TEHRAN, Iran (AP) — With flashy celebrity ads and promises of big discounts, a store in Iran’s capital had offered consumers in the Islamic Republic one of the country’s most popular products: an iPhone due out in 2021.
But instead of getting their hands on the handsets, police and prosecutors in Iran allege customers were tricked by a business owner running a multimillion-dollar Ponzi scheme.
Yet the controversy surrounding the Kourosh, or “Son of the Sun,” Company goes far beyond the alleged plan.
It’s a sign of the economic woes plaguing Iran after decades of Western sanctions, now worsening as Tehran moves rapidly forward on its nuclear program, helping to arm Russia in Moscow’s war against Ukraine, boosting support for proxy increases militias in the Middle East and violently suppresses dissent. ahead of Friday’s parliamentary elections.
When the government banned Apple’s iPhone 14 and 15 from the Islamic Republic last year, the ban stimulated a parallel economy for the older handsets, driving up prices for the devices as many tried to plow their depreciating Iranian rials into physical goods .
And while Supreme Leader Ayatollah Ali Khamenei has condemned American luxury goods amid years of tensions with the West, consumers still want the phones and the prestige that comes with them.
“There is a lot of demand,” said Aram, a mobile phone saleswoman in Tehran who gave only her first name for fear of reprisals. Her customers keep asking for the “latest few iPhone models” – the ones that are banned.
“If they could allow legal imports… that would be much better,” she said.
In stores across Iran, prices of iPhone 13s range from $330 for refurbished models to $1,020 for models still in the box — shiny and new, but still not quite the coveted iPhone 15 now available elsewhere in the world.
Even if you bring an iPhone 14 or 15 model into the country, it will stop working on Iran’s state-controlled mobile phone networks after a month, the time frame for tourists visiting the province.
The import of iPhones has long been a controversial issue. Government statistics show that before the ban, iPhones accounted for about a third of Iran’s $4.4 billion mobile phone import market.
The private companies that import mobile phones have access to government-set exchange rates that are much lower than the rate of 580,000 rials to $1 in exchange houses, making the business much more lucrative.
At the time of Iran’s 2015 nuclear deal with world powers, the exchange rate was 32,000 rials to 1 dollar.
Khamenei pointedly criticized the iPhone imports in remarks to ministers in August 2020.
“Excessive imports are something dangerous,” Khamenei said at the time, according to a transcript on his official website. “Sometimes this import is a luxury product, so there is no need for it. I heard that about half a billion dollars was spent on importing one type of American luxury mobile phone.”
But the demand is still there and iPhones remain a status symbol for many young Iranians.
“I prefer the iPhone to any other phone at any price because it cannot be compared to any other brand in terms of luxury,” said Ehsan Ehsani, a 23-year-old architecture student in Tehran.
Rules for importing iPhones into Iran have always been strict.
The phones could only be brought in individually by travelers, who then registered them at the country’s entry point and declared the iPhone was for personal use. At customs, people gave their passport number and paid a fee of 22.5% of the price of the phone, as determined by the government, or possibly proof of purchase.
This led to a side business where iPhone traders waited for passengers at the airport and paid them in exchange for getting their permission to use their passport numbers to register iPhones in their inventory.
Navid Bahmani, a 26-year-old who works at an iPhone store in Tehran, said he would normally pay travelers up to $40 for their passport numbers at Tehran’s Imam Khomeini International Airport.
“The price depends on the travelers,” Bahmani said. “Some accept the first offer, some don’t.”
Apple, based in Cupertino, California, did not respond to a request for comment.
Iran’s economic problems have also played a role in plans such as that of Kourosh, curiously also the name of the Persian throne under Cyrus the Great.
Inflation has overtaken every interest rate offered by a bank, while depreciation has also eaten away at people’s savings. As a result, many seek to purchase a physical asset, whether it be a house, jewelry, or even a car, to protect themselves from losses.
That’s where the Kourosh Company came into the picture.
The company offered iPhone 13s starting at the equivalent of $360, if you were willing to pay first and wait a few weeks before receiving the device. Celebrities in Iran appeared in online advertisements for the company, attracting even more attention.
Some customers initially received their iPhones, further fueling the frenzy around the store. The reformist newspaper Shargh estimated that the company made $36 million in less than a year, although officials have not confirmed that.
Then the iPhones dried up.
Kourosh’s 27-year-old CEO and the scheme’s alleged mastermind, Amirhossein Sharifian, suddenly left Iran in September — and are still on the run — with millions of dollars in payments, Iranian authorities say.
Sharifian could not be reached by The Associated Press for comment, although a company employee insisted in an online video two weeks ago that supply chain issues were to blame for the delay in iPhone deliveries.
Iranian police spokesman General Saeed Montazeralmehdi said investigators were still chasing Sharifian.
Despite the arguments, customers continue to queue outside the store, even on a recent freezing day in Tehran.
“I paid for nine iPhones,” said Moteza Zarei, 47, who runs a car repair shop. “I thought it was a good way to increase my investment. But I don’t have one.”
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Associated Press journalists Amir Vahdat and Mehdi Fattahi in Tehran, Iran, contributed to this report.