Conspirer in fake Apple products scam pleads guilty

A Chinese man has pleaded guilty for his part in a scheme to traffic and smuggle fake Apple-branded products into the US from China.

Jianhua “Jeff” Li, 43, who has been living in the US on a student visa, conspired with three other people to smuggle more than 40,000 fake electronic devices and accessories, including Apple branded iPads and iPhones, along with labels and packaging, into the US, according to the Department of Justice.

He previously pleaded not guilty.

The racket, which saw Li personally net more than $1.1m, was in operation for almost five years between July 2009 and February 2014.

Li, working through his company Dream Digitals, conspired with Andreina Becerra, Roberto Volpe and Rosario LaMarca, who have all pleaded guilty to their roles in the scheme.

According to court documents, Li shipped the knock-off devices separately from the fake labels to assemble later in order to avoid detection from US Customs and Border Protection. The devices were then shipped all over the US for resale to unsuspecting customers who believed the devices were legit.

Proceeds from the sales of the devices were funnelled back to the co-conspirators’ accounts in Florida and New Jersey via structured cash deposits to avoid detection, and a portion of the proceeds was then transferred to conspirators in Italy, further disguising the source of the funds.

According to court documents, US Customs and Border Protection seized shipments of devices, labels and packaging destined for the co-conspirators on at least five occasions. Warning letters were sent explaining the goods seized were counterfeit.

No details were given as to the scale of the operation or the overall revenues being brought in, but the court documents suggest the estimated price for the equivalent number of genuine devices would have exceeded $15m.

Li was charged and taken into custody in 2015.

Li, who pleaded guilty to one count of conspiracy to traffic in counterfeit goods and labels and to smuggle goods into the US, and one count of trafficking in counterfeit goods, will be sentenced in May.

Smartphones and accessories have been particularly popular with counterfeiters but in recent years there have been increasing issues with counterfeit chargers and batteries, which have been found to explode or catch fire, posing a safety risk.

An Apple investigation in 2016 found that almost 90 per cent of Apple-branded iPhone chargers and accessories on e-commerce platform Amazon were fakes.

And last year, an OECD report revealed that around one in five mobile phones shipped internationally are counterfeit, with smartphone batteries, chargers and memory cards also “increasingly falling prey to counterfeiters”.

In Los Angeles in October last year, the city’s attorney filed civil lawsuits against the owners of two electronics stores for allegedly selling counterfeit Apple and Samsung phone chargers and other smartphone accessories. The aim with the civil lawsuit, instead of a criminal one, was to close the businesses down and stop the stores from trading altogether.

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