Saturday, August 14, 2010, 10:00 am PT (01:00 pm ET)
Apple manager charged with leaking secrets for kickbacksA global supply manager working for Apple has been charged in a US federal grand jury indictment for wire fraud, kickbacks and money laundering, and is also facing a civil suit from Apple itself.
According to a report by the San Jose Mercury News, 37 year old Paul Shin Devine of Sunnyvale, California was named in the 23 count indictment along with Andrew Ang of Singapore.
The charges relate to an alleged fraud scheme that claims Devine used his security clearance at Apple to provide confidential information about upcoming products to Apple's suppliers, including Ang. The indictment says those suppliers then used the secrets to negotiate favorable contracts with Apple and subsequently paid Devine kickbacks, which he shared with Ang.
The funds were said to be laundered through a series of accounts in US and foreign banks, with the payments identified as "samples" so as not to arouse suspicion. Devine reportedly opened accounts to accept payments under both his and his wife's names, and in some cases was said to accept bribes in person while meeting with the suppliers in Asia.
The companies involved were not named in the indictment, but include suppliers for iPhone and iPod products and were said to be located in "various countries in Asia," including China, Singapore, South Korea and Taiwan.
The case was put together by the US Federal Bureau of Investigation and Internal Revenue Service, which reported that Devine is currently being held U.S. Marshals Service and will face a San Jose, California federal court appearance on Monday. The report said the IRS declined to comment on Ang's current status.
In addition to the criminal prosecution, Apple is also reportedly bringing a civil suit that claims Devine accepted more than a million dollars in "payments, kickbacks and bribes" over several years.
"Apple is committed to the highest ethical standards in the way we do business," said Apple spokesman Steve Dowling in a statement. "We have zero tolerance for dishonest behavior inside or outside the company."
Apple has long worked hard to maintain secrecy in order to keep competitors guessing and to excite customers with flashy product releases, but the case also highlights threats the company faces in working with its own partners in the lucrative business of supplying parts and assembling new products.
Whether the case will have an effect upon the product prototype leaks (primarily from Asian suppliers) that have resulted in regular new explosions of media attention remains to be seen.
On Topic: Apple
- Editorial: Google, Microsoft claiming Apple's crown, albeit from 1994
- Apple to appeal e-book decision, maintains company did 'nothing wrong'
- Labor advocate challenges accuracy of NYT report on Apple, Foxconn
- Apple's overseas manufacturing operations offer flexibility, not just savings - report
- Photography pioneer Kodak files for chapter 11 bankruptcy protection