Apple manager arrested after selling iPhone and iPod secrets to Asian suppliers

Image showing the backside of an Apple iPhone 4

Image showing the backside of an Apple iPhone 4

Paul Shin Devine, a global supply manager for Apple, was arrested on Friday for money laundering, wire fraud, and kickbacks after being indicted for selling iPhone and iPod trade secrets to Asian suppliers. Devine is accused of accepting over $1 million in payments from Asian accessory makers in exchange for internal information about the iPhone and iPod Touch. This information was then used by the suppliers to negotiate lucrative deals with Apple.

The federal indictment describes an elaborate multi-year scheme involving both US and international bank accounts, some of which were opened using the name of Devine’s wife. Many of the transactions were mediated by a bogus front end company, CPK Engineering, from which Devine received payments for kickbacks and bribes. Devine even created a code language in which leaked information was referred to as “samples” in order to conceal these transactions from his co-workers.

Also charged in this case was Andrew Ang of Singapore who was the recipient of some of this leaked information. The Asian companies involved in this scheme were not identified by name, but they were revealed to be material suppliers for the iPhone and iPod Touch. They were located in China, South Korea, Taiwan, and Singapore. Both the IRS and the FBI participated in this investigation.

In addition to the federal indictment, Devine also faces a civil lawsuit filed on behalf of Apple seeking compensation for damages done to Apple. The extent of these damages is unknown as the nature of the leaked information was not revealed. As expected, Apple’s response to Devine’s arrest is harsh. Spokesperson Steve Dowling stated publicly that,

“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.”

It is interesting to note that this is the first time in Apple’s 34-year history that an employee has been publicly accused of selling trade secrets. Does that mean Apple has finally hit the big time?

[Via Mercury News]

  • jason

    i think it is so funny how jobs is so insistent about keeping everything so secretive.i mean after all it was apple that used gsm,utms rights that nokia has patents on then they feel that they do not have to pay royalties to nokia.also they infringed more patents on nokia with the i phone internal antenna 2g 3g and 3gs thats why they came out with the new design.they still could not get right.my sister has i-phone 3gs and the reception sucks we both have att and my nokia n95 gets great service in fact it works everywhere i have been and i have been alot of places.

  • Harmonious

    Damn, so what is a safe way to hide large sums of money from the government? Foreign bank accounts not safe, under the bed isn’t safe either. WTF!

  • Duest1278

    Isn´t most of the iPhone hardware and software stole from HTC and Nokia anyway? I suppose the US government still need to protect the Chinese manufacturing industry. Seems lately would have been a better time for him to do it though, the cops are too busy beating up innocent protesters all over Nth AMerica…

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