Apple Manager Indicted for Kickback Scheme, Sued for Racketeering

August 16, 2010

(ChattahBox)—A federal grand jury indictment released on Friday, is charging an Apple, Inc. manager with participating in a kickback scheme with Asian suppliers that netted the Apple employee with more than $1 million. Paul Shin Devine is in federal custody, charged with wire fraud and money laundering. And Devine also faces a civil suit for fraud and racketeering.

Apple has been investigating Devine since April, when the company uncovered email correspondence between the Asian suppliers, admitting to kickback payments in return for proprietary and confidential information.

According to the Wall Street Journal, Devine’s case illustrates the cutthroat nature of the electronic supplier industry:

“According to the indictment and the civil suit, Mr. Devine came up with an elaborate scheme in which he supplied companies such as Cresyn Co. in South Korea, Kaedar Electronics Co. in China and Jin Li Mould Manufacturing Pte. Ltd. in Singapore with confidential information that would let them negotiate favorable contracts with Apple. The companies provided goods such as mechanical parts, tooling and fixtures in connection with products that included Apple iPods and iPhones, according to the documents.”

“The allegations point to the high financial stakes for suppliers, which made regular payments to Mr. Devine in exchange for information that would help them in dealing with Apple—including Apple’s sales volume forecasts, product specifications, competitors’ target prices and bids, according to the indictment and Apple’s complaint.”

Devine is expected to appear in federal court on Monday.


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