A Chinese national who was living in the U.S. on a student visa pleaded guilty on Friday to charges of trafficking in counterfeit goods and conspiracy over a plot to sell Chinese-made Apple knockoffs to U.S. customers.
According to a U.S. Department of Justice press release, 43-year-old Jianhua “Jeff” Li’s company Dream Digitals conspired with at least three others to smuggle over 40,000 Chinese-made “electronic devices and accessories, including iPads and iPhones, along with labels and packaging bearing counterfeit Apple trademarks.” In the process, Li netted some $1.1 million (£780 million) in sales revenue from customers who believed they were buying actual Apple products. He also smuggled in parts separately from the counterfeit labels in order to assemble the electronics stateside, part of an effort to avoid detection by customs officials.
“Proceeds from the sales of the devices were funnelled back to the co-conspirators’ accounts in Florida and New Jersey via structured cash deposits and a portion of the proceeds was then transferred to conspirators in Italy, further disguising the source of the funds,” the DOJ wrote.
According to court documents, prosecutors say that if the products were genuine, they would have been worth over $15 million (£10.6 million).
China has a robust counterfeiting industry; in 2015, officials there busted a factory for producing 41,000 fake iPhones worth up to $19.4 million (£13.7 million) in one year alone, per Fortune. The counterfeiting ring bought second-hand components in Shenzen and “hired hundreds of workers to reassemble them on six production lines.” Years earlier in 2011, Chinese authorities were reported to have uncovered at least 22 fake Apple stores in the city of Kunming. According to Fortune, the International Chamber of Commerce estimated the global counterfeit trade was worth up to $1.7 trillion (£1.2 trillion) in 2012, and China accounted for almost 70 per cent of seizures of fake products globally over a period from 2008 to 2010.
Apple has separately filed lawsuits against Amazon retailers for selling fake products, like Mobile Star LLC, which it alleged sold large numbers of counterfeit Lightning cables and charges.
Li’s sentencing is set for May 30th, while co-conspirators Rosario LaMarca, Andreina Becerra, and Roberto Volpe have also pleaded guilty, according to the DOJ. LaMarca received a sentence of 37 months in jail. [DOJ/The Verge]