You are on page 1of 22

Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 1 of 12

AO 91 (Rev. 11/ 11 ) Criminal Complaint

UNITED STATES DISTRICT COURT


for the
District of Oregon

U nited States of America )


)
V.
)
)
CaseNo. 1.r, \ q - M] - 'J 3
Yangyang Zhou
)
)
)
Defendant(s)

CRIMINAL COMPLAINT
I, the complainant in this case, state that the fo llowing is true to the best of my knowledge and belief.
On or about the date(s) of 12/18/2015 in the county of Lane in the
District of Oregon , the defendant(s) v iolated :

Code Section Offense Description


13 U.S.C. § 305 submitting false or misleading information on export declaration

This criminal complaint is based on these facts:

See attached Affidavit of Special Agent Thomas A. Duffy

ii1 Continued on the attached sheet.

Thomas A. Duffy, Special Agent, HSI


Printed name and title

Sworn to before me and signed in my presence.

Judge's signature

City and state: Portland , Oregon Hon . Youlee Yim You , U.S . Magistrate Judge
Printed name and title
Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 2 of 12

DISTRICT OF OREGON, ss: AFFIDAVIT OF THOMAS A. DUFFY

Affidavit in Support of Criminal Complaint

I, Thomas A. Duffy, being duly sworn, do hereby depose and state as follows:

Introduction and Agent Background

1. I am a Special Agent (SA) with Homeland Security Investigations (HSI), within

Immigration and Customs Enforcement (ICE), in the Department of Homeland Security (DHS),

and have been so employed since July 2010. I am currently assigned to a fraud group in

Portland, Oregon, and, in that capacity, I investigate criminal financial activity such as currency

structuring, money laundering, bank fraud, wire fraud, and intellectual property rights violations.

Prior to this assignment, I was assigned as a Task Force Officer (TFO) to the Federal Bureau of

Investigation, (FBI) charged with investigating transnational organized crime. I am a graduate

of the Criminal Investigator Training Program and the ICE Special Agent Training Program at

the Federal Law Enforcement Training Center. I have received training in interviewing

techniques, arrest procedures, search warrant applications, the execution of searches and

seizures, and various other criminal laws and procedures. I have attended training courses

sponsored by ICE, the Department of Justice, and other law enforcement agencies, which

focused on the investigation of money laundering violations and other financial crimes. Finally,

I have completed the Intellectual Property and Trade Enforcement Security course sponsored by

the Intellectual Property Rights Center, which focuses on investigations involving commercial

trade fraud and intellectual property rights violations.

2. This affidavit is submitted in support of a Criminal Complaint alleging that, while

in the District of Oregon, Yangyang Zhou committed violations of Title 13, United States Code,

Sections 305 (false or misleading information on export declaration).


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 3 of 12

3. This affidavit is intended to show only that there is sufficient probable cause for

the requested warrant and does not set forth all of my knowledge about this matter. The facts

set forth in this affidavit are based on my own personal knowledge, knowledge obtained from

other individuals during my participation in this investigation, including other law enforcement

officers, interviews of witnesses, a review ofrecords related to this investigation,

communications with others who have knowledge of the events and circumstances described

herein, and information gained through my training and experience.

Applicable Law

4. Title 13 U.S .C. § 305 provides, in relevant part: "Any person who knowingly fails

to file or knowingly submits false or misleading information through the Shippers Export

Declaration (SED) or the Automated Export System (AES) shall be subject to a fine not to

exceed $10,000 per violation or imprisonment for not more than 5 years, or both."

Statement of Probable Cause

5. In April 2017, HSI Portland opened a criminal investigation into the importation

of counterfeit goods based on information received from U.S. Customs and Border Protection

(CBP) regarding the seizure of suspicious shipments of cellular telephones bearing Apple, Inc.

