Yangyang Zhou and Quan Jiang were studying engineering at Oregon State University and Linn Benton Community College when they allegedly tricked Apple into giving them almost $900,000 worth of iPhones.
Documents in the case state Zhou and Jiang had received shipments of counterfeit iPhones from “an associate” in China, which they would then submit to Apple for a warranty replacement, claiming the phones wouldn’t turn on.
About half the time, Apple would not catch the counterfeiting and send Jiang a replacement phone. Jiang would then allegedly send the real iPhone to his “associate” to be sold for their actual value in China.
Jiang allegedly made claims on 1,493 phones during 2017 and 2018, both he and Zhou were residing in the U.S. legally at the time. Jiang’s remains a resident of Corvallis.
Apple’s replacement process does include an analysis by their technician to ensure submitted phones aren’t counterfeit, and they did catch a number of phones in this case. However, Apple reports many of the phones were not caught because it’s not always possible to analyze a phone that won’t turn on.
In April of 2017, Customs and Border Protection confiscated five cellphone shipments from Hong Kong which appeared to be counterfeit. In December of that year, Jiang was questioned by Homeland Security Investigations agent Thomas Duffy.
In an affidavit, Duffy wrote that Jiang admitted to him that he had submitted about 2,000 claims for iPhone replacements in 2017. However, Jiang also claimed he did not know the phones he was receiving from China were counterfeit. Zhou is accused of making more than 200 warranty claims to Apple, and three shipments with 95 counterfeit iPhones were discovered in Zhou’s home.
Jiang, apparently seeking to avoid attention, allegedly paid Corvallis area friends and relatives to use their addresses to receive the shipments from China.
Jiang faces federal wire fraud and trafficking of counterfeit goods charges. The wire fraud charge carries the possibility of 20 years in prison. The trafficking charge could mean $2 million in penalties and 10 years in prison. He’s currently not in custody but is being monitored by a GPS device.
Zhou is accused of submitting false information on an export declaration, and is facing $10,000 in fines and five years in prison. Zhou is not currently in custody.