TEHRAN, Iran (AP) — With flashy celebrity ads and promises of deep discounts, a store in Iran’s capital has offered consumers in the Islamic Republic the 2021-launched iPhone, one of the most popular products in the country.
But instead of seizing the phones, police and prosecutors in Iran allege that customers fell into the trap of a business owner running a multimillion-dollar pyramid scheme.
But the controversy surrounding Kourosh, or the “Son of the Sun” Company, extends far beyond the alleged plan.
This follows decades of Western sanctions as Tehran rapidly advances its nuclear program, helps Moscow arm Russia in its war against Ukraine, increases support for proxy militias in the Middle East and violently cracks down on dissidents. A sign of the economic troubles plaguing the world. Ahead of Friday’s parliamentary elections.
When the government banned Apple’s iPhone 14 and 15 in the Islamic Republic last year, the ban spurred a parallel economy for older phones and drove up the prices of the devices as many people tried to put devalued Iranian rials into any physical commodity.
Although 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 associated with them.
“There is a lot of demand,” said Aram, who runs a mobile phone store in Tehran and gave only his name for fear of retaliation. Its customers keep asking about the “latest iPhone models”, i.e. the banned ones.
“It would be much better… if they allowed legal imports,” he said.
Prices for iPhone 13s in stores across Iran range from $330 for refurbished models to $1,020 for those still in the box; it’s shiny and new, but it’s not the much-coveted iPhone 15 that’s still available elsewhere in the world.
Even if you bring an iPhone 14 or 15 model into the country, Iran’s state-controlled mobile phone networks will stop working after a month, which is the required amount of time for tourists visiting the county.
iPhone imports have long been a controversial issue; Government statistics show that about a third of Iran’s $4.4 billion mobile phone import market consisted of iPhones before the ban.
Private companies that import mobile phones have access to government-set exchange rates that are much lower than the rate of 580,000 riyals to $1 at exchange offices, making the business much more lucrative.
At the time of the nuclear deal Iran signed with world powers in 2015, the exchange rate was 32,000 rials to 1 dollar.
Khamenei openly criticized iPhone imports in statements to government ministers in August 2020.
“Excessive imports are a dangerous thing,” Khamenei said at the time, according to a transcript on the official website. “Sometimes this import is a luxury product, so there is no need for it. “I heard about half a billion dollars were spent to import some kind of American luxury mobile phone.”
But the demand is still there and iPhones remain a status symbol for many young Iranians.
Ehsan Ehsani, a 23-year-old architecture student living in Tehran, said, “I prefer iPhone to other phones regardless of its price because it cannot be compared to any other brand in terms of luxury.”
The rules for importing iPhones into Iran have always been strict.
Phones could only be brought by individual travelers, who would then register them at the country’s entry point and declare that the iPhone was for personal use. At customs, people would provide their passport numbers and pay a fee of 22.5% of the phone price set by the government or possibly the sales receipt.
This sparked a side business in which iPhone traders would wait for passengers at the airport and pay them in exchange for permission to use their passport numbers to register iPhones for their stock.
Navid Bahmani, 26, who works at an iPhone store in Tehran, said he often pays up to $40 for passport numbers to passengers traveling through Tehran Imam Khomeini International Airport.
“The price varies depending on the passenger,” Bahmani said. “Some accept the first offer, some don’t.”
Apple, headquartered in Cupertino, California, did not respond to a request for comment.
Iran’s economic problems also had an impact on plans such as Kurosh, which, interestingly enough, was the name of the Persian throne under Cyrus the Great.
As inflation outpaced any interest rate offered by a bank, depreciation ate away at people’s savings. As a result, many people try to purchase a physical asset such as a home, jewelry, or even a car to protect themselves from losses.
This is where Kourosh Company comes into play.
The company was offering iPhone 13s starting at $360; Of course, if you pay first and agree to wait a few weeks before receiving the device. Celebrities in Iran attracted even more attention by appearing in the company’s online advertisements.
Some customers initially bought their iPhones, further fueling the frenzy in the store. Reformist newspaper Shargh estimated that the company earned $36 million in less than a year, but officials have not confirmed this.
Then the iPhones dried up.
Iranian authorities say Kourosh’s 27-year-old CEO and alleged mastermind of the scheme, Amirhossein Sharifian, suddenly left Iran in September and remains at large with millions of dollars in payouts.
The Associated Press could not reach Sharifian for comment, but a company employee insisted in an online video posted two weeks ago that supply chain issues were causing the delay in iPhone deliveries.
Iranian police spokesman General Saeed Montazeralmehdi said investigators were still after Sharifyan.
Despite the fights, customers continue to line up outside the store, including on a recent below-freezing day in Tehran.
“I paid for nine of them (iPhones),” said Moteza Zarei, 47, who runs a car repair shop. “I found a good way to increase my investment. But I couldn’t get any of it.”
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Associated Press journalists Amir Vahdat and Mehdi Fattahi in Tehran, Iran, contributed to this report.