iPhones are expensive, so it makes sense that they’d be easy targets for scammers. Just a few months ago, two engineering students in Oregon were charged after trying to swap counterfeit iPhones with real ones in a grift that cost Apple about $1,289,103.
New details from a Quartz report, however, has unearthed a scam to put all others to shame. Over seven years, a fraud ring based in New York City allegedly stole $27 million worth of iPhones.
Here’s how it worked. The fraudsters would pose as legitimate customers by carrying fake IDs and debit cards to local mobile phone stores. They’d then ask to upgrade their current phones on existing accounts. The fraudsters, again posing as actual customers, would then ‘pay’ for the new phones by spreading out payments over several months on an unsuspecting customer’s account. By the time it was noticed, it was already too late.
The scam was revealed in a recently unsealed complaint by federal prosecutors. The court documents reveal some pretty mind-boggling details. First off, the fraud ring targeted retailers spanning 34 states, though it’s not clear just how many phones were stolen or how many customers were affected.
The documents also reveal that the ring itself was operated as a business, with its own hierarchy. Leading the organisation was a group of individuals who referred to themselves as ‘top dogs.’ The top dogs were purportedly responsible for organising and funding trips, as well as selling the stolen iPhones.
Under them were the people who did the leg work of stealing identities and create fake documents. Meanwhile, the grunts were drivers and runners who travelled out of state to pick up iPhones and then ship them back to the Bronx.
One cooperative witness said he made 18 trips for the ring and was about roughly $143 per stolen phone. The witness said the ring would provide him with a fake ID and bank card, which would be used as a secondary form of ID.
The whole thing came tumbling down, however, in 2014 when an employee at an overnight shipping company noticed something fishy was going on. First off, a large number of packages were being paid for with cash, check, or credit card—meaning the senders did not have an account with the shipping company.
These packages were also all shipped at an express domestic rate to the same two non-residential or business locations. And, 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 going to multiple out-of-state locations.
Sometime between 2014 and July 2014, the complaint details the shipping company opened up 39 packages to find 253 mobile phones that investigators later found to be obtained through fraudulent means. The company also found four packages containing dozens of fake credit cards and driver’s licenses, plus other forms of fake identification.
So far, six individuals have been charged with mail fraud, conspiracy to commit mail fraud, and aggravated identity theft. According to Quartz, the defendants have pleaded not guilty and are currently free on $143,000 bail pending trial. Gizmodo reached out to Apple for comment but did not immediately receive a response.
While one does have to admire the size and scale of this particular scam, it also illustrates that the bigger the grift, the more likely you are to eventually get caught. And it doesn’t even have to be from someone in your own crew—just some eagle-eyed employee at a shipping company.