This article is part of a Huffington Post series exploring the global underground trade in stolen smartphones. Previous stories in the series can be found here.
When Sunah Yang bought an iPhone for her brother two years ago, she warned him about the white earbuds.
Never wear them at night, she told him. They make you a target for thieves.
“Obviously, he didn’t listen,” she said in a recent interview.
Around midnight on April 19, 2012, Hwangbum Yang, a 26-year-old Korean immigrant and aspiring chef, finished work as a cook at an upscale Manhattan restaurant. He rode the No. 1 train uptown to the Bronx and started walking home in the rain.
He was two blocks from his house when a man holding a gun approached him, according to police. The man -- whom police would later identify as Dominick Davis -- demanded Yang's iPhone. When he refused, Davis shot him once in the chest. Yang died on the sidewalk.
Yang was still wearing the iPhone’s white earbuds when paramedics arrived, investigators told his sister. Davis had left his wallet untouched, but had taken his iPhone. Police later found the phone for sale on Craigslist for $400.
Prosecutors charged Davis and an alleged accomplice, Alejandro Campos, with murder. They have pleaded not guilty and are awaiting trial in jail on Rikers Island.
Nearly a year after Yang’s death, a cloud of grief still hangs over his family. His father sleeps in his son’s bed. His mother prayed at the scene of the shooting every day for four weeks until her husband asked her to stop. “It will only cause you heartbreak,” he told her.
Hyun Sup Yang attributed her son’s death to the insatiable demand for the world’s most popular phone. “If my son never had an iPhone,” she said in an interview, “he would be alive now.”
Yang’s murder stands as a chilling example of a modern-day crime wave sweeping the country, sometimes with deadly consequences. From New York to San Francisco to Washington, D.C., police have reported a surge in thefts of smartphones and tablet computers -- iPhones and iPads in particular. The spike in robberies has grown so pronounced that police have coined a term for such crimes: Apple picking.
Every day, criminals snatch phones on crowded streets, inside restaurants, and on subways, reselling their stolen wares on the Internet, on street corners and inside local convenience stores. Phone thefts tend to rise right after the release of new Apple products, according to police in New York City.
Apple declined to comment for this story.
The growing street crime is the most visible example of what law enforcement authorities describe as a well-orchestrated underground global industry: Many stolen phones are shipped to distant points on the globe, sold to consumers in Asia, Eastern Europe and Latin America. It is a market now worth some $30 billion a year, according to Lookout, a San Francisco-based mobile security firm.
The global nature of this illicit trade stems in part from measures American wireless carriers have imposed to make it harder to resell stolen phones in the United States, prompting criminals to seek new markets overseas. But it also results from the unique business model used to sell smartphones to American consumers. In the United States, cell phone carriers subsidize the costs of the phones, while in most other countries customers pay full retail price. The same iPhone that Americans can obtain for $250 can fetch as much as $800 on the streets of Hong Kong or Rio de Janeiro. The trade has grown so vast and lucrative that it's attracted organized crime and alleged terrorist organizations, from Mexican drug cartels to the militant group Hezbollah.
About 40 percent of thefts in major American cities now involve cell phones, according to the Federal Communications Commission, which collects statistics from police departments. Washington D.C. reported 54 percent more cell phone robberies in 2011 than in 2007. In New York City, Apple’s iPhone has become “by far” the most popular target, said police spokesman Paul Browne. The city’s overall crime rate increased last year due to a spike in stolen Apple devices.
“Thieves nowadays don’t care about the money in your wallet,” Albie Esparza, a spokesman for the San Francisco Police Department, said in an interview. “They care about your phone because they can turn around and sell it for a quick profit.”
A FINANCIAL INCENTIVE
The street-level cell phone thieves tend to be young men in their teens and early 20s. Some work in teams, handing off stolen phones to partners so they aren’t caught holding hot property. One group of thieves in D.C., who called themselves the “Swisha Splash Boys,” worked by swiping iPhones from Metro riders and running off just as the train doors closed.
