This week, sentencing came down for one of the biggest iPhone export fraud scams yet detected. Late last year, a twenty-seven year old man from Seattle admitted to committing fraud relating to a multi-million dollar iPhone export scam. During the two years of investigation, investigators determined that the defendant had claimed over $700,000 worth of iPhones that were lost in the mail and obtained a $4 million dollar loan based on false claims and filed a $5 million dollar insurance claim.

The defendant began re-selling Apple products while in college. He mainly dealt with distributors in the Middle East and the United States. Investigators claim that for over five years he moved millions of dollars of Apple products and claimed a seven-figure annual income, dodging the Washington state sales taxes by buying iPhones in Portland, Oregon, and shipping them to the Middle East.

The defendant forged tax returns and bank statements to obtain large loans amounting to $2.8 million owed at the time of his arrest. He also forged documents that were allegedly from Apple authorizing the resale of its products. Those documents helped the defendant secure a $4 million loan from Foundation Bank, a bank that was later sold due to this large loan that was granted.

On two separate occasions the defendant told investigators that his iPhone shipment was stolen in route. Video surveillance showed that the defendant had purchased the materials that the iPhones were “switched” with (on one occasion tiles and the other stone blocks) days before the phones were shipped out. Investigators say this was an attempt to defraud FedEx and UPS.

At the end of 2016 the defendant was arrested. He plead guilty to mail fraud, bank fraud, and filing a false tax return, in effect admitting to faking the shipping losses, lying to obtain the bank loan, and hiding income from the IRS.

He was sentenced to five years in prison and has agreed to pay back taxes and pay back $3.1 million to Foundation bank, as well as $349,000 to Apple and other companies he defrauded. That monetary amount is added to $3.3 million he already has agreed to pay back to the government.