6K Fake iPhones Cost Apple $2.5 Million, 2 MD Men Sentenced

WASHINGTON, DC — Two Maryland men were convicted in a scheme to turn in fake iPhones to Apple for repair, swapping them for actual phones worth $2.5 million, federal authorities said.

Haotian Sun, 34, and Pengfei Xue, 34, both Chinese nationals, were sentenced Oct. 2 for participating in a scheme to defraud Apple Inc. out of millions of dollars’ worth of iPhones. U.S. District Court Judge Timothy J. Kelly sentenced Sun to 57 months in prison, and sentenced Xue to 54 months in prison.

On Feb. 20, Sun, of Baltimore, and Xue, of Germantown, were found guilty by a federal jury in U.S. District Court in the District of Columbia of conspiracy to commit mail fraud and mail fraud, a news release from the U.S. Attorney's Office said.

According to the government’s evidence, between May 2017 and September 2019, Sun, Xue, and other conspirators defrauded Apple Inc. by submitting counterfeit iPhones to Apple Inc. for repair to get Apple to exchange them with genuine iPhones.

Sun and Xue received shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the D.C. area. They then submitted the fake iPhones, with spoofed serial numbers and/or IMEI numbers, to Apple retail stores and Apple authorized service providers, including the Apple Store in Georgetown, prosecutors said.

In all, they submitted more than 6,000 fake phones to Apple, causing a loss of more than $2.5 million.

In addition to the prison terms, Judge Kelly on Wednesday ordered Sun to serve three years of supervised release and pay $1.072 million in restitution. Xue was ordered to serve three years of supervised release and pay $397,800 in restitution.