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Fraud ring stole $19M worth of iPhones, other hardware from stores across the US

Using fake IDs, an organized group of thieves posed as customers buying new phones and spreading the cost out over long-term contracts. The group operated for at least seven years before being caught.




Six people are being charged in New York with conspiracy, mail fraud and identity theft over allegedly stealing $19 million worth of devices, chiefly Apple iPhones. These people were reportedly at the head of a large, organized effort to purchase phones on contracts that were fraudulently signed using stolen identities. The gambit ran for some seven years.

The case against the fraudsters was filed by federal prosecutors with the Southern District of New York in April.

"From at least 2012 to the present, the Fraud Ring perpetrated a wide-ranging scheme to obtain valuable, new electronic devices, predominantly Apple iPhones," NYPD detective Armando Coutinho said in the filing. "During the course of the conspiracy, the Fraud Ring fraudulently obtained more than $19 million worth of devices. To facilitate the scheme, the Fraud Ring traveled to approximately 34 different states."

In each case, a member of the group would typically pose as a customer using fake ID and debit cards. They would buy the phones by agreeing to spread the cost across many months. So for a small upfront fee, they obtained the phones and the people whose identities they had stolen would be billed.

"Thus, the scheme's victims include customers, whose identities were stolen," says the court filing, "and the cellphone service providers, which typically bore financial losses inflicted by the scheme."

Despite acquiring the iPhones in all these different states, the group would usually send them back to New York for resale. This technique was, in part, how they were caught. An unnamed person at the overnight shipping firm the group used became suspicious of the number of parcels and informed the authorities.

No details beyond the $19 million overall cost estimate have been released, including how many iPhones were purchased over the seven-year period of activity. However, the shipping official found 39 packages with a total of 250 phones in them. At the same time, two of the group were reportedly arrested for unrelated crimes and police discovered evidence linking them to the scheme.

Then at some point a source inside the group, referred to only as CW-1 for "cooperating witness", recounted the scheme and its organization to officials.

"In total, CW-1 believes he went on approximately eighteen trips to acquire iPhones for the Fraud Ring," says Coutinho. "CW-1 was generally paid $100 for each iPhone he acquired on one of these trips."

Apple has not commented and the case is ongoing. The previously-sealed case complaint was first spotted by Quartz on Tuesday.



This case follows others involving fraud against Apple, including a recent "empty-box" scheme in California that cost the company some $1 million.