From DailyTech: The first of two Apple, Inc. (AAPL) employees caught stealing and selling company secrets to suppliers was sentenced this week. Caught in a federal sting by the U.S. Department of Justice (DoJ), Paul Shin Devine -- a manager at Apple -- had been charged with committing fraud, breach of his duties at Apple, and with stealing/conspiring to steal trade secrets.
Apple contracts most of its parts and assembly manufacturing work to suppliers in East Asia, such as Foxconn Technology Comp., Ltd. (TPE:2354). The world's most valuable technology company is infamously for squeezing suppliers hard for the best possible contract rates. Manufacturers often seek out intelligence to try to prepare for Apple's upcoming demands and to get the edge up on their domestic rivals.
Mr. Devine had been appointed to the rank of global supply manager at Apple in 2005. He held the role until he was arrested in Aug. 2010 on the current charges. The arrest followed a 4 month investigation by the U.S. Federal Bureau of Investigation (FBI) and the U.S. Internal Revenue Service (IRS) who grew suspicious of irregularities in Mr. Devine's reported income.
The investigation led to the discovery that he was taking kickbacks from Singapore-based Apple supplier Jin Li Mould Mfg and five east Asian manfuacturers who produced iPhone and iPod accessories.
The case in some ways resembles that of Yahoo! Inc.'s (YHOO) embattled chief information officer (CIO) who stands accused by Netflix Inc. (NFLX) of taking at least $500,000 USD in kickbacks from two or more firms on contracts totalling $3.7M USD. However, the two cases are somewhat different in that in the Netflix case Mr. Kail was able to engage in direct quid pro quo with the contracts as he controlled both the awarding of contracts to IT service suppliers and the invoice approval for those contracts.
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