Sacramento, Calif. - Two suspects nabbed in a multi-state smart phone theft investigation were arraigned in federal court on Tuesday. Attorney General Kamala D. Harris announced the two allegedly bought large numbers of stolen smart phones in California for resale in Hong Kong, raking in nearly $4 million in less than a year.
Defendants Shou Lin Wen, 39, of Sacramento, and Yuting Tan, 27, of Sacramento, were arrested on March 6 and did not enter a plea at this time on eight felony counts of money laundering, grand theft, possession of stolen property and conspiracy. They are being held in Sacramento County Jail on $1 million bail each.
The arraignment follows a six-month, multi-state investigation into the trafficking of stolen smart phones by the AG's eCrime Unit.
Special Agents with the eCrime Unit conducted surveillance operations and tracked parcels across the country to identify the ringleaders. According to the arrest warrant, agents intercepted four of the 110 parcels shipped by Wen and Tan to Hong Kong during the past 12 months. The 412 phones seized from these packages were traced back to phony customers as far away as North Carolina.
On March 6, Special Agents with the eCrime Unit conducted an undercover operation in the Sacramento West Marine parking lot, during which they offered to sell 408 "stolen" iPhone 4s and iPhone 5s to Wen and Tan. The defendants agreed to pay $60,600 in cash for 163 phones and were arrested after producing the cash.
AG Kamala Harris pointed to the international nature of the smart phone ring, "This international theft ring used fraud and deceit to steal smartphones and exploit the homeless, I applaud the hard work of our Special Agents whose tenacious investigation put an end to this criminal enterprise."
According to the arrest warrant, co-conspirators in the scheme enlisted individuals from homeless shelters to purchase multiple smart phones such as the Apple iPhone, Samsung Galaxy and Blackberry from cell phone carriers. Carriers allow individuals to purchase up to five phones in their name under one plan at a discounted rate. The straw purchasers then delivered the phones to the co-conspirators for a nominal payment. It is alleged that the straw purchasers never intended to follow through with paying for the phones' contracts which, under California law, constitutes committing theft by false pretenses and designates the phones as stolen property.
Hundreds of stolen phones were then bundled from across the country by middlemen and sent to Wen and Tan, the scheme's ringleaders, in California. Wen and Tan profited by shipping the stolen phones to Hong Kong, where iPhones can go for as much as $2,000.
During an eight-month period, the defendants' business self-reported gross sales of $3,948,485.