D.C. Police Chief Cathy Lanier first noticed the problem two years ago. At the time, robberies were rising and thieves were making specific demands. “It was just odd,” she recalled in an interview. “They were passing up other valuables and just asking for phones.”
Last March, Lanier connected this street crime to a distribution network: District police arrested employees at 13 local businesses for allegedly selling stolen iPhones and other electronics. Two years ago, New York police arrested 141 employees of barber shops, newsstands, convenience stores and other businesses for allegedly selling stolen iPhones and iPads.
Around the country, thefts of Apple products have become so commonplace that law enforcement has developed new methods of luring and apprehending criminals. In D.C., undercover officers ride subways and pretend to be homeless, drunk or asleep while holding out cell phones, pouncing when thieves take the bait. New York police officers have collected serial numbers of newly-purchased iPhones outside Apple stores so they are able to track stolen devices and return them to their rightful owners.
Phone companies have joined the effort by closing a gap that has facilitated the black market for stolen phones. For years, wireless carriers blocked stolen phones from being used on their own systems by shutting down their SIM cards, the tiny removable chips that connect each device to a particular network. But thieves simply replaced blocked SIM cards with new ones and resold phones for use on other networks.
Last April, under pressure from the Federal Communications Commission and police chiefs, AT&T, Verizon Wireless, Sprint and T-Mobile agreed to join forces and share a list of serial numbers linked to stolen phones. Once the policy goes into effect by the end of this year, a phone reported stolen will no longer work on any major U.S. wireless network.
“With the press of a button, carriers will be able to disable phones and turn highly prized stolen property into worthless chunks of plastic,” New York Police Commissioner Ray Kelly said when the stolen phone blacklist was announced last year.
But in the meantime, phone thefts have not stopped. If anything, they have become more brazen. Last month, masked men robbed an AT&T store in Hamilton, N.J., at gunpoint and made off with $15,000 worth of new iPhones, the latest in a string of recent armed robberies at smartphone retailers.
And thieves are finding new ways to get paid. Lanier said some filched phones have been dropped in recycling machines manufactured by a company called ecoATM. Customers who recycle old phones in ecoATM's machines -- which resemble bank ATMs -- receive as much as $300 for each one, depending on their value on the global market.
Ryan Kuder, a spokesman for ecoATM, said the company has installed more than 300 recycling machines at shopping malls in 23 states, including several outside New York City and Washington, D.C., and collected “hundreds of thousands” of used phones last year. About 60 percent were refurbished and resold, mostly back to the U.S. wireless carriers. About 20 percent of those phones were shipped overseas.
Kuder said the company tries to prevent thieves from receiving cash for stolen phones by checking IDs and holding phones for 30 days or longer, to give police time to see if any are stolen. "We have tried to make ecoATMs the worst place for thieves to get rid of stolen phones,” he said in an interview.
But the company does not check in real-time whether a phone dropped in an ecoATM has been stolen. Kuder said that is because the company does not have access to the stolen phone blacklist shared between wireless carriers and law enforcement.
Lanier has assigned a team of detectives to investigate the extent of the problem in D.C. Police there recently arrested a man who deposited 22 stolen phones in an ecoATM kiosk over a 30-day period and was awarded more than $2,200 in cash.
“It’s easy to blame street criminals,” Lanier said. “But somebody is creating a market for these phones in the name of profit. Businesses like ecoATM are creating an incentive for street crime.”
A GLOBAL MARKET
The stolen phone blacklist being developed by American wireless carriers is modeled after a similar effort launched in the United Kingdom a decade ago after police noticed a sharp increase in phone thefts.
But that effort has not stopped phone robberies, which continue in Britain at a pace of more than 200 per day, according to Jack Wraith, chairman of the Mobile Industry Crime Action Forum, an organization created by the British wireless industry.
Instead, the blacklist appears to have simply driven the stolen phone market overseas. British police have apprehended thieves at airports carrying stolen phones in their luggage bound for points around the globe.
“It’s a bit like squeezing a balloon,” Wraith said of the stolen phone market. “You squeeze it in one place and it pops out somewhere else.”
