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Attacks/Breaches

Apple Worker Arrested On Kickback Charges

Paul Shin Devine allegedly disclosed company secrets to Asian suppliers in exchange for payments of more than $1 million.

An Apple worker has been arrested on charges he allegedly took kickbacks of more than $1 million over a period of several years from the company's Asian suppliers in exchange for inside information about the iPhone maker's product lineup.

A federal grand jury has indicted Paul Shin Devine, 37, of Sunnyvale, Calif., along with Singapore-based alleged accomplice Andrew Ang, on 23 counts of wire fraud, money laundering, receiving kickbacks, and other charges, according to the San Jose Mercury News, which first reported the story on Friday.

Apple has also filed a civil lawsuit against Devine, who was a supply-chain manager at the company.

The investigation was led by agents from the Internal Revenue Service and the Federal Bureau of Investigation. An Apple spokesperson said the company is cooperating with the investigators.

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

The newspaper reported that the companies that allegedly paid the kickbacks were not identified by name in the federal indictment. The indictment indicates they are based in various countries in Asia, including China, South Korea, Taiwan, and Singapore. The bulk of Apple's electronics manufacturing is done in those countries.

The vendors, which manufacture parts and accessories for the iPhone and iPod, supposedly benefited from the arrangement as, armed with insider information, they were better able than their competitors to tailor their products to Apple's needs and anticipate future demands.

Devine and Ang allegedly established an elaborate series of front companies and offshore accounts to cover up income received from the scheme. Devine is set to appear Monday afternoon in U.S. Northern District Court in San Jose to face the charges.

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