(hereinafter "Apple") markings and distinctive design features, but which appeared to be

counterfeit based on shipping methods and packaging. As a result of training provided by

Apple, I am aware of an ongoing scheme to defraud in which individuals submit counterfeit

Apple iPhones to Apple as part of a false and fraudulent warranty claim. The scheme is

perpetrated by an individual who submits a counterfeit iPhone that will not power on, and

receives a new and/or factory refurbished officially licensed iPhone in exchange for the non-

working phone through Apple 's warranty and repair process. This is done online and through

Page 2 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 4 of 12

the mail. The submitter then ships the legitimate iPhone to a broker or organizer, often located

overseas, who sells the replacement iPhone- typically for hundreds of dollars-and returns a

portion of the proceeds to the person who submitted the fraudulent warranty claim. As part of

this particular investigation, CBP in Portland, Oregon, has seized more than five shipments

originating from China and imported from Hong Kong containing iPhones that have been

declared counterfeit by the trademark holder, Apple. During the course of this investigation,

Y angyang Zhou has been identified as the addressee of counterfeit Apple iPhones imported from

China and as a person who is receiving the fraudulently requested warranty replacement phones
from Apple. Zhou is a Chinese national, who is lawfully present in the U.S. on an F-1 student

visa and completing studies in engineering at Oregon State University.

6. Business records provided by Apple show 16 total warranty returns in Yangyang

Zhou 's name with his residence as his mailing address. Apple records also show over 200 total

iPhone warranty claims using the name Yangyang Zhou or other similar derivations from other

mailing addresses associated with Zhou's name.

7. United States Customs and Border Protection has seized three international

shipments of Apple iPhones, totaling 95 phones, en route to Yangyang Zhou. The seized

iPhones have been verified as counterfeits by the trademark holder, Apple. Notices of the

seizures by CBP were sent to Zhou, including one notice _sent to his residence.

8. In March 2018, HSI Portland executed a lawful search warrant at the residence of

Quan Jiang, a neighbor and criminal associate of Zhou ' s. During the search, law enforcement

officers located over 300 counterfeit iPhones, shipping records, and warranty submission

records. Law enforcement officers also located multiple boxes that had been addressed to

Yangyang Zhou at four different mailbox facilities in the State of Washington. The shipper,

Page 3 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 5 of 12

shipping company, origination, and declared contents as phones for repair on these boxes were

consistent with other international shipments of counterfeit iPhones intercepted in this

investigation.

9. During the course of the investigation, I have found at least four different

mailboxes associated with Zhou's name, identification documents, and residential address. In

March 2018, I lawfully seized an international package from one of the mailboxes putatively

leased by Zhou, and it contained 25 counterfeit iPhones.

10. On or about June 30, 2017, Apple, through its legal counsel, Kilpatrick and

Townsend, sent a cease-and-desist (C&D) letter to Jiang via overnight mail. The letter formally

placed Jiang on notice that he was importing counterfeit Apple products. On or about July 19,

2017, Apple, through its legal counsel, Kilpatrick and Townsend, sent a second C&D letter to

Jiang via overnight mail as Jiang did not respond to the first notice. Both C&D letters were sent

to Jiang at Zhou's residential residence, which is the address associated with the CBP seizure

(2017-2904-100112-01) that had initiated the correspondence.

11. On August 18, 2018, Zhou was departing for China from San Francisco

International Airport (SFO). Customs and Border Protection Officers and HSI Special Agents

conducted an outbound inspection of Zhou and his luggage. Three electronic devices were

found in his possession. I observed that one of the Apple iPhones found in Zhou's possession

(Apple iPhone SN F2LLWF026GRWV) was in like-new condition and still in a factory box.

Based on my training and experience, I recognized that the box was the type used by Apple

during the warranty-replacement process. I conducted a telephonic interview with Mr. Adrian

Punderson, a brand protection specialist contracted by Apple. Mr. Punderson advised that the

telephone was part of warranty claim submitted in approximately April 2018 for a customer

Page 4 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 6 of 12

named "Apache Helicopter." In September 2018, during a video-recorded consensual interview,

Zhou stated that he received the brand new phone from Jiang as payment for a debt.

