Multimillion Dollar Scheme to Defraud Apple Inc. out of 6,000 iPhones Nets Prison Terms for Two Maryland Residents

Press Release

Defendants Caused an Actual Loss of More Than $2.5 Million

WASHINGTON - Haotian Sun, 34, and Pengfei Xue, 34, both Chinese nationals, were sentenced today for participating in a sophisticated 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.

The sentences were announced U.S. Attorney Matthew M. Graves, Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department's Criminal Division, Inspector in Charge Damon E. Wood of the United States Postal Inspection Service (USPIS) Washington Division, and Special Agent in Charge Derek W. Gordon of Homeland Security Investigations Washington Field Office.

On February 20, 2024, after three-and-a-half days of testimony, Sun, of Baltimore, and Xue, of Germantown, MD, 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. In addition to the prison terms, Judge Kelly today ordered Sun to serve three years of supervised release and pay $1,072,000 in restitution. Judge Kelly ordered Xue to serve three years of supervised release and pay $397,800 in restitution.

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 replacement iPhones. Sun and Xue received shipments of inauthentic iPhones from Hong Kong at UPS mailboxes throughout the D.C. metropolitan 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. Trial evidence and evidence developed after trial showed that members of the conspiracy submitted more than 6,000 inauthentic phones to Apple during the conspiracy, causing an intended loss of approximately $3.8 million and an actual loss of more than $2.5 million.

This case was investigated by the U.S. Postal Inspection Service's Washington Division and Homeland Security Investigations' Washington Field Office.

The case was prosecuted by Assistant U.S. Attorney Kondi J. Kleinman of the U.S. Attorney's Office for the District of Columbia, and Trial Attorney Ryan Dickey of the Criminal Division's Computer Crime and Intellectual Property Section. Valuable assistance was provided by Paralegal Specialist Sona Chaturvedi. Essential work also was provided by Paralegal Specialists Michon Tart, Mariela Andrade, and Liliana Villamizar.

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Updated October 2, 2024