On eBay, a quick search for smartphones under the Verizon network turns up thousands of listings that include the term “Bad ESN” -- shorthand for a phone that can’t be used on a particular wireless network because its serial number has been reported lost or stolen.
James Person, chief operating officer of CDG, an international wireless industry group, said he has counted more than 30,000 sales of smartphones with tainted serial numbers on the auction site. Since these phones can’t be used on Verizon’s network, he believes most are trafficked to other countries.
Many phones that are stolen on the West Coast of the United States are subsequently smuggled across the border to Mexico, he said. Mexican drug dealers use phones stolen in the U.S. to communicate with relatives of kidnapping victims, according to Hector Olavarria Tapia, Mexico’s former under-secretary of communications. “The easiest way to communicate with the families is to use a mobile device that is not tracked,” he said at a press conference last fall.
In response, the U.S. and Mexican governments agreed in November to deactivate stolen phones in both countries to prevent cross-border trafficking -- the first deal of its kind between the U.S. and another country.
“This, we believe, will be another major blow to the smartphone black market,” FCC Chairman Julius Genachowski said at the time.
But Mexico is far from the only foreign market for stolen phones. British police have tracked stolen phones to 16 countries across Eastern Europe, Africa and Asia, where they can be reactivated on foreign wireless networks.
In 2009, federal agents arrested alleged Hezbollah operatives in Philadelphia for attempting to buy thousands of stolen cell phones and other electronics from an undercover officer and ship them to Hong Kong and the United Arab Emirates. Authorities said the traffickers planned to use the profits to finance the Lebanese arm of the Shiite militant organization, which the United States considers to be a terrorist group.
Industry experts say dozens of other phone trafficking rings transport phones around the world. They involve “runners” who buy or steal phones in large quantities, hackers who “unlock” their software for use on other wireless networks, and warehouse employees who repackage them in new boxes with instruction manuals in the native language of their destinations.
“The uptick in street crime can be attributed to these large operations,” said James Baldinger, an attorney who has sued more than 200 phone traffickers on behalf of wireless companies.
“Ultimately, a consumer in some country will walk into a cell phone store and when the clerk pulls a box out from under the counter, they’ll have no way of knowing that phone began its life in San Francisco,” Baldinger said.
Phone trafficking to other countries is not only a way to avoid detection by the new stolen-phone database in the United States. It also beckons as a more rewarding business model, with the stark retail price differences between the United States and foreign markets making for massive profit margins on goods stolen from Americans and sold abroad. Moreover, many popular smartphone models -- Apple products in particular -- tend to be abundant in the United States, but in limited supply in foreign markets, reinforcing their cachet there.
“There’s tremendous demand,” said Israel Ganot, president of Gazelle, an electronics recycler, adding that his company checks stolen phone databases before shipping recycled phones overseas. “People will pay almost anything.”
PRESSURE ON APPLE
Apple products are not the only brand at the center of soaring rates of gadget-related crime, but iPhones -- and increasingly iPads -- appear to be in highest demand, according to police. Two years ago, a thief who robbed Columbia University students in New York City demanded their iPhones. When the students handed over BlackBerry smartphones instead, the mugger didn't want them and gave them back, according to DNAinfo, a local news site.
The iPhone is just the latest Apple product to be targeted for theft. In 2005, New York police warned commuters about an increase in iPod thefts on city subways. That year, two teenagers were charged with stabbing 15-year-old Christopher Rose to death in Brooklyn during a fight over an iPod. After Rose's slaying made headlines, former Apple chief executive Steve Jobs called the teen's father to offer his condolences.
On its website, Apple directs victims to report thefts to police and use the company's “Find My iPhone” feature, which helps them locate a phone on a map, display a message on its screen, remotely set a passcode lock and delete data from the device. Police have used the feature to catch several iPhone thieves.
In recent months, the company has also helped a team of New York police officers locate stolen iPhones and iPads by tracking the devices' locations using their serial numbers. While about three-fourths of Apple devices stolen in New York City have been found within city limits, some have turned up as far away as the Dominican Republic, according to Browne, the police spokesman.
