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Great Britain

Counterfeit gadget gang who sold 10,000 fake iPhones and iPads worth $6.1MILLION busted by FBI

THE FBI has busted a counterfeiting ring that focused on fake iPhones and iPads and reportedly cost Apple more than $6.1 million.

The elaborate scheme involved importing of more than 10,000 phony iPhones and iPads from China, which were then exchanged for real ones at stores across the US, according to a press release.

According to a release from the Department of Justice, the phony devices were intentionally damaged and then exchanged for real Apple products at the company's stores.

Those authentic devices were then sent back to China, where they were sold at a markup, reports claim.

United States Attorney Robert Brewer said in a press release: "The manufacture of counterfeit goods -- and their use to defraud US companies -- seeks to fundamentally undermine the marketplace and harms innocent people whose identities were stolen in furtherance of these activities."

The scheme allegedly involved 14 people, 11 of whom have been arrested by the FBI, while three are still being searched for.

Those individuals face dozens of charges of conspiracy, identity theft, fraud and money laundering.

According to the release, the operation was busted early Wednesday morning in San Diego, California.

There, officers reportedly seized around $250,000 in cash and 90 iPhones that may have been fake.

Included in the busts were the alleged ringleaders – brothers Zhiwei “Allen” Loop Liao, Zhimin “Jimmy” Liao and Zhiting “Tim” Liao – as well as their wives.

According to a release from the US Attorney's Office in the Southern District of California, the brothers were naturalized American citizens who had been born in China.

Each iPhone and iPad is tied to an International Mobile Equipment Identity (IMEI) and a serial number, with reports claiming the counterfeit devices featured IMEI and serial numbers that matched up to devices in the US and Canada.

This, according to the indictment, classes as identity theft, as those involved "knowingly and without lawful authority, transferred, possessed, and used a means of identification of another person, that is, telecommunication identifying information."

The FBI said their investigation took years of planning.

Earlier this year, two college students reportedly cost Apple around $900,000 by using a similar scheme of importing fake phones from China, reporting them as broken, and then shipping them back to sell at a profit.

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