Brothers swap fake iPhones for real ones – scamming Apple out of RM28.75mil, US feds say


The counterfeit Apple products imported into the US from China by the Liao brothers had ‘identification numbers that matched identification numbers on real iPhones and iPads that were under warranty and had been previously sold to customers in the United States and Canada’, prosecutors said. — AFP

Three brothers from San Diego caused Apple to lose US$6.1mil (RM28.75mil) with a widespread scheme in which more than 10,000 fake iPhones and iPads were swapped out for the real devices at hundreds of stores, according to US federal prosecutors.

Zhimin, Zhiting and Zhiwei Liao led the scam involving a slew of other co-conspirators from 2011 through 2019, according to the US Attorney’s Office for the Southern District of California.

A judge sentenced Zhimin and Zhiting Liao to three years and five months in prison on Oct 2 in connection with trafficking the counterfeit iPhones and iPads, court records show. Meanwhile, Zhiwei Liao is due in court on Oct 30 for his sentencing hearing.

This comes after all three Liao brothers pleaded guilty to conspiracy to traffic in counterfeit goods on June 2, 2022, according to a news release from the attorney’s office.

The counterfeit Apple products imported into the US from China by the Liao brothers had “identification numbers that matched identification numbers on real iPhones and iPads that were under warranty and had been previously sold to customers in the United States and Canada”, prosecutors said.

Over the course of the scheme, Zhimin Liao travelled to about 105 Apple stores in 22 different states, where he tried exchanging 720 fake iPhones and iPads for real ones, according to his sentencing memorandum. In 2015 alone, he travelled to several stores in states along the East Coast – from Florida all the way up to New Hampshire, the sentencing memo says.

Zhiting Liao also directly travelled to at least 200 Apple stores in 18 states and in Canada, where he tried swapping out 718 counterfeit iPhones and iPads, his sentencing memo says.

Both brothers directly profited US$6.1mil (RM28.75mil), according to their sentencing documents.

After the fake Apple devices were exchanged, the Liao brothers sold and shipped them outside the US, prosecutors said.

Attorney Anthony E. Colombo Jr., who is based in San Diego and represented Zhimin Liao in the case, told McClatchy News in a statement on Oct 5 that Zhimin Liao “accepted responsibility for his conduct and deeply regrets his involvement in the offence”.

He said the “severity” of his client’s sentence was based on the court’s “desire to generally deter similar conduct”.

Zhimin Liao’s “sentence weighs heavily on (him) given the potential impact on his family and business”, Colombo added. “He is committed to being a productive member of his community as he has been over the past five years.”

McClatchy News also contacted defense attorneys representing Zhiting and Zhiwei Liao for comment on Oct 5 and didn’t receive immediate responses.

The Liao brothers’ wives were also involved and previously pleaded guilty to wire fraud or mail fraud charges, according to the US attorney’s earlier release.

As part of the brothers’ and their wives’ plea agreements, they agreed to forfeit five homes in San Diego, more than US$250,000 (RM1.17mil) and more than 200 fake Apple iPhones, prosecutors said.

The wives have all been sentenced to three years of probation as of Oct 5, court records show.

Zhimin and Zhiting Liao’s prison sentences will be followed by three years of supervised release, according to court records.

McClatchy News contacted Apple for comment on Oct 5 and didn’t receive an immediate response. – The Charlotte Observer/Tribune News Service

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