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Apple Worker Pleads Not Guilty To Kickbacks

Paul Shim Devine denies he took illegal payments from Apple suppliers in exchange for details about the company's product roadmap.
An Apple worker who was arrested on charges he 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 has pleaded not guilty.

Paul Shim Devine, 37, of Sunnyvale, Calif., entered the plea Monday in U.S. District Court in San Jose, before U.S. Magistrate Howard Lloyd. A detention hearing is slated for Wednesday.

A federal grand jury last week indicted Devine, along with Singapore-based alleged accomplice Andrew Ang, on 23 counts of wire fraud, money laundering, receiving kickbacks, and other charges. 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. Prosecutors say evidence of the scheme was found, among other places, in Devine's Hotmail and Gmail e-mail accounts.

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 said in a public statement. "We have zero tolerance for dishonest behavior inside or outside the company," the spokesman said.

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.

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