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2 March 2011

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2 March 2011 | Angeline Albert

A global supply manager at Apple has admitted taking kickbacks from some of the computer giant’s suppliers.

Paul Devine, who had responsibility for managing relationships with suppliers to buy components for iPod music players and related accessories, this week pleaded guilty to wire fraud, conspiracy and money laundering. He previously pleaded not guilty.

In a US federal courtin San Jose, Devine admitted to defrauding Apple while he was employed with the company from 2005 until 2010.

He revealed confidential company information such as product forecasts, pricing targets and product specifications to a number of Apple’s component suppliers and manufacturers in return for kickbacks. This included payments of a percentage of the business they got with Apple.

His activities enabled suppliers to negotiate more favourable contracts with Apple than they would have been able to obtain without the confidential information. 

Devine also admitted transferring the proceeds of his fraudulent activities between bank accounts in the US and overseas to try to cover his tracks. 

He accepted that the loss attributable to his offences was $2,409,000 (£1,481,150) and has agreed to forfeit money and property worth $2.28 million (£1.4 million).

Charged with 15 counts of wire fraud, one count of wire fraud conspiracy, six counts of money laundering and one count of engaging in transactions with criminally derived proceeds, Devine is currently on bail. He will be sentenced on 6 June. 

The investigation into the Apple manager’s activities began in April 2010 when Apple found evidence of the kickback scheme on Devine’s Apple-owned laptop. He was arrested on 13 August following a joint investigation by the Internal RevenueService and the Federal Bureau of Investigation. Apple filed a civil suit against Devine the same day (13 August).  The technology giant is trying to sue him for taking bribes from component suppliers.

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