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Leader of counterfeit Apple crime ring sentenced to more than four years

Apple UTC in San Deigo, whose local police force worked on the international case

The head of an international gang behind return fraud of 10,000 counterfeit iPhones and iPads, has been sentenced to prison for 51 months.

Some 14 people were involved in the international organization, which ultimately defrauded Apple of at least $6 million. Two of the key figures, brothers Zhimin and Zhiting Liao (aka "Jimmy" and "Tim"), were sentenced in October 2023 to 41 months jail time.

Now according to another brother, Zhiwei Liao (aka "Allen"), was sentenced to 51 months as the organizer and leader of an international conspiracy. Alongside the four years and three months of his sentence, Liao was ordered by US District Judge Cynthia Ann Bashant, to surrender over 200 Apple devices, more than $120,000, and to forfeit two residencies.

"This was a massive, sophisticated fraud that victimized not only Apple, Inc., but thousands of Apple product owners across North America," US Attorney Tara McGrath said in a statement. "Theft of intellectual property and the sale of counterfeit goods are growing global problems with serious economic implications."

The operation worked by members of the gang in China acquiring counterfeit iPhones and iPads. As well as being superficially convincing, these counterfeits bore the serial numbers of genuine Apple devices bought in the US and still under warranty.

It's not clear how those serial numbers were obtained, but with them on the devices, the brothers and associates would "return" these fake iPhones and iPads to Apple. The devices would pass a initial examination, at least by non-technical sales staff, and Apple would replace them with genuine iPhones and iPads.

The gang would then send those genuine devices to China, where they would be sold.

In all, the gang reportedly took over 10,000 devices in visits to hundreds of Apple Stores. The gang was caught in 2019, by which time the operation had been running for eight years, costing Apple an estimated $6.1 million.

At the time of the original arrest in 2019, three of the group went on the run as fugitives. They were subsequently apprehended, though it's not clear when.

"Mr. Liao's sentencing closes a major chapter in a multi-year investigation," FBI San Diego Special Agent in Charge Stacey Moy, said, "that exposed an international, elaborate scheme to sell counterfeit goods worldwide."

Overall, the multi-year investigation by the FBI and the San Diego Police Department resulted in 12 felony convictions. It included the forfeit of $4.1 million worth of local residences, plus more than $250,000 in cash.

Separately, the federal authorities said in 2023 that they had captured almost $400,000 worth of counterfeit Apple devices — in a single week at Long Beach Seaport and Ontario International Airport.