12. I utilized HS I's customs authorities to conduct a border search of the contents of

the other two electronic devices found in Zhou 's possession at SFO. On one of the cellular

phones I observed photographs of Apple products and shipping materials.

13. Specifically, I observed a photograph of approximately 60 white boxes marked

with Apple product SKUs and codes (see Photograph 1).

Photograph I

Page 5 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 7 of 12

14. I also observed a photograph showing approximately seven cardboard shipping

boxes with the labels and markings used by Apple to return phones that have been submitted for

warranty claims but rejected for being counterfeit or otherwise out of warranty, as well as a pile

of approximately 24 cardboard shipping boxes with green labels and markings used by Apple to

ship genuine replacement phones in satisfaction of warranty claims (see Photograph 2).

Photograph 2

15. I also observed photographs of international shipping documents on the same

telephone.

16. Specifically, I observed a photograph of a commercial invoice for DHL airway

bill # 8938746736 dated December 21 , 2015. The document named the putative exporter of the

subject parcel as "Fangkai Zheng" at 3108 SE Everglade St. , Corvallis, Oregon. (I have learned

during my investigation that Zheng is another Chinese national and an associate of Jiang's and

Page 6 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 8 of 12

Zhou's.) The document listed the description of merchandise as 25 "used" phones with a

purported value of $30 per phone, for a total declared value of$750. The document is signed and

dated 12/18/2015. (See Photograph 3.)


--••n1n::rc1a1 Invoice

Shlpperl~po"•r:
~•nukaf Zn.ng
Alrw.y BHi HmntJ4,:
3108 SE Ev~rglMt• SI
89:1.ft7~7-
CorvAJHs.OR •?:J33 UNITEO ST ATE$
f!:::::=~ (doCilm-....\ryyy\.

Aoe•lvar/Conal gr1•• :
.SUN LIGHT COMMUNICATION S LIMITED
... ~-· n~,
W!tight

"ec:olvOl"'A•f•~K<r. ,a...._.....,___c
:SM;..~~~F;-~~~NN E.R FACTORY SLOG.
K'WUN TONO
Coun\ry of Vaum..t. 0-tlnallon:
HONG KONG. HONO KONO H<lNOl<.ONG
UN HONG~2HONG
85269...... 2.445 E•porUng C•~Mr.:
OHL Coepo111(W)r,
Rec.elver Tax 10/VAT•
TennaofTra.,_:
Line Oescri_puon of Me<chMKttw
HTS,
1 USED PHONE GRADE B•
Paek.age Marica :
8517700000
Coun,,yot
... INA
n
•• EA .,....,
"""""""- UnoT-
U&al'SDM
M tsc..Chargee:

Shlpmonc Commanl.9 : lnyotc.eTot1tl: US$,.... .

!t~ 1~.;i~fo':?:J:j:;;;~~;1~~~~9~g~i,~~~~~ t~;~1i~~'6~f,!';'1'0t'.s~~!t;t1s5:~'i,9ib~~•nce


5

s ,gnature of Aotrtorlzed Pe<san

ner-Name

Sig nerT11Je

12118/2015

Oa re
-

Photograph 3

The signature on this document appears to match Zhou's signature five weeks later on his DHS

Form I-20. (See Photograph 4.)


STUDENT ATTESTATION
I have read and agreed to comp ly with the tenns and conditions of my admission and those of any extension of stay. I certify that all information provided on this form
refers specificall y to me and is true and correct to the best of my knowledge. I certify that I seek to en ter or remain in the United States temporarily, and solely for the
purpose of pursuing a full program of study at the school named above . I also authorize the named school to release any information from my records needed by DI-IS
pursuan t to 8 C · 2 14.3(g) to determine my non immigran1 statu s. Parent or guardian , and student, must sign if student i5 und er 18.
X o//;,-s/16
I
SIGNATURE OF: Ya ngyang Zhou DATE
X
NAME OF PARENT OR GUARD IAN SIGNATURE ADDRESS (city/state or province/co untry) DATE

Photograph 4
Page 7 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017
Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 9 of 12

17. I also observed a photograph of what appears to be a computer monitor showing

tracking information for the same DHL airway bill, confirming that the package had been

delivered in Hong Kong. (See Photograph 5.)

