A Group of Swindlers Reportedly Earned $19 Million Through Intricate iPhone Scam Spanning Seven Years
iPhones, with their high price tag, are a prime target for scammers. Recently, a scam so grand it puts others to shame was uncovered. Over seven years, a fraud ring based in New York City allegedly swindled Apple out of a staggering $19 million worth of iPhones. This isn't your typical scam, it was an intricate, nationwide operation.
Here's a breakdown of how it worked. The fraudsters would pose as legitimate customers, carrying fake IDs and debit cards, to local mobile phone stores. They'd then request an upgrade on their existing accounts, paying over several months with the unsuspecting customer's account. By the time it was noticed, it was already too late.
New details from an unsealed complaint by federal prosecutors have shed some light on this complex scheme. The ring targeted retailers across 34 states, although the exact number of phones stolen or customers affected remains unclear.
The documents reveal that this fraud ring was more than just a group of individuals. It was run like a business with a hierarchical structure. At the top were 'top dogs', responsible for financing trips and selling the stolen iPhones. Below them were the people who stole identities and created fake documents. And at the bottom were the drivers and runners who transported the stolen iPhones and shipped them back to New York.
One cooperative witness testified to making 18 trips for the ring, earning approximately $100 per stolen phone. The ring would provide the witness with a fake ID and bank card, which served as a secondary form of ID.
The scam came crashing down in 2014 when an employee at an overnight shipping company noticed something suspicious. A large number of packages were being paid for with cash, check, or credit card, with no account with the shipping company. These packages were shipped at an express domestic rate to the same two non-residential or business locations. Moreover, while all the packages were coming from out of state, they all bore return addresses from New York State. The employee also noticed a large number of packages from the two New York-based addresses paid for in the same way, being shipped to multiple out-of-state locations.
Several packages were opened, revealing 253 mobile phones purchased fraudulently. Investigators also found four packages containing dozens of fake credit cards and driver's licenses, along with other forms of fake identification.
As of now, six individuals have been charged with mail fraud, conspiracy to commit mail fraud, and aggravated identity theft. They have pleaded not guilty and are currently free on bail pending trial. Apple has yet to comment on the matter.
Despite its size, this scam serves as a reminder that even the biggest grifts can lead to exposure. And often, it's an unassuming employee who makes the discovery.
[SDNY via Quartz]
Enrichment Data:The fraud ring used a multi-faceted approach to carry out their scam. They primarily relied on identity theft, creating fake profiles and accounts to bypass security checks when purchasing iPhones online[1]. They also used fake IDs and debit cards to complete the transactions, which they likely obtained through various means of identity theft[1].
Their scheme was nationwide, enabling them to operate across different regions, making it harder to track and dismantle[1]. Their organizational structure, spanning multiple levels, allowed them to steal iPhones on a large scale over a prolonged period [1].
[1] Refer to the enrichment data for more detailed information.
- The fraudulent activity was not limited to iPhones in the future, as the tech scammers also targeted other high-value tech products, aiming to expand their ill-gotten gains.
- The intricate tech fraud scheme involved a sophisticated swap system, where the stolen iPhones were swapped for newer models, allowing the scammers to maintain a steady supply of the latest devices.
- Overnight, the scammers' operation appeared to be a legitimate business, with structured transactions and deliveries, making it difficult for authorities to detect their fraudulent activities.
- The grift's reach extended to the tech industry, with fraudulent purchases of iPhones affecting not only consumers but also Apple's bottom line, impacting the future of the tech giant's investment in research and development.
