Two Sacramento men were arraigned today in Sacramento Superior Court on felony charges related to a multimillion-dollar international cell phone trafficking conspiracy that allegedly involved recruiting individuals from homeless shelters.

Attorney General Kamala D. Harris announced the arraignment, which followed a six-month, multistate investigation by the state Attorney General's eCrime Unit into the trafficking of stolen smart phones.

Shou Lin Wen, 38, and Yuting Tan, 27, both of Sacramento, allegedly bought large numbers of stolen smart phones in California for resale in Hong Kong, raking in nearly $4 million in less than a year, according to a California Attorney General's Office news release. The two were arrested March 6 and arraigned today on felony counts of money laundering, grand theft, possession of stolen property and conspiracy. They are being held in Sacramento County Jail in lieu of $1 million bail each.

"The international theft ring used fraud and deceit to steal smart phones and exploit the homeless," Harris said in a written statement.

According to the arrest warrant, the co-conspirators in the scheme enlisted individuals from homeless shelters to purchase multiple smart phones such as the Apple iPhone, Samsung Galaxy and Blackberry from cell phone carriers. Carriers allow individuals to purchase up to five phones in their name under one plan at a discounted rate. The straw purchasees then delivered the phones to the co-conspirators for a nominal payment, officials said.

It is alleged that the straw purchasers never intended to follow through with paying for the phone contracts, which under California law constitutes committing theft by false pretenses and designates the phones as stolen property, according to the news release.

Hundreds of stolen phones reportedly were then bundled from across the country by middlemen and sent to Wen and Tan, the alleged ringleaders of the scheme, in California. Wen and Tan allegedly profited by shipping the stolen phones to Hong Kong, where iPhones can sell for as much as $2,000, authorities said.

Special agents with the eCrime Unit conducted surveillance operations and tracked parcels across the country to identify the ringleaders. According to the arrest warrant, agents intercepted four of the 110 parcels that Wen and Tan shipped to Hong Kong during the past 12 months. The 412 phones seized from these packages were traced to phony customers as far away as North Carolina.

During an eight-month period, officials said, the defendants' business self-reported gross sales of $3,948,485.

On March 6, special agents with the eCrime Unit conducted an undercover operation in the Sacramento West Marine parking lot during which they offered to sell 408 "stolen" iPhone 4s and iPhone 5s to Wen and Tan. The defendants reportedly agreed to pay $60,600 in cash for 163 phones and were arrested after producing the cash.

The California Attorney General's eCrime Unit was created in 2011 to investigate and prosecute identity theft, cyber crimes and other crimes involving the use of technology.

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