•w i.-..-J.-•'1--1<'"!........;,i,M' ,M+,_.. ; _ . . : . . . . ... --~I!?"--'-...:.......-- - ~ - - - - '


Delivery attempted - consignee premises closed HONG J<ONG- HONG KONG
Location
Arrjved at Delivery Facility in HONG KONG- HONG KONG- HONG KONG

~---------~
HONG KONG I

......Departed Facility In HONG KONG- HONG KONG HONG KONG- HONG KONG

Photograph 5

Ill//

Page 8 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 10 of 12

18. On the same cellular telephone I also observed a photograph of a commercial

invoice for DHL airway bill # 1450040362, which similarly identified the exporter as "Fangkai

Zheng" of 3108 SE Everglade St., Corvallis, Oregon. The document listed the invoice as 30

"used" phones with a declared value of $30 per phone, for a total value of $900. (See Photograph

6.)

Page 1 of 1

Commercial Invoice

Shlpperlhporter: Mwoy Bill tlumbet:


Fangl<ai Zheng 1450040362
3108 SE Everglade St Expon Date (dd/mnvnlyyyy):
Co,vallis.OR 97333 Utll TED S"TATES 29/Ded2015
Weighi:
998 (Kg)
I
22(11.>)
Receiver/Consignee: Reaive.r Reference: Shipper Reference:
SUN LIGHT COMMUNICATIOtlS LIMITED
RM. L1 0 FLOOR WINNER FACTORY BLDG.
55 HUNG"TOROAD CountJy of Uhimate Destination:
KWUN TOt4G HONGKONG
HONG KONG. HOtlG KONG
LIN HOHG.ZHONG Exponing Carrier.
8~9442445 OHL Corporation

Receiver Tax ID/VAT# T = ol Trade:

LinelDescoplion o1 Me,chandise I HTS!I =mw o1 unoo I Ouantitvl IJndl Unit Value lj,e Tot:il
I !USED PHONE GRADE B+ 18517700000 CI-IINA 130 I EA I SJ0.000 USS900.00
Podcage M.lrks : Misc. Chocges:

Shipmen! COIMletllS: Invoice Tot.ti: USS90000

These commodities , technologi,' or software were exported from the United States in accordance
with the Export Administration Regulations. Diversion contra ry to U.S. law is prohibited.

Photograph 6

//Ill

Page 9 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 11 of 12

19. Finally, I observed a photograph of a receipt from a UPS store located at 2397

NW Kings Blvd, Corvallis, Oregon, for the same airway bill, which showed the package had

been tendered for shipment on December 29, 2015. (See Photograph 7.)

PAK MAIL 0228


2397 NW Kings Blvd
CORVALLIS, OR 97330
541 -·754-8411 Store: 228

Date: 12/29/15 Tune: 16:58:39

Master Workstation

You, the Sender, nol


for all claims assoc
·oment. Pak Mail di s
ty for delays,
Photograph 7

20. In my experience, shippers often take digital photographs of documents relating to

valuable parcels both for recordkeeping and to share with the intended recipients of the subject

Page 10 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:19-mj-00053 Document 1 Filed 03/22/19 Page 12 of 12

parcels. I therefore believe that Zhou shipped the China-bound parcels described in DHL

airway bill numbers 8938746736 and 1450040362 and submitted the accompanying paperwork.

