How are people buying the iPhone 5 in bulk?

There was a guy in line next to my friend at the Aplle store handing out tons of cash for people to buy him a second iPhone. He handed each person $800 to buy him one. I though hmmm how could this possibly work? My buddy got a new iPhone 5 while I'm happy with my 4 and not ready to upgrade but I thought free money, who could turn that down. I got two cards from the Apple rep (Apparently you had to have a card to be guaranteed a phone) and told the guy give me $1600 I'll get you two. Well when the Apple rep handed me the two phones he said each has to be tired to a line and my current phone will automatically be diasbled as soon as I buy the 5. Well that wasn't going to happen so I told the money man I wasn't interested. Apparently he got about 5 phones and each person got $800. How did this work? As far as I can think, the person who took the guy's money now has a phone in their nane that for $800 they handed to some dude who will probably put them on eBay. Thankfully I was smart enough not to partake.