An employee of Apple Inc. (AAPL) was arrested Friday for allegedly receiving more than $1 million in kickbacks from six companies in Asia that serve as suppliers to the Silicon Valley company.
Paul Shin Devine, a global supply manager at Apple, was charged in a federal grand jury indictment of offenses that include wire fraud, money laundering and unlawful monetary transactions. The indictment also names Andrew Ang, an employee of one of Apple's suppliers.
Apple also named Devine in a civil suit filed Friday in U.S. District Court in San Jose, Calif., which includes allegations of fraud and violations of racketeering laws. He is scheduled to make a court appearance Monday.
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"Apple is committed to the highest ethical standards in the way we do business," said an Apple spokesman, adding that it has "zero tolerance for dishonest behavior inside or outside of the company."
Devine couldn't be reached for comment. Arlette Lee, an agent for the Internal Revenue Service, confirmed that it conducted the investigation jointly with the FBI and that Devine was being held in an unknown location by the U.S. Marshals Service.
Lee said Devine didn't yet have an attorney. She declined to comment on Ang's whereabouts. The FBI and the U.S. Marshals Service didn't return calls seeking comment.
The case was reported earlier by the San Jose Mercury News.
According to the indictment and the civil suit, Devine came up with an elaborate scheme in which he supplied companies like Cresyn Co. Ltd. in South Korea, Kaedar Electronics Co. Ltd. in China and Jin Li Mould Manufacturing Pte. Ltd. in Singapore with confidential information that would let them negotiate favorable contracts with Apple.
In return, Devine demanded payments, which were sent to bank accounts in his wife's name in amounts that were small enough to avoid attention. He shared part of the money with Ang, who was an employee of Jin Li, and helped broker deals with Jin Li as well as others.
Apple's lawsuit said Devine began working for Apple in July 2005 as a manager responsible for selecting and managing relationships with companies that supply Apple with parts and materials for iPods and iPod accessories.
Jin Li, Cresyn and Kaedar couldn't immediately be reached.
Apple's complaint said it began investigating Devine for a possible violation of its corporate policy and found a cache of suspicious emails from his personal Hotmail and Gmail accounts in his company laptop computer that contained discussions with suppliers that included confidential corporate information and acknowledgements of payments received.
The Cupertino, Calif., company said these activities apparently took place from October 2006 until the present. The federal indictment said the scheme took place no later than February 2007.
-By Yukari Iwatani Kane, The Wall Street Journal
