By Don Southerton, Korea Legal Editor
The Apple supplier scandal now has a Korean connection. Apple Insider and numerous media sources report a Korean supplier has revealed it was involved in the Apple kickback scheme. It will be interesting to see how things unfold. I’m wondering if the Asian suppliers will be subject to civil lawsuits by Apple, along with accused ex-Apple supply manager, Paul Shin Devine.
A South Korean earphone and headset maker this week admitted it entered into what it believes was a legal consulting contract with an Apple supply manager.
South Korea’s Cresyn said on Tuesday that it first met Paul Devine, an Apple global supply manager, in early 2006. The company was in negotiations to supply Apple, and Devine offered consulting services according to Reuters.
An unnamed official said the company made a “legal contract” with the supply manager in 2007, through which it paid him a “small consulting fee” in exchange for “general information about U.S. markets.” Cresyn supplies the ear buds that ship with Apple’s line of iPods.
In addition, JLJ Holdings, owner of Jin Li Mould Manufacturing, said it was looking into the accusations of kickbacks made by Apple. The company said that a former Jin Li employee was named in the indictment, along with Devine.
On Monday, Pegatron, the parent company of Kaedar Electronics, admitted it did pay a brokerage fee to an intermediate trading company between 2005 and 2008. The incident occurred before Pegatron acquired Kaedar, which has supplied iPod packing boxes to Apple since 2005. A company spokesperson said that no money was ever paid to an individual.
Three more companies have been named in the case but have not commented: Glocom/Lateral Solutions and Fatestning Technologies of Singapore, and Nishoku Technology in Taiwan.
Devine appeared in a San Jose, Calif., court on Monday and pleaded not guilty to accusations that he shared confidential information with Apple’s suppliers to give them an advantage in negotiations. He was arrested Friday and charged with 23 counts, including wire fraud, kickbacks and money laundering.
Devine also faces a civil suit from Apple, alleging that he accepted more than a million dollars in kickbacks from Asian suppliers.
Source: Apple Insider
Tags: Apple, Cresyn, Fatestning Technologies, Glocom/Lateral Solutions, IP, iPod, Jin Li Mould Manufacturing, Kaedar Electronics, Kickbacks Apple, Korea consultant, Korea consulting, Nishoku Technology, Paul Shin Devine, Pegatron
Here’s a follow-up story.
Sept. 21 (Bloomberg) — Paul Devine, the Apple Inc. manager accused of taking kickbacks in exchange for company secrets, proposed posting a bond of $612,407 from his foreign bank accounts to win release from jail, according to court documents.
Devine pledged the equity in his home near San Francisco and his mother’s Maryland home as collateral for the bond and has met most conditions for release set by U.S. Magistrate Judge Howard Lloyd in San Jose, California, Devine’s lawyer, Raphael Goldman, said in a letter to the judge today. Lloyd is scheduled to consider the bail request at a hearing tomorrow.
Goldman said Korean banking laws blocked Devine from transferring about $313,000 from accounts in that country.
“It appears that it will be very time-consuming, and difficult — if not impossible — to transfer these funds from Korea into the United States,” Goldman wrote. “The defense submits that Mr. Devine should be released while we explore possible ways to transfer the remaining funds from Korea.”
Devine, 37, a global-supply manager, was accused of money laundering and wire fraud in a 23-count indictment unsealed Aug. 13. He has pleaded not guilty to charges that he took at least $1 million in kickbacks from Asian suppliers.
Devine gave the suppliers of iPhone and iPod accessories confidential data that helped them win better contracts from Cupertino, California-based Apple in exchange for payments, according to the indictment. Each count of wire fraud, wire fraud conspiracy, and money laundering carries a 20-year prison sentence, prosecutors said.
Lloyd ordered Devine on Aug. 24 to give the government access to two safe deposit boxes that a prosecutor said may contain “proceeds of the fraud.” Devine granted that access, Goldman said in today’s letter.
Jack Gillund, a spokesman for the U.S. Attorney’s office in San Francisco, declined to comment.
Apple hasn’t provided information on Devine’s employment status since his arrest.
The case is U.S. v. Devine, 10-cr-00603, U.S. District Court, Northern District of California (San Jose).