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.