Apple Manager Arrested in Kickback Scheme

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Earlier this morning, Mercury News reported that a midlevel global supply manager at Apple, Paul Shin Devine, has been accused of accepting $1 million in kickbacks from iPod/iPhone accessory developers. He was arrested on charges of wire fraud, and money laundering, resulting in a federal indictment and a private civil suit from Apple related to the kickbacks.

Devine’s position within Apple meant that he was privy to sensitive trade information, which he would turn around and sell to Asian suppliers like Andrew Ang of Singapore. No specific companies were named, but they are described as suppliers of iPhone and iPod products and are located in various Asian countries, according to the indictment. With this knowledge, companies could have an upper hand when negotiating contracts and licenses with Apple, as well as the ability to gain a competitive advantage in the iPhone/iPod accessory market. He is accused of dealing with companies in China, Taiwan, Singapore and South Korea.

Devine relied on a series of U.S. and foreign bank accounts and as a shadow company posing as a front for the operation. In order to mask the intention of transfers, code words such as “sample” were used to identify transactions. One of the accounts was opened in his wife’s name, but she is not named as an accomplice in either case. Some payments for Devine went through CPK Engineering before ending up in his pocket. Devine was also known to travel to Asia, where he is suspected to have picked up kickbacks in person.

Apple’s PR lead, Steve Dowing had this to say: “Apple is committed to the highest ethical standards in the way we do business... We have zero tolerance for dishonest behavior inside or outside the company.” Devine will appear at the U.S. Northern District Court in San Jose on Monday, August 16, at 1:30 PM. The investigation was a joint effort between the FBI and IRS. Devine is currently being held by the U.S. Marshals Service.

[ Mercury News ]