products are a big problem.

Apple only realized something was afoot as early as June 30, 2017, when its legal counsel sent Jiang a "cease and desist" letter to an address in Corvallis where 150 of the warranty claims had originated.

Apple's lawyers said that's when the company knew he was importing counterfeit Apple products, according to comments made by Homeland Security Investigations Special Agent Thomas Duffy in a court document.

"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," Duffy wrote, quoting Apple brand protection representative Adrian Punderson.

According to the U.S. Attorney's Office for the District of Oregon, between January 2016 and February 2018, Jiang was the recipient of multiple packages containing as many as 20 to 30 inoperable, counterfeit iPhones from partners in Hong Kong.

After delivering the genuine replacements, Jiang's associate would pay Jiang's mother, who lives in China, who would then deposit the money into Jiang's bank account.

Apple is said to have rejected 1,576 warranty claims associated with Jiang, but the 1,493 claims that resulted in replacement iPhones being delivered by Apple represented an $895,000 loss to the company, according to court documents.

Jiang will be sentenced on August 28 and faces a maximum sentence of 10 years in prison, a $2 million fine or twice his proceeds, whichever is greater. Bloomberg reports that the U.S. Attorney's office will recommend a prison sentence of three years and at least $200,000 in restitution to Apple, under a plea agreement, provided Jiang also forfeits his 2015 Mercedes-Benz CLA 250 coupe.

Top Rated Comments

RogerWilco Avatar
41 months ago
Angela Ahrendts tricked Apple out of a $70MM dollar signing bonus.
Score: 26 Votes (Like | Disagree)
BigBoy2018 Avatar
41 months ago
I still dont get how one guy did it 1500 times before Apple caught on.
Score: 22 Votes (Like | Disagree)
az431 Avatar
41 months ago
surely they all had different serial numbers which were checked for the warranty? Where did he get them all from?
Wow. Seems like not reading articles is the norm these days.
[doublepost=1558610079][/doublepost]
But 150 of the claims were from the same address. Seems a big oversight to miss that!
They didn’t. He’s in jail. Read the article.

And just FYI, there are businesses that own tens of thousands of iOS devices. Hundreds of warranty claims from one address is not unusual.
Score: 14 Votes (Like | Disagree)
Stiss Avatar
41 months ago
Enjoy jail.
Score: 8 Votes (Like | Disagree)
tirk Avatar
41 months ago
Did you not read the article? The guy gave fake names and probably fake addresses, so Apple likely recognised him as a different customer each time.
But 150 of the claims were from the same address. Seems a big oversight to miss that!
Score: 7 Votes (Like | Disagree)
Edsel Avatar
41 months ago
"U.S. Attorney's office will recommend a prison sentence of three years and at least $200,000 in restitution to Apple, under a plea agreement...."

If this is a loss of $895k to Apple, and our govt. is asking for only $200k returned, AND that he serves only 3 years in a U.S. jail, then I'd say Quan still profited by his scheme. If they had arranged jail time in the notorious Qincheng Prison, Beijing then it would be an equitable sentence.
Score: 7 Votes (Like | Disagree)

Popular Stories

macbook air m2

Exclusive: Apple Plans to Launch MacBook Air With M2 Chip on July 15

Wednesday June 29, 2022 5:23 pm PDT by
The redesigned MacBook Air with the all-new M2 Apple silicon chip will be available for customers starting Friday, July 15, MacRumors has learned from a retail source. The new MacBook Air was announced and previewed during WWDC earlier this month, with Apple stating availability will begin in July. The MacBook Air features a redesigned body that is thinner and lighter than the previous...
original iphone 2007

15 Years Ago Today, the iPhone Went On Sale

Wednesday June 29, 2022 4:43 am PDT by
Fifteen years ago to this day, the iPhone, the revolutionary device presented to the world by the late Steve Jobs, officially went on sale. The first iPhone was announced by Steve Jobs on January 9, 2007, and went on sale on June 29, 2007. "An iPod, a phone, an internet mobile communicator... these are not three separate devices," Jobs famously said. "Today, Apple is going to reinvent the...
maxresdefault

Video Comparison: M2 MacBook Pro vs. M1 MacBook Pro

Tuesday June 28, 2022 2:45 pm PDT by
Apple last week launched an updated version of the 13-inch MacBook Pro, and it is the first Mac that is equipped with an updated M2 chip. As it's using a brand new chip, we thought we'd pick up the M2 MacBook Pro and compare it to the prior-generation M1 MacBook Pro to see just what's new. Subscribe to the MacRumors YouTube channel for more videos. For the video comparison, we're using the...
iPhone vs Galaxy Larger

Apple Executive Says Samsung Copied the iPhone and Simply 'Put a Bigger Screen Around It'

Tuesday June 28, 2022 8:59 am PDT by
The Wall Street Journal's Joanna Stern today shared a new documentary about the evolution of the iPhone ahead of the 15th anniversary of the device launching on June 29, 2007. The documentary includes an interview with Apple's marketing chief Greg Joswiak, iPhone co-creator Tony Fadell, and a family of iPhone users. One segment of the interview reflects on Android smartphones gaining larger...
iPhone 11 Pro vs iPhone 14 Pro

iPhone 11 Pro vs. 14 Pro: New Features to Expect if You've Waited to Upgrade

Monday June 27, 2022 11:22 am PDT by
With many customers choosing to upgrade their iPhone every two or three years nowadays, there are lots of iPhone 11 Pro users who might be interested in upgrading to the iPhone 14 Pro later this year. Those people are in for a treat, as three years of iPhone generations equals a long list of new features and changes to look forward to. Below, we've put together a list of new features and...
Mac Studio IO

Apple Begins Selling Refurbished Mac Studio Models

Thursday June 30, 2022 7:42 pm PDT by
Apple today began selling refurbished Mac Studio models for the first time in the United States, Canada, and select European countries, such as Belgium, Germany, Ireland, Spain, Switzerland, the Netherlands, and the United Kingdom. In the United States, two refurbished Mac Studio configurations are currently available, including one with the M1 Max chip (10-core CPU and 24-core GPU) for...
rootbug

Major macOS High Sierra Bug Allows Full Admin Access Without Password - How to Fix [Updated]

Tuesday November 28, 2017 12:33 pm PST by
There appears to be a serious bug in macOS High Sierra that enables the root superuser on a Mac with a blank password and no security check. The bug, discovered by developer Lemi Ergin, lets anyone log into an admin account using the username "root" with no password. This works when attempting to access an administrator's account on an unlocked Mac, and it also provides access at the login...