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Ex-Apple manager pleads guilty to fraud

02 Mar 2011

According to a release from the US Department of Justice, Paul Devine has pleaded guilty in federal court to wire fraud, conspiracy and money laundering.

Devine was originally accused of taking more than US$1 million in kickbacks from Asian suppliers last August

United States Attorney Melinda Haag said that in pleading guilty, Devine admitted to engaging in a scheme to defraud Apple, of its money or property and its right to his honest services while he was employed with the company from 2005 through 2010. 

Devine also 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. 

Court documents revealed that Devine transmitted Apple’s confidential information, such as product forecasts, roadmaps, pricing targets, product specifications, and data obtained from Apple’s business partners, to suppliers and manufacturers of Apple parts. 

In return, the suppliers and manufacturers paid Devine kickbacks, including payments determined as a percentage of the business they did with Apple. The scheme enabled the suppliers and manufacturers to, among other things, negotiate more favorable contracts with Apple than they would have been able to obtain without the confidential information.

As part of the plea agreement, Devine admitted that the loss attributable to his offenses was US$2,409,000.

The investigation began in April 2010, when Apple found evidence of the kickback scheme on Devine’s Apple-owned laptop. 

Devine, 38, of Sunnyvale, California, is currently on pre-trial release.  Sentencing is scheduled for June 6th, 2011.