21. Due to the high cost of shipping dozens of cellular phones internationally, I do not

believe the inoperable phones rejected by Apple during this scheme were in the above-described

parcels. I therefore believe Zhou, alone or with others, shipped only the operational

replacement phones fraudulently obtained from Apple in those packages.

22. Based on my conversations with representatives from Apple, I understand the

approximate resale value of each replacement phone issued by Apple in this scheme was $600-

not the $30 declared on the airway bills captured on Zhou's cellular telephone.

Conclusion

23. Based on the foregoing, I have probable cause to believe, and I do believe, that

Yangyang Zhou has committed violations of 13 U.S .C. § 305 (Penalties for Unlawful Export

Information).

24. Prior to being submitted to the Court, this affidavit, the accompanying Complaint,

and the requested warrant were all reviewed by Assistant United States Attorney Ryan Bounds,

who advised me that in his opinion the affidavit and application are legally and factually

sufficient to establish probable cause to support the issuance of the requested warrant.

THOMAS A. DUFFY
Special Agent, Homeland Security Investigations

Subscribed and sworn to before me this 2 A day of March 2019.

HON. YOULEE YIM YOU


United States Magistrate Judge

Page 11 - Affidavit of Thomas A. Duffy USAO Version Rev. April 2017


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 1 of 10

AO 91 (Rev. 11111) Criminal Complaint

UNITED STATES DISTRICT COURT


for the
District of Oregon

United States of America )


v. )
Case No.
)
) '18-MJ-04 7
Quan Jiang )
)
) UNDER
Defendant(s)
SEAL
CRIMINAL COMPLAINT
I, the complainant in this case, state that the following is true to the best of my knowledge and belief.
On or about the date(s) of April 2017 through present in the county of in the
District of Oregon , the defendant(s) violated:

Code Section Offense Description


18 U.S.C. §§ 2320, 1343 Trafficking in counterfeit goods; Wire fraud

This criminal complaint is based on these facts:


See attached affidavit.

if Continued on the attached sheet.

Complainant's signature

Thomas A. Duffy, SA, HSI


Printed name and title

Sworn to before me and signed in my presence.

City and state: Portland, Oregon costa, United States Magistrate Judge
Printed name and title
Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 2 of 10

DISTRICT OF OREGON, ss: AFFIDAVIT OF THOMAS A. DUFFY

Affidavit in Support of a Criminal Complaint

I, Thomas A. Duffy, being duly sworn, do hereby depose and state as follows:

Introduction and Agent Background

1. I am a Special Agent (SA) with Homeland Security Investigations (HSI), within

Immigration and Customs Enforcement (ICE), in the Department of Homeland Security (OHS),

and have been so employed since July 2010. I am currently assigned to a fraud group in

Portland, Oregon, and, in that capacity, I investigate criminal financial activity such as currency

structuring, money laundering, bank fraud, wire fraud, and intellectual property rights violations.

Prior to this assignment I was assigned as a Task Force Officer (TFO) to the Federal Bureau of

Investigation, (FBI) charged with investigating transnational organized crime. I am a graduate

of the Criminal Investigator Training Program and the ICE Special Agent Training Program at

the Federal Law Enforcement Training Center. I have received training in interviewing

techniques, arrest procedures, search warrant applications, the execution of searches and

seizures, and various other criminal laws and procedures. I have attended training courses

sponsored by ICE, the Department of Justice, and other law enforcement agencies, which

focused on the investigation of money laundering violations and other financial crimes. Finally,

I have completed the Intellectual Property and Trade Enforcement Security course sponsored by

the Intellectual Property Rights Center, which focuses on investigations involving commercial

trade fraud and intellectual property rights violations.

2. I submit this affidavit in support of a criminal complaint and arrest warrant for

Quan Jiang for trafficking in counterfeit goods and wire fraud in violation of 18 U.S.C. §§ 2320

and 1343. As set forth below, there is probable cause to believe, and I do believe, that Jiang
Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 3 of 10

trafficked in counterfeit goods and committed wire fraud in violation of 18 U .S.C. §§ 2320 and

1343.

