Former Apple Man Pleads Guilty And Surrenders Payout

Paul Shin Devine, the former Apple employee at the centre of a kickback scheme, has admitted defrauding Apple and pleaded guilty to wire fraud, conspiracy and money laundering in a Northern California court.

The plea is an about-face from the not-guilty plea Devine made 16 August, 2010, after being arrested and charged with more than 23 counts.

The 38-year-old Devine, who worked for Apple as a global supply manager from 2005 until 2010, is accused of having passed confidential company information – such as pricing targets, product specifications, roadmaps, product forecasts and information obtained from Apple’s partners – to a number of Asian suppliers in exchange for kickbacks.

The scheme earned him more than $2.4 million (£1.5 million).

Criminal Charges

“In addition, Devine admitted to transferring the proceeds of the wire fraud between various bank accounts in the US and overseas in order to conceal the nature, location, source, ownership and control of the proceeds; and to conducting financial transactions with criminally-derived property worth more than $10,000 (£6,100),” the office of US Attorney Melinda Haag said in a 28 February statement.

As part of his plea, Devine agreed to pay restitution and to forfeit nearly $2.3 million (£1.4 million) in cash and assets. Devine is currently on pretrial release, with sentencing scheduled for 6 June.

The investigation into Devine’s behaviour began in April 2010, when Apple found evidence of the scheme on Devine’s company laptop. On 11 August, 2010, he was charged with 15 counts of wire fraud, one count of wire fraud conspiracy, six counts of money laundering and one count of “engaging in transactions with criminally derived proceeds.” He plead guilty to one count of each statutory violation.

That same month, two of Apple’s Asian suppliers launched their own investigations into the scheme, while another insisted on its innocence, Reuters reported.

Supplier Tip Offs

Devine was said to have offered confidential information to six Asian suppliers that were unnamed in the Apple indictment, though three came forward to insist on their innocence or claim that they had launched investigations of their own. South Korea-based Cresyn, which manufactures earbuds for Apple’s iPod, admitted to paying fees to Devine, but described the relationship as legitimate.

“Devine approached us first and offered to give us business consulting to help advance into the US market,” an unnamed Cresyn official told Reuters 17 August. “We accepted his offer and received general information about U.S. markets, and in return we offered him a small consulting fee. But this was based on a legal contract we made with him in 2007.”

The maximum penalty Devine could receive, according the US Attorney’s office statement, is 20 years of prison time and a fine of $250,000 (£153,000) for each of the 15 counts of wire fraud and one count of wire fraud conspiracy; 20 years in prison and a fine of $500,000 (£306,000) or twice the value of the property involved, for each of the six counts of money laundering; and 10 years in prison and fine of $250,000, or twice the value of property involved, for the one count of engaging transactions with criminally derived proceeds.

According to Reuters, Devine’s attorney, Raphael Goldman, said that “Mr. Devine is a good man who made a mistake, and now he’s trying to make amends.”