A man from San Diego who was the mastermind behind a criminal operation that cheated Apple out of at least US$6.1 million by replacing fake iPhones and iPads from China with real ones in the US and Canada has been sentenced to four years and three months in federal prison. Zhiwei “Allen” Loop Liao, 36, confessed to being the leader of an elaborate scheme involving his two brothers, their wives, and several other individuals in the US and China.
In 2019, prosecutors unveiled a 76-count indictment against the brothers and their co-conspirators on the same day the FBI executed searches at various locations in the San Diego area linked to the Liao family, who are naturalized US citizens originally from China. In 2022, Zhiwei Liao pleaded guilty to one count of conspiracy to traffic in counterfeit goods as part of a plea deal with many of the other defendants.
During the sentencing hearing, US District Judge Cynthia Bashant told Liao, “You came up with all this and ran it all.” Liao’s brothers, Zhimin “Jimmy” Liao and Zhiting “Tim” Liao, were previously sentenced to three years and five months in prison, while their wives received probation.
The fraudulent operation, which began around 2011, involved manufacturing counterfeit iPhones and iPads in China with serial and IMEI numbers matching real devices under Apple warranty. The fake products were then shipped to San Diego, where they were intentionally damaged and exchanged for new, authentic devices. These genuine items were sent back to China and sold at a higher price.
The defendants spread out across North America to avoid detection, targeting Apple stores in 40 states and Canada. Liao’s plea agreement revealed that he and his brothers instructed their co-conspirators to exchange over 10,000 fake iPhones for real ones, resulting in Liao personally receiving at least US$6.1 million in profits.
Assistant US Attorney Timothy Salel stated in court that Liao coordinated with counterfeiters in China, imported the fake devices, paid couriers for executing the exchanges, exported the fraudulently acquired devices to China, and handled wire transfers related to the scheme. Salel mentioned that the other defendants all identified Liao as their leader.
In defense, attorney Jan Ronis mentioned that Liao meticulously controlled the criminal activity, including negotiating the plea deal that resolved the case for him and his family. Ronis mentioned that Liao’s intentions were to provide for his family financially, but he acknowledges the predicament he put them in. He expressed regret for his actions and stated that given another chance, he would not have engaged in the scheme.
As part of the plea deal, the defendants forfeited five homes valued at around US$4.1 million and over US$250,000 in criminal proceeds. Salel reported these details in court, emphasizing the steps taken to recuperate the ill-gotten gains and assets associated with the fraudulent operation.
The San Diego Union-Tribune/Tribune News Service
