The Department of Justice on Wednesday charged 14 people for their alleged participation in a scheme that involved swapping counterfeit iPhones and iPads for legit devices at Apple Stores throughout the US and Canada. Apple estimates the operation cost it at least $6.1 million, according to a release from the DOJ.
“The manufacture of— 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,” said US Attorney Robert Brewer in a release.
More than 10,000were imported from China as part of the scheme, according the indictment. The were intentionally damaged and then exchanged at Apple Stores for new genuine devices. To pull off the swap, the counterfeit devices falsely used IMEI and serial numbers — unique numbers for identifying devices — of actual iPhones and iPads owned by other people and covered by an Apple warranty. The real iPhones and iPads were then sent back to China and other countries to be sold at a premium, the Justice Department said.
The defendants face charges of fraud, conspiracy, identity theft and money laundering, according to the DOJ. Law enforcement agents arrested 11 of the defendants as of Wednesday, including three brothers who allegedly led the criminal group.
Apple didn’t immediately respond to a request for comment.