‘iPod Mechanic’ faces federal fraud, money laundering charges [updated]

Once known as the “iPod Mechanic,” Nicholas Woodhams of Kalamazoo, MI, has been charged by U.S. prosecutors with both federal fraud and money laundering crimes over a scheme that allegedly involved tricking Apple into sending “more than 9,000” replacement iPod shuffles to a company that specialized in third-party repair and replacement of iPods. According to an earlier lawsuit filed by Apple last year, Woodhams allegedly took advantage of Apple’s iPod shuffle Advance Replacement Program in 2007, by filling out an online form for customers that saw Apple ship him “replacement” iPod shuffle units, with a credit card kept on file in case the broken shuffle was never returned. Apple claimed that Woodhams used a credit card he knew could be authorized for a potential charge, but would immediately decline any actual charges made by Apple should the broken shuffles fail to appear. Woodhams then sold the players for $49 each, according to court documents filed this week in Grand Rapids, MI. According to his lawyer, Woodhams has “been cooperating with the government and [is] in the process of negotiating a resolution,” adding that Apple’s lawsuit is on hold while the criminal case proceeds.

In addition to the shuffle replacement scheme, Apple also accused Woodhams of ignoring an agreement to stop using the iPod Mechanic name for his business and accompanying website, claiming it was misuse of the company’s “iPod” trademark; Woodhams is also said to have swapped out the back plates of out-of-warranty iPods for those of still-covered models in an effort to avoid paying repair and parts charges.

Update, April 7, 2009: Woodhams has pleaded guilty to fraud and money laundering. As part of the plea, he has agreed to forfeit property, including a home, Audi sedan, a race car, and more than $570,000; Woodhams will be sentenced August 25.

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