Businessman arrested on money laundering charges in connection with €9.7m ‘zombie’ iPhone scam – The Irish Times

A Dublin-based Chinese businessman is accused of money laundering in connection with an international “zombie” iPhone scam worth €9.7 million.

Chengwen Guo (41) of Ivy Exchange, Parnell Street, Dublin 1, was arrested at his home on Wednesday following a three-year investigation by the Garda National Bureau of Criminal Investigation (GNBCI) into the illegal trade in counterfeit Apple phones.

He was taken to Kevin Street Garda Station in the city centre and charged with three offences under Section 7 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 for possessing proceeds of crime totalling €170,460 following searches at three locations in Dublin in January 2022. This offence carries a maximum sentence of 14 years.

The father of four, who is believed to have run a chain of phone shops since moving to Ireland in 2012, allegedly had €143,245 in his home, €20,700 at Murray Mobile, 15 Main Street, Dundrum, Dublin 14, and €6,515 in a 2019 Audi Q2 registered in Shanowen Road, Dublin 9.

The court heard that fake Chinese Apple phones were sent to Ireland and exchanged for genuine iPhones that were sent to China.

He was refused bail when he appeared before Judge David McHugh at Dublin District Court on Saturday, concluding that the Gardaí believed him to be a “central figure in the complex fraud scheme aimed at defrauding Apple”.

Det Gda Conor Cadogan said Mr Guo had “made no response” to the allegations and the officer had objected to his bail, citing the risk of him absconding and fears of witness tampering.

At the controversial bail hearing, it was revealed that the GNBCI investigation was launched in December 2021 after tech giant Apple released a report on product warranty fraud.

“There are suspicions that an international organised crime group (OCG) is involved in sourcing counterfeit products and sending them to OCG members in Ireland for further processing,” said Det Gda Cadogan.

He claimed that in July 2021, customs officials intercepted a parcel “full of counterfeit items and Apple products” destined for mobile phone company Murray Mobile at 15 Main Street in Dundrum.

The court heard that although the package had a different name on it, it had the same address and mobile phone number as the defendant.

Gardaí believed the accused controlled eight Murray Mobile stores in Dublin and Kildare. Ten warrant searches were conducted on 10 January 2022 and Gardaí found the cash at the three locations mentioned.

Det Gda Cadogan said the investigation team had frozen 14 bank accounts linked to Murray Mobile, the defendant and his wife. He told Judge McHugh there was a total of €168,902 in these accounts.

The official explained that the investigation focused on genuine and unique International Mobile Equipment Identity (IMEI) numbers used on counterfeit Apple phones.

The court heard that the devices, known as “zombie phones,” were delivered to Mr Guo and then used to defraud Apple.

This activity involved taking the phones to a special phone repair shop. From 2019 to 2021, approximately 10,685 devices were sent for repair, and 9,761 of them were allegedly fake zombie phones.

It is estimated that the defendant and his accomplices earned about 9.7 million euros through this fraud.

Det Gda Cadogan was convinced that these were members of the international gang in China and Ireland.

The court heard that the counterfeit devices were probably shipped to Ireland, where they were given genuine IMEI numbers.

The defendant allegedly took them to the phone repair shop for repairs and received original replacement iPhones, which were sent to Asia and sold for the benefit of the organized crime gang.

Mr Guo’s phone was seized in January 2021 and reportedly contained evidence that he was a “central figure in the complex deception undertaken to defraud Apple”.

The investigator believed that the defendant posed a “high flight risk,” adding that he was a person with considerable wealth and connections. He claimed that if Mr. Guo were released on bail, he would have an easy time fleeing the jurisdiction to avoid justice.

Judge McHugh heard that the investigation team would recommend that the Attorney General bring further serious charges under the Organised Crime Act, as well as for trademark, money laundering and theft offences.

The court heard that Mr Guo held a Chinese passport and Ireland had no extradition treaty with China.

The investigator said 57 witness statements had been taken and he feared that the witness statements could be influenced, which could jeopardize the trial.

Judge McHugh said he was satisfied that Mr Guo posed a flight risk and refused bail. The defendant was remanded in custody and is due to appear before Cloverhill District Court on Wednesday.