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]