Chinese Engineering Student in US defrauds Apple of 1,500 Devices

A Chinese student living in the US has in a period of 2 years defrauded Apple of almost 1500 iPhones.

The former engineering student, Quan Jiang had over a period of two years sent devices that looked like iPhones to Apple, saying they wouldn’t turn on and should be replaced under warranty.

He didn’t just submit a couple of the devices, he delivered in person or shipped to Apple around 3,000 of them, Police reports. Apple, in turn, responded by sending almost 1,500 replacement iPhones, each with an approximate resale value of $600, but the devices that Quan Jiang sent to Apple were all fake.

The 30-year-old was a former engineering student at a community college in Albany, Oregon. He was arraigned in court where he pleaded guilty in federal court Wednesday to trafficking in counterfeit goods, the U.S. Attorney’s office in Portland announced.

The U.S. Attorney’s office in Portland said Jiang would import the counterfeit devices from Hong Kong and submit them to Apple using various assumed names. The genuine replacement phones Jiang received would be sold in China. Jiang’s associate would pay Jiang’s mother, who lives in China, who would then deposit the money into Jiang’s bank account.

Apple rejected 1,576 warranty claims associated with Jiang. 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.

An Apple official quoted by a Homeland Security Investigations Special Agent Thomas Duffy in a court document exposed a vulnerability that Jiang exploited.

“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.

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 August 28. Under a plea agreement, the U.S. Attorney’s office will recommend a prison sentence of three years, at least $200,000 in restitution to Apple. And Jiang must forfeit his black 2015 Mercedes-Benz CLA 250 coupe.