DENVER - 9Wants to Know caught an iPhone scheme on camera that targets the homeless and the desperate with promises of quick cash.
"I thought it was amazing money. I had rent due the next day and I was looking to pay it," said a 19-year-old Denver woman named Phoenix. "I was very desperate."
9Wants to Know spent weeks unraveling the scheme in which people are convinced to sign up for numerous iPhone contracts and then handover the reduced-price phones for some cash.
Those who sign the contracts are then left on the hook with expensive monthly payments.
The 'iScheme' - how it works
9Wants to Know has learned men cruise around homeless shelters, the 16th Street Mall, and plasma donation clinics in an effort to find people desperate for money.
The men will drive victims to Apple stores and convince them to sign numerous contracts for numerous iPhones. Victims will then be paid $100 or more in exchange for several iPhones.
The iPhones can be unlocked and sold on the international market for more than $700 dollars each.
Victims tell 9Wants to Know they were told by organizers they can just cancel contracts at any time to avoid paying monthly fees and penalties.
"I'm in the hole about $6,000," Phoenix said. She claimed she was told by the schemers she could cancel her contracts within three days. "They're targeting anybody that looks like they would be vulnerable."
A man named Jamal told 9Wants to Know he is now more than $2,000 in debt after signing several contracts at the Apple store and turning over his phones. Jamal said he was picked up outside of a plasma donation clinic in Aurora.
"I just needed cash at the moment," Jamal said. "I didn't really understand what was happening."
"How are you going to comprehend the long term ramification of things when you're just worried about where your next meal is coming from?" Dan Conner asked.
Connor works with the homeless at the Denver Rescue Mission and says getting into more debt makes it even more difficult for someone to get off the street. Credit can be ruined, making it difficult to find an apartment, Connor said.
"They're taking advantage and preying on people who don't understand what's going on," Connor said.
Caught on Camera
9Wants to Know received a tip several men were operating this scheme at the Cherry Creek Apple Store.
With our iPhones, 9Wants to Know recorded several men signing numerous iPhone contracts and then turning over their new iPhones to two men.
One of those who signed numerous contracts is David Sauer, who lives under a bathroom building at an Aurora park.
"I didn't really think about it. All I heard was 200 bucks. I'm broke," Sauer told 9Wants to Know.
9Wants to Know observed an Apple store employee collect Sauer's information for several contracts.
The same Apple employee was seen giving Sauer's new iPhones directly to the schemers.
Sauer said he was surprised his bad credit was still good enough to get contracts but his main thought was on the quick cash the men offered.
"Motel room. A bath. Food," Sauer said. "[Two hundred dollars] don't last too long."
9Wants to Know identified one of the men behind the scheme as Benji Kermani of Beverly Hills. Records show Kermani owns a cell phone company called DEAL2BEAT which advertises the sale of "unlocked" iPhones in foreign countries.
Kermani and a partner of his declined to answer questions about his operation when approached by 9Wants to Know at the Apple store and instead physically grabbed our iPhone.
Eventually, we were able to recover the phone from Kermani's hands.
9Wants to Know sent emails and left voicemails with Apple's public relations department detailing what was observed.
A company spokesperson eventually returned our calls and said Apple doesn't comment on "matters of security."
A day after 9Wants to Know questioned Kermani at Cherry Creek, we saw him back at the Apple store conducting his scheme.
Verizon and AT&T also declined to comment about the issue.
Sprint was the only company that responded to 9Wants to Knows questions about the scheme.
"Once we introduced the iPhone, we were seeing rampant credit 'muling' all over the country," said Sprint attorney Dan Solomon. "It's attractive for someone who doesn't have a lot of money."
"Credit muling" is a relatively new term that describes the use of someone else's identity and personal information to get something of value.
Solomon says Sprint is very aggressive in curbing credit muling by hiring private investigators across the country to track down cell phone traffickers.
"There are many laws being broken by this activity," Solomon said. "Sprint has filed about 40 lawsuits all over the country to crack down on this behavior."
Cherry Creek's response
Cherry Creek general manager Nick LeMasters said the organizers were found to be conducting unauthorized business in the mall area.
Security observed cash transactions outside the Apple store, according to LeMasters. Eventually the shopping center told Kermani he and his partners were trespassing.
"….one of the organizers returned at which time we had to get the police involved, and since that happened, they have not returned," LeMasters told 9Wants to Know.
In Lone Tree, police recently arrested two people accused of convincing a mentally disabled man to sign up for iPhone contracts at the Park Meadows Apple store.
Casey Parker of California and Erin Chamblee of Denver are facing a misdemeanor charge of deception.
In the affidavit, Lone Tree police say Parker is "known to have homeless and vagrant persons make purchases of iPhones. Parker purchases the cell phones at a reduced price ..."
"Parker pays these people $30 per phone. Parker collects the phones and re-sales [SIC] the phones for profit," the affidavit says.
Parker and Chamblee are due in court next month.
As for the scheme at the Cherry Creek Apple store, a police report filed by Jamal indicates Denver police will not investigate because they consider the scheme a "civil" issue and "unfounded."
(KUSA-TV © 2014 Multimedia Holdings Corporation)