3. This affidavit is intended to show only that there is sufficient probable cause for

the requested complaint and warrant and does not set forth all of my knowledge about this

matter. The facts set forth in this affidavit are based on my own personal knowledge,

knowledge obtained from other individuals during my participation in this investigation,

including other law enforcement officers, interviews of witnesses, a review of records related to

this investigation, communications with others who have knowledge of the events and

circumstances described herein, and information gained through my training and experience.

Applicable Law

4. Title 18 U.S.C. § 2320 (trafficking in counterfeit goods) provides, in relevant part:

"Whoever intentionally traffics in goods or services and knowingly uses a counterfeit mark on in

connection with such goods or services, [or] traffics in labels, patches, stickers, wrappers,

badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation

or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the

use of which is likely to cause confusion, to cause mistake, or to deceive, ... [or] attempts or

conspires to [][to do so] ... shall ... not be fined not more than $2,000,000 or imprisoned not

more than 10 years, or both, and, if a person other than an individual, shall not be fined not more

than $5,000,000."

5. Title 18 U.S.C. § 1343 (wire fraud) provides, in relevant part: "Whoever, having

devised or intending to devise any scheme or artifice to defraud, or for obtaining money or

property by means of false or fraudulent pretenses, representations, or promises transmits or

Page 2 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 4 of 10

causes to be transmitted by means of wire, radio, or television communication in interstate or

foreign commerce ... for the purpose of executing such scheme or artifice, shall be fined under

this title or imprisoned not more than 20 years, or both."

Statement of Probable Cause

Overview

6. In April 2017, HSI Portland opened a criminal investigation into the statutes listed

above based on information received from U.S. Customs and Border Protection (CBP) regarding

the seizure of suspicious shipments of cellular telephones bearing Apple, Inc. (hereinafter

"Apple") markings and distinctive design features, but which appeared to be counterfeit based on

shipping methods and packaging. As a result of training provided by Apple, I am aware of an

ongoing scheme to defraud where individuals submit counterfeit Apple iPhones to Apple as part

of a false and fraudulent warranty claim. The scheme is perpetrated by an individual who

submits a counterfeit iPhone that will not power on, and, as part of the Apple's warranty and

repair process, receives a new and/or factory refurbished officially licensed iPhone in exchange

for the non-working phone. This is done online and through the mail. The submitter then ships

the legitimate iPhone to a broker or organizer, often located overseas, who sells the new working

iPhone, providing a portion of the proceeds to the person who submitted the fraudulent warranty

claim. As part of this particular investigation, CBP in Portland, Oregon, has seized more than

five shipments originating from China and imported from Hong Kong containing iPhones that

have been verified counterfeit by the trademark holder, Apple. During the course of this

investigation, Quan Jiang has been identified as an importer of counterfeit Apple iPhones and as

the person who is submitting the fraudulent warranty claims. Jiang is a Chinese national, who is

Page 3 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 5 of 10

lawfully present in the U.S. on an F-1 student visa and completing studies in electrical

engineering at Linn Benton Community College.

Interview of Quan Jiang

7. In December 2017, I conducted a consensual, non-custodial interview with Jiang

at the CBP office located at terminal 6 in the Port of Portland, Portland, Oregon. During the

interview, Jiang stated that he regularly receives packages containing 20 to 30 iPhones from an

associate in China. Jiang stated that the phones he receives do not power on and that he then

submits each of the phones individually to Apple for repair under Apple's warranty program.

Jiang stated that after he receives the replacement iPhones from Apple, he ships them back to his

associate in China. Jiang explained that in exchange for his labor and efforts, his associate in

China pays Jiang's mother, who also resides in China, who in tum deposits the proceeds into a

back account that Jiang is able to access here in the United States. Jiang estimated that during

2017, he submitted 2,000 telephones to Apple for warranty repairs. Jiang stated he submitted

some of the phones for repair in person and that he submitted others using Apples online service

support. Jiang stated that after submitting the warranty claim using Apple's online service

support he shipped the non-working phone to Apple for repair as part of the warranty process.

