More than $6 million in counterfeit iPhone and iPad were exchanged for the real thing by a 14-member international crime ring, including a 39-year-old San Diegan still a fugitive, said a federal grand jury indictment unsealed Wednesday.
Dozens of fraud, conspiracy, identity theft and money laundering charges are alleged, with 10 San Diego residents arrested.
During raids beginning early Wednesday, investigators executed 11 search warrants — including at two businesses plus several homes and vehicles in Mira Mesa and Mission Hills — and seized an estimated $250,000 in cash plus 90 iPhones being evaluated to determine authenticity.
Eleven defendants were in custody, but three are fugitives, including Xiamon Zhong, who is thought to be in China; Charley Hsu of San Diego; and Hyo Weon Yang of San Francisco.
San Diegans named as defendants are Zhiwei Loop Liao, 31; Zhimin Liao, 33; Zhiting Liao, 30; Dao Trieu La, 29; Mengmeng Zhang, 28; Tam Thi Minh Nguyen, 36; Deedee Zhu, 32; Danny Tran Chan, 29; Jiaye Jiang, 32; and Dmitri Pigarov, 31.
Officials the ring – led by three brothers – imported more than 10,000 counterfeit iPhones and iPads from China, exchanged them for the real thing at Apple stores throughout the United States and Canada, and then shipped the authentic devices back to China and other foreign countries to sell at a premium, San Diego officials said
“While a significant amount of money in any circumstance, this prosecution is about more than monetary losses,” said U.S. Attorney Robert Brewer. “The manufacture of counterfeit goods – and their use to defraud U.S. companies – seeks to fundamentally undermine the marketplace and harms innocent people whose identities were stolen in furtherance of these activities. The United States Attorney’s Office is fully committed to bringing to justice those who seek to damage American markets and consumers through the peddling of bogus products.”
The Liao brothers – alleged ringleaders Zhiwei, Zhimin and Zhiting – were arrested by FBI agents Wednesday morning along with their wives. The brothers are naturalized U.S. citizens born in China. Other defendants include mostly U.S. citizens, mostly naturalized, from China, Vietnam and Russia.
Seeking the public’s assistance in locating these #fugitives. If you have any information regarding their whereabouts, please contact the FBI at 1-800-CALL-FBI (1-800-225-5354) or the San Diego FBI at 858-320-1800. #FBI #WANTED pic.twitter.com/iWDmSE4nKe
— FBI San Diego (@FBISanDiego) November 13, 2019
According to the indictment, the Liao brothers directed other alleged conspirators to exchange counterfeit iPhones and iPads for genuine iPhones and iPads at Apple stores throughout the United States and Canada.
Defendants intentionally damaged the counterfeit iPhones and iPads and fraudulently represented the counterfeit devices to be genuine Apple devices that were covered by an Apple warranty knowing that Apple would exchange damaged devices under warranty for new genuine Apple devices.
According to the indictment, all genuine Apple iPhones have an International Mobile Equipment Identity (IMEI) number, and a serial number, that are both unique numbers to each device. The counterfeit iPhones had IMEI and serial numbers that matched IMEI and serial numbers for genuine iPhones and iPads that were purchased and used by other persons and covered by an Apple warranty in the United States or Canada.
U.S. Attorney Brewer thanked lead prosecutor Tim Salel and agency partners, including the FBI, San Diego Police Department, U.S. Customs and Border Protection and Homeland Security Investigations, for their pursuit of justice in this matter.