The US Federal Bureau of Investigations (FBI) has busted an iPhone and iPad counterfeit ring that reportedly cost Apple over $6.1 million.
The FBI arrested 11 people from the counterfeit ring and discovered that the scheme involved importing over 10,000 fake iPhones and iPads from China.
US Attorney Robert Brewer said in a press release that these counterfeit devices were then intentionally damaged and exchanged at Apple stores for authentic products. Once replaced with authentic items, these devices will then be shipped to China and other countries and sold at a markup.
Since genuine Apple iPhones and iPads have International Mobile Equipment Identity (IMEI) and serial numbers that are unique to each device, the scheme involved equipping the counterfeit items with IMEI and serial numbers that matched those of real devices covered by an Apple warranty in the US or Canada.
Brewer said: "The manufacture of counterfeit goods -- and their use to defraud US companies -- seeks to fundamentally undermine the marketplace and harms innocent people whose identities were stolen in furtherance of these activities."
According to the indictment, the use of other people's IMEI or serial numbers is a form of aggravated identity theft since the perpetrator "knowingly and without lawful authority, transferred, possessed, and used a means of identification of another person, that is, telecommunication identifying information."
Prior to the arrests, the FBI conducted investigations for several years and covered many jurisdictions. While 11 people have been arrested, there are still three others involved in the counterfeit ring who are at large.
The arrested people will be facing dozens of fraud, conspiracy, identity theft and money laundering charges. The FBI bust happened early Wednesday in San Diego, California, and approximately $250,000 in cash and 90 iPhones that may be counterfeit were seized in the operation.
The US Attorney's Office's press release indicated that the alleged ringleaders are three brothers who are naturalized US citizens born in China while most of the others allegedly involved are US citizens, naturalized from China, Vietnam and Russia.
