Two savvy siblings resorted to swapping counterfeit for genuine devices. In 2019, they were apprehended for attempting to exchange 10,000 fake Apple products over eight years, resulting in $6.1 million worth of genuine Apple merchandise.
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LOS ANGELES, CALIFORNIA - SEPTEMBER 22: People wait in line to purchase new Apple iPhone 15 models at the Apple The Grove store on the phone’s worldwide release day on September 22, 2023 in Los Angeles, California.
Manipulating Apple's System
While it's usually a straightforward process to have your malfunctioning iPhone replaced at an Apple Genius Bar through your AppleCare plan, a pair of resourceful siblings managed to manipulate the system by substituting counterfeit devices for genuine ones.
Regrettably for them, their illicit activities caught up with them in 2019, when they were apprehended for attempting to swap 10,000 fake Apple products over an eight-year period.
As reported by The Verge, the two San Diego residents, Zhimin and Zhiting Liao, who also go by Jimmy and Allen Liao, accrued approximately $6.1 million worth of legitimate Apple merchandise.
This includes iPhones and iPads, which they later shipped to international buyers. The siblings have now been handed 41-month federal prison sentences.
This imprisonment is a component of a plea agreement that encompasses the forfeiture of five San Diego properties in which the brothers held an interest, lasting more than three years, as well as $250,000 derived from their fraudulent activities and 200 iPhones implicated in the scheme.
Broadening Lawsuit
The legal pursuit by prosecutors has broadened to encompass the Liao brothers' wives, who now face charges related to their participation in the fraudulent enterprise.
Each of the female accomplices has acknowledged their involvement and been handed three-year probation sentences. Additionally, an extra eight individuals implicated in the conspiracy have also confessed to their roles in the scheme.
According to the prosecution, the defendants orchestrated the exchange of more than 10,000 counterfeit products at various retail stores over an eight-year period.
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Times of San Diego reported that the genuine items obtained in return were subsequently shipped to individuals in foreign countries, leading to an overall financial loss estimated at approximately $6.1 million for Apple.
Under the terms of their plea agreements, the Liao brothers have agreed to forfeit their interests in five San Diego residential properties, along with over $250,000 in ill-gotten gains from their illicit activities, as well as more than 200 Apple iPhones connected to the conspiracy, as stated by the U.S. Attorney's Office.
Other Instances
The Liao brothers are not the sole individuals involved in deceptive schemes involving fake-for-real swaps. In 2019, a college student from Oregon faced legal consequences for defrauding Apple Stores. The student's modus operandi involved presenting counterfeit iPhones with warranty serial numbers at the Genius Bar.
When Apple's experts couldn't immediately identify the phones as fakes, the student received brand-new replacements, which he subsequently shipped to China in exchange for monetary gains. It's worth noting that this particular tactic might present greater challenges today, given Apple's increased serialization of internal components.
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