Two college students from China now face federal charges for scamming Apple to replace more than 2,000 iPhones that were found to be fake.
Chinese nationals Quan Jiang and Yangyang Zhou were caught participating in a counterfeit iPhone scheme. The duo allegedly submitted claims to Apple saying that the iPhones were broken and would not power on.
Jiang and Zhou both lived in Corvallis, Oregon, and are in the United States with student visas.
Court documents showed that the men were importing thousands of fake iPhones from China. Each unit costs about $30, which means that the duo profited almost $600 for every successful return.
Apple rejected 1,500 out of more than 3,069 warranty claims. However, the company sent 1,493 units as replacements. Juan and Zhou reportedly sent the working iPhones back to China, where they got a cut on the sales.
Authorities charged Jiang with wire fraud and trafficking counterfeit goods. He was put in federal custody but was later released on GPS monitoring.
Zhou is accused of submitting false or misleading information on export declaration. He attended his first hearing on March 29 at the U.S. District Court in Portland.
Zhou's lawyer, Jamie Kilberg, said his client was not aware of any counterfeit activity.
"We do believe that Mr. Zhou will be vindicated," Kilberg said in an interview with The Oregonian.
Investigations on the counterfeit scheme began in April 2017 after the U.S. Customs and Border Protection apprehended five shipments containing fake iPhones with Apple, Inc. markings from Hong Kong.
Jiang told the authorities he received regular packages with 20 to 30 iPhones from a contact in China.
"Jiang explained that in exchange for his labor and efforts, his associate in China pays Jiang's mother, who also resides in China, who in turn deposits the proceeds into a bank account that Jiang is able to access here in the United States," read the court filing submitted by Special Agent Thomas A. Duffy of the Homeland Security Investigations.
Apple apparently did not require proof of purchase for a warranty claim.