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Apple manager charged after leaking iPhone, iPod secrets

updated 11:35 am EDT, Sat August 14, 2010

Apple manager accused of taking pay for secrets

The US Marshals Service on Friday arrested Apple worldwide supply manager Paul Shin Devine for money laundering and wire fraud relating to leaking iPhone and iPod secrets. Officials accused Devine of taking over $1 million in illegal payments from iPhone and iPod accessory makers in return for internal data that helped them negotiate better terms with Apple. It's unclear what was transmitted from what the San Jose Mercury News had learned, but the companies were material suppliers from mainland China and Taiwan, South Korea and Devine's native Singapore.

Investigators at the FBI and IRS said the manager had avoided detection by Apple by establishing many shell bank accounts and using indirect payments. Some accounts in the target countries were in the name of Devine's wife, while some payments routed through an outside firm, CPK Engineering. Code words such as "sample" were used to throw off co-workers.

The case only named one individual associated with the suppliers, Andrew Ang of Singapore, who received some of the information.

Apple has also filed a separate lawsuit against Devine for the damage done to the company. Company spokesman Steve Dowling didn't have details of the case but characterized Devine's behavior as unlike Apple's corporate culture.

"Apple is committed to the highest ethical standards in the way we do business," Dowling said. "We have zero tolerance for dishonest behavior inside or outside the company."

The company is known for being far more secretive than most other companies in an attempt to preserve the surprise of new product launches. In recent years, however, the dependence on Asian manufacturing it shares with most other US companies has made it difficult to avoid at least some leaks from abroad as assemblers and suppliers often can't prevent samples from reaching others. This year alone, the iPhone 4 was repeatedly confirmed through Vietnamese phone dealers who obtained engineering prototypes and from part suppliers.

Devine's instance represents one of the first known instances of an Apple employee directly leaking information to suppliers, although there's no immediate indication that his transactions involved prototypes or other information that would reach the public through rumors and photos.




by MacNN Staff

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    Comment buried. Show
  1. MyDaily-Gadget.com

    Joined: Dec 1969

    -19

    He has enough

    He has enough money to walk away from the law suite.

  1. MacMan2000

    Joined: Dec 1969

    +12

    umm

    not really. if found guilty, which is highly possible. apple just needs to get the other companies to agree to testify against him and the guy would be in placed in jail for years.

    Comment buried. Show
  1. Jonathan-Tanya

    Joined: Dec 1969

    -25

    agreed

    While anyone would prosecute this obvious crime, it takers an Apple to use the opportunity to stress they are intolerant, in general.

  1. Hillbilly Geek

    Joined: Dec 1969

    +2

    oh, snap!

    money laundering and wire fraud.. no more kung pao for you!

    Comment buried. Show
  1. iphonerulez

    Joined: Dec 1969

    -15

    Make sure he gets plenty of jail time

    with a sexually deprived inmate.

    Comment buried. Show
  1. Foe Hammer

    Joined: Dec 1969

    -12

    And That Will Ensure ...

    ... he'll be leaking a different kind of c*** for the rest of his life.

  1. Bobfozz

    Joined: Dec 1969

    +2

    send his a** away for a long time

    Apple will get the money back and then some... the companies involved just lost any chance to do further business with Apple. As I said not too long ago, Apple COULD (theoretically) open up business in the US again. Would bring a ton of jobs here AND so much positive publicity their shares would rise... probably wouldn't have to raise costs much. Save a ton in shipping and overseas security. Plus, quicker handle on supply issues. Cut out the middleman (China, etc.)

    Foreign countries would be angry, but do they really care about our problems? Nope. Just the money.

  1. Gazoobee

    Joined: Dec 1969

    +7

    enough money?

    Apple has filed a civil suit as well. This fellow will be paying all the money back plus interest plus court fees almost certainly. He will either get jail time or not, but he won't profit, he will never get another job of the same calibre, and he will probably be paying off this debt for the next ten years at least.

    Comment buried. Show
  1. famalegoods102

    Joined: Dec 1969

    -12

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  1. testudo

    Joined: Dec 1969

    0

    Re: send his a** away for a long time

    the companies involved just lost any chance to do further business with Apple.

    Do you think they really had any plans to do business with Apple in the first place? The whole reason they were paying this guy was to get information that Apple wasn't supplying them.

    As I said not too long ago, Apple COULD (theoretically) open up business in the US again.

    Never happen. Too expensive.

    Would bring a ton of jobs here AND so much positive publicity their shares would rise... probably wouldn't have to raise costs much.

    Wouldn't raise costs much? Are you serious? Salaries alone would jump astronomically for the workers. There is a reason all these companies send the work to China. it is just far, far, far cheaper to manufacture there.

    And shares wouldn't rise because of the announcement. Some people might go "Look, Apple's finally supporting America! Let's get Apple stock!", but most true investors would look at it more in the way of "OK, how's this move going to affect overall costs, profit margins, sales, etc. Apple might be able to get by without raising prices of Macs, but for the small stuff, iPods and iPhones, there could be a serious hit.

    Save a ton in shipping and overseas security. Plus, quicker handle on supply issues. Cut out the middleman (China, etc.)

    You do realize Apple sells a lot of products overseas as well, right? Those shipping costs are just going to be going in reverse.

    And the guy just caught here worked for Apple! This isn't a case where, if all manufacturing was done at home, this couldn't happen.

    And how do they get a 'quicker handle' on supply issues? Do you really think this is the 19th century? It takes a month for Apple to receive word from far-off China that they're low on hard drives? In fact, if anything, supply issues will be aggravated, since most of Apple's supplies come from China or the far east. Or are you thinking all the components and parts will be made in the US as well?

    Foreign countries would be angry, but do they really care about our problems? Nope. Just the money.

    What do you mean 'foreign countries will be angry'? What country will be angry? Some companies might be upset, but it isn't like Apple's production is a large part of any country's economy. And users in foreign countries aren't going to feel slighted by Apple since they already feel slighted by Apple, what with the prices of some of Apple's products in those countries.

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