Feds: Young millionaire’s iPhone fraud broke a Seattle bank Apple reseller who lived large on stolen millions sentenced to 5 years in prison

When Maziar Rezakhani was arrested in October 2015, federal agents found three of his cars parked in the garage of his luxury downtown Bellevue apartment. From left to right, a white Ferrari Speciale that Rezakhani obtained in June 2015, a Mercedes-Benz that he obtained in November 2014, and a blue Ferrari Spider that he obtained in December 2014. Rezakhani bought the cars while conducting a fraud that would help force the sale of a Seattle-area bank. less When Maziar Rezakhani was arrested in October 2015, federal agents found three of his cars parked in the garage of his luxury downtown Bellevue apartment. From left to right, a white Ferrari Speciale that ... more Photo: U.S. Department Of Justice Photo: U.S. Department Of Justice Image 1 of / 11 Caption Close Feds: Young millionaire’s iPhone fraud broke a Seattle bank 1 / 11 Back to Gallery

A Seattle-area fraudster who made millions illegally shipping Apple products to the Middle East has been sentenced to five years in federal prison.

Maziar Rezakhani already lost his high-end penthouse and Ferrari collection for defrauding Apple and the IRS. On Monday he learned how much of his life he would lose to prison.

Rezakhani, now 27, ultimately admitted to fraud crimes related to his dubious, multi-million dollar iPhone exporting operation. Pleading guilty in August, Rezakhani had been under investigation for nearly two years before federal agents came calling in October 2015.

By then, though, the damage was done. Prosecutors say the young millionaire’s fraud helped break Foundation Bank, which loaned Rezakhani some of the millions he blew on Italian sports cars and his penthouse apartment.

Federal investigators determined the University of Washington grad-turned-millionaire faces shipped thousands of Apple products to Dubai and elsewhere. While doing so, Rezakhani stole at least $3 million through a variety of frauds related to the business.

“This is the familiar story of unrelenting greed and lies winning out over hard work,” U.S. Attorney for Western Washington Annette L. Hayes said following Rezakhani's sentencing hearing. “This defendant could have had all the cars and fancy apartments he wanted by running an honest and successful business. Instead, he deceived everyone in his path resulting in more than $3 million dollars of loss and a lot of innocent bank employees losing their jobs.”

By the prosecution’s account, Rezakhani first tried to steal $700,000 worth of iPhones by claiming they were lost in the mail, and succeeded in taking $300,000 worth of phones. He then obtained a $4 million loan based on false documents and statements, and defaulted on the loan after stealing more than $2.8 million. He then tried to do it again, trying to steal $5 million through a false insurance claim.

“Over time, Mr. Rezakhani’s fraud schemes grew in their audacity as Mr. Rezakhani increased the stakes” Assistant U.S. Attorney Brian Werner said in court papers.

“Each offense preyed on the willingness of others to believe Rezakhani,” Werner continued. “Of course, the victims were no match for Rezakhani’s willingness to deceive.”

U.S. District Judge James Robart sentenced Rezakhani to the five-year prison term requested by prosecutors. He also imposed a five-year period of court supervision to begin after Rezakhani's release.

Rezakhani, a longtime Western Washington resident, began reselling Apple products at 18 while studying at UW. He was a middle man, reselling iPhones to distributors in the United States and Middle East.

From 2009 until his arrest, he moved millions of dollars in Apple products. The operation was lucrative – he leased luxury apartments, drove expensive cars and claimed to have a seven-figure annual income.

Rezakhani wasn’t paying taxes, and he wasn’t exactly truthful about what he was exporting. Not only was Rezakhani failing to pay the IRS, he was dodging Washington state sales taxes by buying iPhones in Portland, Oregon.

Investigators say Rezakahani and a colleague used a group of “runners” in Portland to buy thousands of iPhones. They flew south from Seattle every few days to collect the phones and buy more from an authorized Apple retailer. Rezakhani then repacked the iPhones at his parents’ home and shipped them to the Middle East.

Rezakhani formed or partnered with at least three companies to manage the effort. One, NeoAce, was described as the sole purchaser for a Dubai reseller; a Washington firm, GTE Holdings, transferred about $50 million to and from NeoAce between 2011 and 2013.