8. During the interview, Jiang stated that since October 2017 he has been residing at

2420 NW Rolling Green Drive, Apartment #27, Corvallis, Oregon and that his previous address

was 2370 NW Rolling Green Drive, Apartment #58, Corvallis, Oregon. Jiang provided an

email address of QJlovehake@gmail.com with an alternative email of

Quan.Jiang.3975@mail.linnbenton.edu.

9. During the interview, Jiang stated that he knew that it was a violation of law to

Page 4 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 6 of 10

import stolen or counterfeit iPhones. Jiang also stated that he knew it was a violation of law to

submit counterfeit or stolen goods to Apple for warranty claims. Jiang stated that he has never

received any notification from Apple that any of the phones he has submitted were stolen or

counterfeit. Additionally, Jiang stated that he has never received any notification that any of his

actions were against the law or prohibited by Apple.

10. Jiang stated that he uses friends, relatives, and name variations to receive the

packages of iPhones from China and to receive the replacement phones from Apple. Jiang also

stated that he provides compensation to friends to receive packages of iPhones on his behalf.

Jiang stated the he coordinates the shipments of iPhones to different addresses in the U.S. in

order to avoid the packages being detained by CBP.

11. During the interview, Jiang voluntarily presented me with his Apple iPhone for

examination in order for me to view images of receipts associated with each of the phones Jiang

has received. During the examination, I viewed images of receipts that bore IMEi numbers,

which are unique identifying numbers associated with cellular telephones. Additionally, Jiang

stated that he uses email applications and other digital communications applications on his

iPhone to communicate with his associate in China and friends in the United States, who are

receiving packages of on his behalf. On his iPhone, he has contact information for persons he

believes are also engaged iPhone warranty fraud.

Notices of Infringement to Jiang

12. On or about June 30, 2017, Apple, through its legal counsel, Kilpatrick and

Townsend, sent a cease and desist (C&D) letter to Jiang via overnight mail. The letter formally

placed Jiang on notice that he was importing counterfeit Apple products. On or about July 19,

Page 5 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 7 of 10

2017, Apple, through its legal counsel, Kilpatrick and Townsend, sent a second cease and desist

letter to Jiang via overnight mail as Jiang did not respond to the first notice. Both C&D letters

were sent to Jiang at 2480 NW Rolling Green Drive, #58, Corvallis, Oregon, which is the

address associated with the CBP seizure (2017-2904-100112-01) that initiated the C&D letter.

While this address is not Jiang's stated residence, it is an address used by Jiang for

approximately 150 Apple warranty claims. During the consensual interview, Jiang stated that

this address is one of the addresses at which he has associates receive mail for him.

13. During this investigation, I spoke with Adrian Punderson, a brand protection

representative employed by Apple. Mr. Punderson explained the Apple repair and warranty

process, stating that once Apple receives a phone for repair, an Apple technician will examine

the phone to ensure that is a genuine Apple product. If a device is determined to be counterfeit,

or altered in an unauthorized manner, the submitted phone warranty and replacement claim will

be rejected. Once rejected, the submitted phone and a letter explaining the rejection will be

shipped to the return address provided by the submitter. According to business records provided

by Apple, 93 telephones associated with Jiang's stated previous address of 2370 NW Rolling

Green Drive, Apartment #58, Corvallis, Oregon, were rejected by Apple and returned with letters

of rejection. Additionally, Apple records show 1,576 warranty claims associated with Jiang

based on name, email, or physical address were rejected for tampering and the accompanying

rejection notices, along with the counterfeit phones, were sent back to Jiang.

