Haotian Sun and Peng Fei Xue were convicted by a jury in the District of Columbia for participating in a scheme to defraud Apple. The defendants received counterfeit iPhones from Hong Kong and submitted them to Apple stores and authorized service providers for repair. The goal was to trick Apple into sending back authentic replacement iPhones, which the defendants would then ship to China for resale. Sun was convicted on one count of mail fraud and conspiracy, while Xue was convicted on six counts of mail fraud and conspiracy. The district court sentenced Sun to 57 months and Xue to 54 months on each count, to run concurrently. On appeal, Sun challenged the sufficiency of the evidence, while Xue challenged the denial of his motion to suppress evidence and the calculation of his sentence under the U.S. Sentencing Guidelines.
The court addressed Sun's sufficiency of the evidence challenge by applying the standard of viewing the evidence in the light most favorable to the government. To prove mail fraud, the government must show a scheme to defraud and a mailing for the purpose of executing that scheme, with fraudulent intent. The court found Sun's argument meritless because the government presented ample circumstantial evidence that Sun knew federal agents had seized counterfeit phones, was warned by Apple and agents about the inauthenticity of the devices, yet continued the scheme. Sun's use of different zip codes, email addresses, and names to conceal his involvement further supported the finding of fraudulent intent. The court also rejected Sun's claim that the specific iPhones he mailed were not counterfeit, citing precedent that innocent mailings can satisfy the mailing element if they are incident to the scheme. Regarding the intent to have Apple mail the phones, the court found it reasonably foreseeable that Apple would mail replacements in the ordinary course of business. For Xue, the court affirmed the denial of his motion to suppress, noting that he failed to challenge the district court's good-faith exception ruling, which applied to the search of his phone. On sentencing, the court held that the district court correctly used intended loss, which is the greater of actual or intended loss under the Guidelines. The court also affirmed the enhancement for the scheme's international scope, as a substantial part of the fraud occurred outside the U.S., and the enhancement for Xue's role as a supervisor, based on his recruitment and management of others.
The decision reinforces the D.C. Circuit's willingness to uphold mail fraud convictions based on circumstantial evidence of intent and the foreseeability of mailings. It clarifies that defendants cannot avoid liability by arguing specific mailed items were not the fraudulent object if the mailing was part of the overall scheme. For sentencing, the ruling confirms that intended loss is a valid basis for calculating offense levels and that enhancements for international scope and supervisory roles apply even when the defendant's personal actions were limited to the U.S. The case is remanded with no changes to the convictions or sentences.