Apple Employee and Agent for Apple Parts Suppliers Charged in Fraudulent Kickback Scheme

Defendants Shared Kickbacks from Apple Business Partners

SAN JOSE, CA—Facing wire fraud and conspiracy charges, an employee of Apple Inc. was arrested and made his initial appearance in federal court Friday, United States Attorney Melinda Haag announced.

A federal grand jury in San Jose indicted Paul Shin Devine, of Sunnyvale, Calif., and Andrew Ang, of the Republic of Singapore, on Aug. 11, 2010. In addition to wire fraud and conspiracy, the grand jury charged Devine with money laundering and engaging in monetary transactions with criminally derived property. The charges involve a kickback scheme dating to early 2007.

According to the indictment, Devine, 37, and Ang, 35, are alleged to have defrauded Apple of Devine’s honest services and to have obtained money and property by means of materially false and fraudulent representations and material omissions. In his role as an Apple Global Supply Manager, Devine was responsible for selecting suppliers of enclosure materials for headsets designed for Apple's iPhone and iPod products. Devine had access to confidential company information, including Apple product forecasts and product development plans (known as "roadmaps"), pricing targets, and product specifications. Ang worked for several companies that supplied parts for Apple products.

Devine allegedly transmitted confidential internal Apple information to the suppliers, located in China, Singapore, South Korea, and Taiwan. In return, the suppliers agreed to pay Devine kickbacks, including payments determined as a percentage of the business they did with Apple. Devine allegedly then shared a portion of those kickbacks with Ang.

Between early 2007 and the present, Devine and Ang are alleged to have received more than $2.5 million dollars in kickbacks. Devine is alleged to have used bank accounts in several foreign countries to receive kickback payments and to have used a business bank account in the United States to launder the wire fraud proceeds.

The maximum statutory penalty for each count of wire fraud in violation of 18 U.S.C. §§ 1343 and 1346 and for wire fraud conspiracy in violation of 18 U.S.C. § 1349 is 20 years' imprisonment and a fine of $250,000 plus restitution if appropriate. The maximum statutory penalty for each count of money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) is 20 years' imprisonment and a fine of $500,000 or twice the value of the property involved in the transaction. The maximum statutory penalty for each count of money laundering in violation of 18 U.S.C.§ 1957 is 10 years' imprisonment and a fine of $250,000 or twice the value of the property involved in the transaction. The government is also seeking to forfeit the proceeds of the wire fraud and any property involved in the money laundering offenses. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Michelle J. Kane is the Assistant U.S. Attorney who is prosecuting the case, in consultation with Assistant U.S. Attorney Stephanie Hinds, of the Asset Forfeiture Unit, with the assistance of paralegal Lauri Gomez. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Devine and Mr. Ang must be presumed innocent unless and until proven guilty.