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 a 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.
Follow Andrew Selsky on Twitter at https://twitter.com/andrewselsky
KYIV, Ukraine (AP) — A Ukrainian court on Friday ordered the detention of the country’s farm minister in the latest high-profile corruption investigation, while Kyiv security officials assessed how they can recover lost battlefield momentum in the war against Russia.
Ukraine’s High Anti-Corruption Court ruled that Agriculture Minister Oleksandr Solskyi should be held in custody for 60 days, but he was released after paying bail of 75 million hryvnias ($1.77 million), a statement said.
Ukraine’s National Anti-Corruption Bureau suspects Solskyi headed an organized crime group that between 2017 and 2021 unlawfully obtained land worth 291 million hryvnias ($6.85 million) and attempted to obtain other land worth 190 million hryvnias ($4.47 million).
Ukraine is trying to root out corruption that has long dogged the country. A dragnet over the past two years has seen Ukraine’s defense minister, top prosecutor, intelligence chief and other senior officials lose their jobs.
That has caused embarrassment and unease as Ukraine receives tens of billions of dollars in foreign aid to help fight Russia’s army, and the European Union and NATO have demanded widespread anti-graft measures before Kyiv can realize its ambition of joining the blocs.
In Ukraine's capital, doctors and ambulance crews evacuated patients from a children’s hospital on Friday after a video circulated online saying Russia planned to attack it.
Parents hefting bags of clothes, toys and food carried toddlers and led young children from the Kyiv City Children’s Hospital No. 1 on the outskirts of the city. Medics helped them into a fleet of waiting ambulances to be transported to other facilities.
In the video, a security official from Russian ally Belarus alleged that military personnel were based in the hospital. Kyiv city authorities said that the claim was “a lie and provocation.”
Kyiv Mayor Vitali Klitschko said that civic authorities were awaiting an assessment from security services before deciding when it was safe to reopen the hospital.
“We cannot risk the lives of our children,” he said.
Meanwhile, Ukrainian President Volodymyr Zelenskyy was due to hold online talks Friday with the Ukraine Defense Contact Group, which has been the key international organization coordinating the delivery of weapons and other aid to Ukraine.
Zelenskyy said late Thursday that the meeting would discuss how to turn around Ukraine’s fortunes on the battlefield. The Kremlin’s forces have gained an edge over Kyiv’s army in recent months as Ukraine grappled with a shortage of ammunition and troops.
Russia, despite sustaining high losses, has been taking control of small settlements as part of its effort to drive deeper into eastern Ukraine after capturing the city of Avdiivka in February, the U.K. defense ministry said Friday.
It’s been slow going for the Kremlin’s troops in eastern Ukraine and is likely to stay that way, according to the Institute for the Study of War. However, the key hilltop town of Chasiv Yar is vulnerable to the Russian onslaught, which is using glide bombs — powerful Soviet-era weapons that were originally unguided but have been retrofitted with a navigational targeting system — that obliterate targets.
“Russian forces do pose a credible threat of seizing Chasiv Yar, although they may not be able to do so rapidly,” the Washington-based think tank said late Thursday.
It added that Russian commanders are likely seeking to advance as much as possible before the arrival in the coming weeks and months of new U.S. military aid, which was held up for six months by political differences in Congress.
While that U.S. help wasn’t forthcoming, Ukraine’s European partners didn’t pick up the slack, according to German’s Kiel Institute for the World Economy, which tracks Ukraine support.
“The European aid in recent months is nowhere near enough to fill the gap left by the lack of U.S. assistance, particularly in the area of ammunition and artillery shells,” it said in a report Thursday.
Ukraine is making a broad effort to take back the initiative in the war after more than two years of fighting. It plans to manufacture more of its own weapons in the future, and is clamping down on young people avoiding conscription, though it will take time to process and train any new recruits.
Jill Lawless contributed to this report.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
Ukrainian young acting student Gleb Batonskiy plays piano in a public park in Kyiv, Ukraine, Thursday, April 25, 2024. (AP Photo/Francisco Seco)
