Men accused of $1m fake iPhone scam

Two Chinese men studying in the US are accused of netting nearly $1m (£765,000) by sending "broken" fake iPhones to Apple for repair and getting official handsets in return.

According to a criminal complaint filed last month, the counterfeit phones were shipped from China and the replacements were sent back there and sold on.

Almost half of the fake iPhones were replaced with genuine ones.

Both men claim they were unaware that the faulty phones were fake.

Apple calculated that it lost $895,800 (£684,758) as a result of the alleged scam.

Zhou Yangyang and Jiang Quan, students at Oregon State University, are named in the complaint. Both are Chinese citizens on student visas.

The alleged scam was uncovered after customs officers opened five suspicious packages en route from Hong Kong, which appeared to contain counterfeit iPhones.

A further search of Mr Jiang's home found a further 300 fake devices, according to the testimony from Homeland Security agent Thomas Duffy.

Mr Jiang is charged with trafficking counterfeit goods, while Mr Zhou is accused of submitting false information on export documentation.

Apple told investigators it had received 3,069 repair requests, and completed 1,493 of these. The others were rejected as counterfeits.

It added that all the warranty claims stated that the device would not turn on.

Selecting this particular issue meant that the phone replacement process was immediately triggered rather than face examination from Apple technicians, according to the handset maker.