The college students, who were studying in the US used knock-off iPhone clones that would not power on to demand replacements from a local, gullible, Apple store. The genuine iPhones would then be returned to China and sold for a profit. This is a clear violation of Apple's policies so naturally, the firm got a tiny bit annoyed, and suspicious, when one person returned 1,493 identical, non-functioning phones in the space of two years. They sent a cease and desist letter and when that didn't work, they took it to court.
The individuals involved were Yangyang Zhou, Quan Jiang and his mother. The scheme worked as follows: Yangyang Zhou was in charge of shipping for both to non-functioning Chinese phones and the working iPhones, Quan Jiang visited the Apple stores and demanded replacements, and undisclosed individuals sold the phones, sending the money to Quan Jiang's mother, who then forwarded it on to his US account. Apple sent two cease and desist letters to Zhou's home, addressed to Jiang, saying that they were aware of what he was doing and pleaded with him to stop. Understandably, he didn't.
Apparently, 3,069 claims were submitted, with Apple giving out 1,493 as replacements. Apple claims they lost $895,800 from the scheme, which worked because Apple doesn't check for proof of purchase on faulty phones, and they had no way of checking if they were genuine, as they were given dummies, which also lowered the costs for the scammers, increasing their profits. Both have been charged, Zohu with illegally exporting goods and Jiang with illegally trafficking in counterfeit goods and committing fraud. Maybe they were just trying to harm Apple after what America has done to poor Huawei's CFO.
The students claim that they had no idea that they were selling counterfeits. Neither are in custody.
Kids, don't try this at home,