Rezakhani was already under investigation by January 2014, when a Homeland Security Investigations agent watching his parents’ home in the Seattle suburbs saw FedEx pick up a shipment of iPhones bound for Singapore. Investigators placed a camera outside the Lynnwood home and collected security data from the Bravern – a luxury apartment building in downtown Bellevue – to track Rezakhani.

At the same time, Rezakhani was opening large lines of credit. He provided false tax returns and bank statements to obtain the loans, and owed $2.8 million on one when the FBI interrupted his operation.

To secure one loan, Rezakhani provided Foundation Bank with what purported to be an agreement with Apple authorizing NeoAce to resell Apple products. The fake agreement was meant to legitimize Rezakhani’s business and helped him secure a $4 million loan.

“After getting this money, Mr. Rezakhani immediately started conducting fraudulent transactions,” Werner said in court papers. “Mr. Rezakhani conducted transactions to hide the fact that his re-selling business was not successful.”

Werner said Rezakhani was using new loans to repay old debts. While doing so, he lived lavishly on his creditors’ dime.

In March 2015, Rezakhani moved into the Bravern’s penthouse apartment, paying $26,265 a month in rent. Rezakhani appears to have bought a house in Medina, and collected two Ferraris, a Mercedes and a Range Rover. Each of the vehicles carried a personalized license plate reading “MAZAIR” and a number.

Werner said Rezakhani’s theft from Foundation Bank helped force the Bellevue bank’s sale in 2016. The $3 million loss, Werner said, “was very significant to a small, local bank.”

“This loss helped lead to the sale of Foundation bank, and the sale of the bank caused many former Foundation Bank employees to lose their jobs,” the federal prosecutor said in court papers.

Twice Rezakhani lied while claiming that shipments of iPhones had been stolen in transit. Investigators came to believe that Rezakhani was lying both times in attempts to defraud FedEx and UPS.

Rezakhani told FedEx investigators that a shipment of 1,280 iPhone 5s phones had been replaced with kitchen tiles. Several of the cartons were found packed with anti-Apple leaflets reading “iSlave” and depicting workers hanged with Apple’s signature earbuds. The leaflets also named Foxconn, a Chinese electronics manufacturer notable for its poor treatment of workers.

Surveillance video taken at hardware stores around the Eastside showed Rezakhani buying the tiles days before he bought the missing phones. Moreover, the iPhones were spread between multiple shipments from different locations, making it impossible for a distribution-center thief to fake the order.

Despite the flaws in his claim, Rezakhani convinced his creditors to repay him $340,000 at Apple’s expense.

Rezakhani made similar claims in July 2015, asserting that a $5.6 million shipment had been replaced with stone blocks. Rezakhani bought the blocks at a Bellevue building supply store days before sending the shipment.

That month he also told Lynnwood police 625 iPhones had been stolen from his parents’ home. Rezakhani didn’t know it at the time, but investigators were watching the home with surveillance cameras and knew it hadn’t been burgled.

In October, investigators raided Rezakhani’s penthouse apartment as well as his parents’ home. They seized financial documents and electronics, as well as $114,000 in cash.

Rezakhani was arrested following those searches and indicted in December on three fraud-related counts connected to statements Rezakhani made to secure loans. Rezakhani ultimately pleaded guilty to mail fraud, bank fraud and filing a false tax return.

Doing so, he admitted faking the shipping losses, lying to obtain the $4 million Foundation Bank loan and hiding income from the IRS, saving himself $355,000 in the process. Rezakhani has agreed to pay those taxes and to repay Foundation Bank $3.1 million. He also agreed to pay $349,000 to Apple and two other companies he swindled. That restitution comes on top of $3.3 million he garnered through the fraud that he has agreed to forfeit to the government.

Even facing years in prison, Rezakhani was still trying to make deals, according to court papers. He sought special permission from the court to meet with a Federal Aviation Administration engineer with whom he hoped to launch a new venture.

Rezakhani was initially freed on bond but has been jailed at the SeaTac Federal Detention Center since August. He is expected to be transferred to a Bureau of Prisons facility in coming weeks.

Seattlepi.com reporter Levi Pulkkinen can be reached at 206-448-8348 or levipulkkinen@seattlepi.com. Follow Levi on Twitter at twitter.com/levipulk.