But some industry experts say Apple could do more to make stolen iPhones harder to resell. For example, they say the company’s warranty policy links customer service plans to devices, not their owners. If a stolen iPhone is under warranty, a thief can replace the device at an Apple store with a new iPhone that has not been reported stolen and avoid detection. Thieves in Britain have exploited this policy by placing stolen iPhones in the microwave to render them inoperable and prove to Apple employees they should be replaced, Wraith said.
Stolen smartphones are still valuable -- even when wireless companies block them from their networks -- because they're more than just phones: They're mobile computers. A blacklisted smartphone can still connect to Wi-Fi hotspots to download games and music, browse the Web, make Skype calls and send text messages using WhatsApp, a popular Internet-based texting application. Stolen phones can also hold sensitive personal data such as social security and credit card numbers, a veritable treasure trove for criminals intent on identity theft.
Apple could limit many of those features -- and make its products less valuable to thieves -- by preventing stolen iPhones from updating software or accessing its App store or iTunes store, according David Rogers, who teaches mobile security at Oxford University. “Everybody knows the iPhone is the hot product to be stolen,” Rogers said. “Why would Apple want consumers to be a moving target for theft?"
'I'M GOING TO DIE'
For Paul Boken, any effort to deter iPhone thieves will come far too late.
For years, his daughter Megan owned a BlackBerry, but wanted an iPhone because she thought it would make it easier to use social media and take photos, he said. Last July, he bought her a white iPhone at a retail store near the family's home outside Chicago.
One month later, Megan, then 23, was in St. Louis for job interviews as well as an alumni volleyball game at St. Louis University. Tall, thin and athletic, Megan had been captain of the volleyball team the previous year.
As she got into her car that afternoon, a man whom police later identified as Keith Esters allegedly opened the passenger-side door and demanded her iPhone. According to police, Esters shot Megan twice in the chest and neck. She died in the car. Esters fled the scene, dropping the stolen iPhone nearby, prosecutors say. He later told police he targeted Megan after seeing her talking on the phone, according to court documents. Police say they connected Esters to another phone robbery in the area that day.
Esters and a cousin who police say drove him from the crime scene have since been charged with Megan’s murder. They are being held at the St. Louis City Justice Center. Their attorneys said their clients were unavailable for interviews and declined to comment.
Paul Boken lays blame for his daughter’s death not just on her killers, but also on an industry that he says has been slow to reduce the street value of stolen phones. "Phone manufacturers, including Apple, should have addressed this problem three or four years ago,” he said. “I don’t think they realized someone as special as Megan can lose her life over this.”
Police later returned Megan’s iPhone to her father. He said he keeps it in a box at his home. Like everything that belonged to his daughter, he said he can’t bring himself to get rid of it. He keeps her bedroom the same way she left it. Last month, Megan's former volleyball teammates at St. Louis University named an award after her, citing “her fun-loving attitude, contagious laugh, servant leadership and humble demeanor.” When they gave Boken one of her jerseys, “I almost fell apart,” he said.
Now, when Boken sees Megan’s friends and watches their lives unfold, he wonders what might have been. “As a father, you invest all of this time in your children,” he said. “You show them how to walk and throw a baseball and hit a volleyball. You watch them develop and take on life’s challenges. Then, all of a sudden, it's over. That’s the hardest part. You don’t get to see the next 10 chapters of that book.”
Megan’s story is not unique. As police and wireless providers have searched for solutions to phone thefts, the human toll exacted by often-violent robberies is rising. Last month, three people were stabbed on a subway platform in Queens in a fight over an iPhone, according to local news reports.
Many victims “either have lost their lives or had their lives significantly changed because of a very senseless act of violence by somebody who wanted to take a phone and then resell that phone on the black market,” Lanier, the D.C. police chief, said last fall.
Alex Herald considers himself lucky to be alive.
Last April 28, Herald, 20, and his friend, Miguel Gonzalez, were riding the subway in New York City, headed home to the Bronx after a night out. It was 4 a.m. and they both fell asleep.
