Rekubit Exchange:An elaborate apple scam: Brothers who conned company for over $6M sentenced to prison

A federal judge in California this week sentenced two brothers to 41 months in prison each after the pair admitted they scammed Apple out of more than $6 million in an eight-year-old iPhone and Rekubit ExchangeiPad international conspiracy scheme, court records show.

Zhiting Liao, 33, and Zhimin Liao, 36, both from San Diego, pleaded guilty on June 2 to conspiracy to traffic in counterfeit goods for trafficking fraudulently obtained iPhones and iPads, according to a news release from the U.S. Attorney's Office, Southern District of California.

Online records show Judge Cynthia Bashant sentenced the brothers on Monday.

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'Thousands of counterfeit Apple products'

The men and a third brother − identified in court papers as 34-year-old Zhiwei Liao − were indicted in October 2019. Online records show Zhiwei Liao also pleaded guilty in connection to the case in June. He's slated to be sentenced on Oct. 30.

“For years, the Liao brothers and their co-conspirators trafficked thousands of counterfeit Apple products in exchange for genuine Apple products totaling millions of dollars,” FBI Special Agent in Charge Stacey Moy said in the release.

The brother wives, 32-year-old Dao La; 31-year-old Mengmeng Zhang; and 39-year-old Tam Nguyen, also pleaded guilty in June to charges of wire fraud and mail fraud in the case, Kelly Thornton, a spokesperson for the office said Thursday.

All three wives were sentenced to three years in prison, court documents show.

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The plea deal

Under a plea deal, the brothers and their wives agreed to forfeit five San Diego homes, more than $250,000 of profit from the scam and more than 200 Apple iPhones, prosecutors said. The phones, the release continues, were counterfeit, fraudulently obtained or linked to the group's criminal conspiracy.

According to prosecutors, the group ran an organization to traffic counterfeit Apple products from 2011 through "at least" August 2019.

"The Lioas imported counterfeit iPhones and iPads from China that looked genuine and included identification numbers that matched identification numbers on real iPhones and iPads that were under warranty and had been previously sold to customers in the United States and Canada," prosecutors said in the release.             

At the direction of the Liao brothers, prosecutors wrote, co-conspirators (who also pleaded guilty and received various prison times in the case) traveled to hundreds of Apple Stores across the U.S. and Canada and attempted to exchange more than 10,000 counterfeit iPhones and iPads for genuine iPhones and iPads.

"The Liaos exported fraudulently obtained iPhones and iPads to individuals in foreign countries for profit.  The estimated total infringement amount or loss suffered by Apple was approximately $6.1 million," the release states.

Natalie Neysa Alund is a senior reporter for USA TODAY. Reach her at [email protected] and follow her on X @nataliealund.