Chinese man guilty of defrauding Apple out of 1,500 iPhones

Pleaded guilty in federal court Wednesday to trafficking in counterfeit goods.

By Andrew Selsky / Associated Press

SALEM, Ore. — Over the span of two years, a Chinese national in Oregon 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.

Apple responded by sending almost 1,500 replacement iPhones, each with an approximate resale value of $600.

But the devices that Quan Jiang sent Apple were fake.

Jiang, 30, a former engineering student at a community college in Albany, Oregon, pleaded guilty in federal court Wednesday to trafficking in counterfeit goods, the U.S. Attorney’s office in Portland announced.

The presence of fake iPhones and other high-tech gadgets has become an issue in global resale markets, with some counterfeit versions operating so well it’s hard for users to tell the difference between them and the genuine products. But in the Oregon case, the makers of the thousands of fake phones apparently didn’t even have to bother with having working operating systems.

An Apple official quoted by 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.

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.

Jiang received packages containing between 20 and 30 counterfeit iPhones from associates in Hong Kong between Jan. 1, 2016, and Feb. 1, 2018, according to court documents.

Apple realized something was amiss as early as June 30, 2017, when its legal counsel sent Jiang a “cease and desist” letter to an address in Corvallis where 150 warranty claims emanated. The lawyers said the company knew he was importing counterfeit Apple products, according to Duffy’s affidavit. Jiang didn’t respond, so the Apple lawyers sent a second letter.

Apple did not immediately respond to requests for comment on the case.

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

Brad Bench, who heads the Homeland Security Investigations office in Seattle, said in a statement that trafficking in counterfeit goods hurts the economy, legitimate businesses, and impact consumers directly.

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 Aug. 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.

Talk to us

More in Northwest

Diners Bonnie Breitman, left, and Casey McGan huddle near an outdoor gas fire as they eat lunch outside in a blustery wind Tuesday, Nov. 17, 2020, in Bellingham, Wash. Washington Gov. Jay Inslee on Sunday announced tighter restrictions in the state in response to a flood of new cases of COVID-19, the disease caused by the coronavirus. Restaurants and bars will again be limited to outdoor dining and to-go service, gyms, and some entertainment centers will be required to close indoor services. Retail stores, including grocery stores, will be ordered to limit indoor capacity and indoor social gatherings will be prohibited unless attendees have quarantined for 14 days or tested negative for COVID-19 and quarantined for a week. (AP Photo/Elaine Thompson)
New shutdown expected to cost Washington restaurants $800M

The Washington Hospitality Association urged lawmakers to figure out ways to support hospitality businesses.

Teen girl found dead after driving into Skagit River

The search for the girl, and the vehicle, was suspended because of hazardous conditions.

Ryan Warren Ward, left, looks over court papers with attorney Lane Wolfley during Ward's sentencing for three counts of aggravated first-degree murder and multiple counts of theft and firearms violations on Thursday in Clallam County Superior Court in Port Angeles. (Keith Thorpe/Peninsula Daily News)
Man sentenced to life in prison in triple-murder

Ryan Warren Ward was the second defendant sentenced in the December 2018 slayings.

Virus playing part in booming ranch sales in US West

Some buyers drawn to rural areas are motivated by a “get me out of here” kind of mentality.

Seattle City Council rejects effort to block police hiring

The measure was promoted by organizations that emerged during Black Lives Matter demonstrations.

Washington Gov. Jay Inslee speaks during a news conference, Sunday, Nov. 15, 2020, at the Capitol in Olympia, Wash. Inslee announced new restrictions on businesses and social gatherings for the next four weeks as the state continues to combat a rising number of coronavirus cases. (AP Photo/Ted S. Warren)
Inslee announces $135 million pandemic relief plan

The state will use CARES Act dollars to help businesses and people impacted by latest restrictions.

Darrin Moseley (Washington State Department of Corrections)
Whatcom man allegedly held girl, 16, in shack for 10 days

The suspect’s many warrants included one for failing to register as a sex offender in Snohomish County.

Monroe Correctional Complex (Washington State Department of Corrections)
Commission suspends license of ex-doctor at Monroe prison

Dr. Julia Barnett was fired in April 2019 by the state Department of Corrections.

Bellingham Public Schools
· November 15, 2018 · Edited · 
 
Principal Lynn Heimsoth and Dean of Students Amy Berreth at Sunnyland Elementary.
Legacy scholarship honors slain former Marysville principal

Lynn Heimsoth, 58, was found fatally shot in her home west of Bellingham last December.

Middle-school counselor Shanon Baker poses for a photo in the school's library Wednesday, Nov. 18, 2020, in Sammamish, Wash. A master's degree and a full-time job weren't enough to help Baker land an apartment she could afford in Seattle's east-side suburbs. But a $750 million commitment by a partnership backed in part by Microsoft's affordable housing initiative helped do the trick. Urban Housing Ventures is cutting rents at 40% of the units in three buildings as part of an effort to make sure teachers, nurses and other middle-income professionals can live in the communities where they work. (AP Photo/Elaine Thompson)
Microsoft-led housing effort cuts rents in Seattle suburbs

The plan is to help middle-income professionals live in the communities where they work.

Coyote Ridge Correctional Center in Connell, Washington.
Everett man dies at Coyote Ridge Corrections Center

The man may have suffered a head injury during a fight with another inmate. Officials are investigating.

Steve Lerch, executive director of the Washington state Economic and Revenue Forecast Council, walks in front of the Washington state flag, Wednesday, Feb. 19, 2020, following a meeting of the council at the Capitol in Olympia, Wash. Lawmakers were told that the state's latest revenue forecast shows they have significantly more money to work with as they prepare to unveil their supplemental state budget proposals. (AP Photo/Ted S. Warren)
Uncertainty remains, but Washington sees revenues increase

September and October saw a jump in real estate taxes due to record-low mortgage rates.