Analysis of Business Records Provided by Apple

14. According to business records provided by Apple, the Premises has been listed as

the return address for 33 warranty claims. Of the 33 claims submitted to Apple using the

Page 6 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 8 of 10

address of the Premises, five were submitted in the name of Quan Jiang, one of which used

Jiang's Linn Benton Community College email address of

Quan.Jiang.3975@mail.linnbenton.edu. The remaining warranty claims submitted to Apple

listing the Premises as the return address were filed under 11 other names.

15. According to business records provided by Apple, the email address of

QJlovehake@gmail.com, which is an email address claimed by Jiang, has been listed as the

email address in approximately 150 iPhone warranty claim submissions. This email address is

has been associated with at least ten unique mailing addresses in Oregon, including addresses in

the cities of Corvallis, Eugene, Salem, Springfield, and Portland.

16. According to business records provided by Apple, Jiang has been associated by

either name, email, mailing address, or IP address to the submission of 3,069 iPhone warranty

claims. Of the 3,069 warranty claims submitted, 100 percent of the claims were submitted for

"No Power/Wired Charging Issues," indicating that the phone would not power on. As Mr.

Punderson explained, submission of an iPhone that will not power on is critical to perpetuating

iPhone warranty fraud, as the phone will not be able to be immediately examined or repaired by

Apple technicians, triggering the Apple phone replacement process as part of its product

warranty policy.

17. According to Apple business records, of the 3,069 warranty claims attributed to

Jiang, 1,493 of the claims resulted in Apple providing a replacement telephone as part of the

warranty process. Apple uses a standard cost of $600 per phone as the basis for calculating loss,

resulting in an $895,800 loss to Apple for the 1,493 claims that resulted in the issuance of

replacement iPhones.

Page 7 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 9 of 10

18. As detailed in Apple's limited warranty, which is listed on their publicly

accessible Apple support website, Apple's limited warranty does not apply to products that are not

Apple-branded, even if packaged or sold with Apple products.

U.S. Custom and Border Protection Records

19. In April 2017, U.S. Customs and Border Protection sent Jiang a Notice of Seizure

and Information to Claimant letter (form att-8b, rev 2014). The letter informed Jiang that CBP

had seized 28 counterfeit iPhones that were being shipped to Jiang as a violation of 19 U.S.C. §

1526 (e) - Importation of Counterfeit Goods.

20. In October 2017, CBP sent Jiang a Notice of Seizure and Information to Claimant

letter (form att-8b, rev 2014). The letter informed Jiang that CBP had seized 25 counterfeit

iPhones that were being shipped to Jiang as a violation of 19 U .S.C. § 1526 (e) - Importation of

Counterfeit Goods.

21. On or about December 18, 2017, which was approximately 11 days after Jiang's

interview with me at CBP Portland, Jiang contacted Supervisory CBP Officer Mark Kim and

verbally claimed ownership of three packages that were being detained by CBP. I assisted CBP

in examining the packages, all of which contained suspected counterfeit iPhones. All of the

packages claimed by Jiang were being shipped to different addresses, none of which were

Jiang's stated residential address or were addressed to Jiang.

Conclusion

22. Based on the foregoing, I have probable cause to believe, and I do believe, that

Quan Jiang has committed violations of 18 U.S.C. §§ 2320 (trafficking in counterfeit goods) and

1343 (wire fraud). I therefore request that the Court issue a criminal complaint and arrest

Page 8 - Affidavit of Thomas A. Duffy


Case 3:18-mj-00047 Document 1 Filed 03/12/18 Page 10 of 10

warrant for Quan Jiang.

23. Prior to being submitted to the Court, this affidavit, the accompanying

application, and the requested search warrant were all reviewed by Assistant United States

Attorney (AUSA) Scott E. Bradford, and AUSA Bradford advised me that in his opinion the

affidavit and application are legally and factually sufficient to establish probable cause to support

the issuance of the requested compliant and warrant.

Special Agent, Homeland Security Investigations

BLE JOHN V. ACOSTA

Page 9 - Affidavit of Thomas A. Duffy