Paul Shin Devine, the former Apple employee at the center of a kickback
scheme, admitted to defrauding Apple and pled guilty to criminal accounts of
wire fraud, conspiracy and money laundering in a Northern California
court Feb. 28.
The plea is an about-face from the not-guilty plea Devine made Aug. 16, 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, road maps, 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.
"In addition, Devine admitted to transferring the proceeds of the wire
fraud between various bank accounts in the U.S. 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," the office of U.S. Attorney Melinda Haag said in a
Feb. 28 statement.
As part of his plea, Devine agreed to pay restitution and to forfeit nearly
$2.3 million in cash and assets. Devine is currently on pretrial release, with
sentencing scheduled for June 6.
The investigation into Devine's behavior began in April 2010, when Apple
found evidence of the scheme on Devine's company laptop. On Aug. 11, 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 pled 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.
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 U.S.
market," an unnamed Cresyn official told Reuters Aug. 17. "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 U.S. Attorney's
office statement, is 20 years of prison time and a fine of $250,000 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 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, "Mr.
Devine is a good man who made a mistake, and now he's trying to make amends."
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