A San Diego man who led a criminal ring that defrauded Apple out of at least US$6.1mil (RM28.78mil) by swapping fake iPhones and iPads from China for real ones in the US and Canada was sentenced Monday to four years and three months in federal prison.
Zhiwei “Allen” Loop Liao, 36, admitted that he was the leader of an aggressive and prolific exchange fraud scheme that also included his two brothers, each of their wives and more than a half-dozen other co-conspirators in the US and China.
Prosecutors unsealed a 76-count indictment against the brothers and their co-conspirators in 2019 on the same day the FBI raided several San Diego-area homes and businesses connected to the Liao family, who are naturalised US citizens from China. Zhiwei Liao pleaded guilty to a single criminal count of conspiracy to traffic in counterfeit goods in 2022 as part of a package plea agreement with many of the other defendants.
“You came up with all this and ran it all,” US District Judge Cynthia Bashant told Liao on Monday.
Bashant previously sentenced Liao’s brothers, Zhimin “Jimmy” Liao and Zhiting “Tim” Liao, to three years and five months each in prison. The three wives were each sentenced to probation.
Prosecutors said the exchange scheme began as early as 2011 and worked like this: Counterfeit iPhones and iPads were manufactured in China with serial numbers and International Mobile Equipment Identity – or IMEI – numbers that matched genuine phones and tablets owned by real users that were under Apple warranty.
Once the fake products were shipped to San Diego, the defendants would intentionally break them and try to exchange them for real, new devices. Those devices would then be sent back to China and sold at a markup.
The defendants fanned out across North America to avoid detection, hitting Apple stores in 40 states and Canada. Liao’s plea agreement states he and his brothers directed their co-defendants “to exchange more than 10,000 counterfeit iPhones for genuine iPhones” and Liao “personally received at least US$6.1mil in proceeds”.
Assistant US Attorney Timothy Salel said Monday in court that Liao communicated with counterfeiters in China and imported the fake devices; paid the couriers who executed the exchanges; exported the fraudulently obtained real devices to China; and directed wire transfers connected with the conspiracy.
Salel said the other defendants “all pointed to (Liao) as the leader”.
Defense attorney Jan Ronis said his client micro-managed the criminal conspiracy – but also the package plea deal for him and his family that resolved the case.
“He was motivated by his desire to financially provide for his family,” Ronis wrote in sentencing documents. “In his misguided efforts he involved his family in the conspiracy as a way to also ensure their financial success but now realises he has put them in a precarious situation. He has expressed remorse for his decisions and given the opportunity again he would not have gotten involved.”
As part of their plea package, the defendants forfeited five homes worth about US$4.1mil (RM19.34mil) and more than US$250,000 (RM1.17mil) in criminal proceeds, Salel said. – The San Diego Union-Tribune/Tribune News Service
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