Former supply chain buyer's fraud and kickbacks cost Apple $10M

A former Apple employee has allegedly defrauded Apple out of $10 million, according to federal authorities, by using his position as a supply chain buyer to obtain kickbacks and to make Apple pay for undelivered goods and services.

Charged on Friday, Dhirendra Prasad was with Apple between 2008 and 2018, and spent most of his time working as a buyer as part of its "Global Service Supply Chain," prosecutors and the Internal Revenue Service say. In his position working with vendors, Prasad is said to have "exploited his position by engaging in multiple different schemes to defraud Apple."

A federal press release seen by Silicon Valley says the list of activities includes "taking kickbacks, stealing parts, and causing Apple to pay for items and services it never received." The five charges include counts of fraud, money laundering, and tax evasion, with each carrying maximum sentences of five to 20 years.

The activities are said to have resulted in losses totaling more than $10 million for Apple.

Prasad is set to make his first court appearance on the matter in the U.S. District Court in San Jose on Thursday. The federal government has already been given permission by the court to seize $5 million in cash and property from Prasad, with the intention to keep the assets as proceeds of crime.

Two other men based in California have also been linked to the scheme, authorities claim, with the pair owning companies that sold to Apple, as well as conspiring with Prasad over fraud and money laundering. Both were charged in separate federal cases, and authorities claim they have both "admitted their involvement."

8 Comments

zoetmb 2655 comments · 17 Years

About 2 years ago

It’s hard to understand how this happens in a company like Apple which must have all kinds of controls. Even the kickbacks should have been implied because kickbacks aren’t “free” to a company — they result in being charged more. And Apple supposedly controls product costs quite rigidly. (Although they spend ungodly amounts of money on facilities and other things.)

Many decades ago, I got a job at a large media company because my predecessor got caught taking kickbacks. And they were able to catch him even though this was before much computerization because the way the acquisition process worked was that first we’d have to do a purchase request, which had to have three competitive quotes and it had to be signed by one’s boss as well as their boss (and sometimes even more up the line, depending upon the level of spending).

Then it had to be approved by the purchasing department, which had their own chain of approval. Once approved, only then did you complete a purchase order, which they re-approved and sent out. Once you received the order, you signed off on a copy of the P.O. and then the company got paid.

Anything that was going to be capitalized went through a similar but more rigid process as those were expensed to different budgets.

They also had a policy of never again doing business with any company that paid a kickback.

wood1208 2932 comments · 10 Years

About 2 years ago

In USA,corporations,government and IRS put more trust in people to do right. As a side effect, it give immigrants(not aware of the US laws and it's reach) doing something wrong and a sense of easily getting away is higher than facing consequences. Thought process is when get caught, will handle. Until then just keep ripping the system.

But in US when law enforcement comes after you, you are finished. Unfortunately, some people don't get it until get caught and put in prison and if they put you with general prison population, you know what happens.