When Herald woke up, he recounted in an interview, he found a hole in the front right pocket of his pants -- the place where he always kept his smartphone. He looked around the train and spotted a man holding a knife in one hand and his phone in the other.
The man, whom police later identified as 22-year-old Victor Montalvo, got off at the train at the Fordham Road station. Herald says he confronted Montalvo on the train platform and demanded his phone. Montalvo held onto it, so Herald punched him, prompting Montalvo to pull out a knife. He stabbed Herald five times in the face, once in the neck and once in the back, according to a police report. Herald lay on the train platform in a pool of blood while his friend ran to get help.
"I thought to myself, 'I'm going to die,'" Herald recalled.
An ambulance arrived and rushed him to the hospital, where he received eight blood transfusions. In the ten months since, he has been in three different hospitals, spending half that time on life support.
On a recent morning, Herald lay in bed at Coler-Goldwater Specialty Hospital and Nursing Facility on Roosevelt Island. Scars from the stabbing marred his face and neck. A red cap inserted in his neck held in place a tracheostomy tube. One stab wound had severed a nerve in his spinal cord, paralyzing him from the neck down.
“It’s hard,” he said, speaking softly in a Brooklyn accent as a hospital machine beeped in the background. “To be like this for the rest of my life, over a damn cell phone.”
Montalvo has been charged with attempted murder. His attorney declined to comment.
Herald's mother, Benedicta, said her son was no stranger to crime or violence. Herald dropped out of high school, had been in several fights and had been arrested for marijuana possession and jumping subway turnstiles, she said.
His phone was one of his most prized possessions, she said. He fought to get it back because he didn’t want to lose the music and photos it contained. “It was his own little world on that phone,” she said.
Looking back on that night, however, Herald wishes he had kept sleeping. “I would have woken up and the phone would have been gone and I could have replaced it,” he said. “It’s not worth a life.”
A FAMILY’S GRIEF
Hwangbum Yang’s life began in South Korea. In 1999, his parents moved him and his younger sister, Sunah, to New York City. His father, Kyung Sik Yang, works at a dry cleaner in Westchester. His mother, Hyun Sup Yang, works at an elder-care facility. They live in a modest two-story house behind the family's dry cleaners in the Riverdale section of the Bronx.
Hwangbum taught Sunday school at his church. While his parents worked late, he took care of his younger sister. He worked with a private tutor to learn English, memorizing 10 new words a day, but he struggled with the language. To earn extra money, he waited tables on weekends at Eden, a nightclub in Manhattan’s Koreatown. He dreamed of opening his own restaurant in Korea and carried a notepad to write down ideas for dishes he would someday serve, his sister said.
By last April, Hwangbum's life was starting to come together. He had graduated from culinary school, received his green card and found a job as a cook at The Modern, a restaurant at the Museum of Modern Art owned by famed restaurateur Danny Meyer.
“He was working very hard to get what he wanted,” Sunah said. “I was really proud of him.”
But around 1:30 a.m. on April 19, police knocked on Hwangbum's father’s door. Kyung Sik Yang, who doesn’t speak English, called his brother to help translate. Then he called his daughter.
“He said my brother had passed away,” Sunah said. “I said, ‘Don’t joke around.’ He was crying. My whole body was shaking.”
After Hwangbum's death, neighbors placed carnations on the sidewalk near where he was shot -- a steep one-way street bordered by a park and brick homes. Sunah avoids the spot because it causes her to imagine her brother’s shooting. “Instead, I try to imagine that my brother is traveling around the world, and I’ll see him again soon,” she said.
On a recent Sunday afternoon, Hwangbum's parents sat in a quiet room on the second floor of their church. His mother held in her hand a wallet-sized photo of her son. In it, Hwangbum wore a white button-down shirt and a straw hat and stared intently into the camera.
“It’s like he’s always beside me,” Hyun Sup said, speaking in Korean and fighting back tears. “I miss him so much.”
Hwangbum’s father said his friends often encourage him to buy an iPhone because they say it's more convenient than his older-model cell phone. But he tells them he never will. It would be too hard. "If I bought an iPhone,” he said, “I’d think of my son whenever I see it.”
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