Students' iPhone Scam Took Apple for $900K, US Says

Two college students scammed Apple out of $900,000 by sending fake iPhones to the company for repair under warranty, federal complaints say. The company realized many of the thousands of phones were counterfeit but still returned almost 1,500 genuine replacements to the students, NBC News reports. The phones sent in would not power on, which the government said was the key to the scam, "as the phone will not be able to be immediately examined or repaired by Apple technicians." One of the Oregon students said an associate in China sent him 20 to 30 iPhones at a time, with instructions to submit them to Apple for warranty repairs. After receiving replacements, the student sent them to China to be sold.

The associate made payments to the student's mother in China, and she deposited the money in a bank account the student could access in the US. Quan Jiang and Yangyang Zhou, who were on student visas at the time, say they didn't know the phones were fakes, per court filings. "With respect to Mr. Zhou, the government has the case completely wrong," his lawyer said. But the filings also say that Quan Jiang explained how the scheme worked to an investigator, NPR reports. He used fake and nonsense names, once putting "Apache Helicopter" as the name on a claim that succeeded in getting a new phone. Both men face fines and prison time if convicted. (More iPhone stories.)