Former Apple worker pleads guilty to $17m mail and wire fraud charges
- Reference: 1667394051
- News link: https://www.theregister.co.uk/2022/11/02/apple_buyer_wire_money_fraud/
- Source link:
Dhirendra Prasad, 52, of Mountain House, California, worked at Apple from 2008 to 2018 and operated in the Global Service Supply Chain for most of that time. He was tasked with buying parts and services for Apple from various vendors.
According to the [1]US Attorney's Office for the Northern District of California , Prasad admitted in a written statement that he began to defraud Apple as early as 2011 by "accepting kickbacks, inflating invoices, stealing parts, and causing Apple to pay for items and services never received."
[2]
The former Apple worker ran these fraudulent schemes through to 2018 and "ultimately resulted in a loss to Apple of more than $17 million," the office stated.
[3]Founder of zero-emissions truck venture Nikola found guilty of $1b fraud
[4]Prison inmate accused of orchestrating $11M fraud using cell cellphone
[5]American software biz CEO arrested for allegedly storing election data in China
[6]DoJ 'very disappointed' with probation sentence for Capital One hacker Paige Thompson
Co-conspirators included Robert Gary Hansen and Don M Baker, both of whom reside in the Central District of California. The pair each owned vendor companies and engaged with Apple. Both admitted they had "conspired with Prasad to commit fraud and money laundering" [7]earlier this year .
In one of several frauds devised by Prasad, he had motherboards shipped from Apple's inventory to CTrends, Baker's company. Baker was to have the board's components harvested, and Prasad issued purchase orders for those products. Baker shipped the components back to Apple and CTrends submitted an invoice. The pair then split the proceeds of the crime.
[8]
A separate example in 2016 saw Prasad arrange to have parts shipped from Apple's stockholding in a Nevada warehouse to Hansen's business, Quality Electronics Distributors Inc. Hansen then intercepted the components, removed their packaging, put them in new packaging and sent them back to Apple's warehouse. Prasad raised a purchase order and Hansen submitted an invoice to bill Apple for parts it already owned. The duo shared the subsequent payment.
The Attorney's Office added: "In addition to the many fraud schemes, Prasad admitted he engaged in tax fraud by funneling illicit payments from Hansen directly to Prasad's creditors. Prasad also caused a shell company to issue sham invoices to CTrends in order to conceal Baker's illicit payments to Prasad and to allow Baker to claim hundreds of thousands of dollars of unjustified tax deductions. These schemes resulted in an IRS loss of more than $1.8 million.
[9]
"The United States also instituted a civil forfeiture action to forfeit the assets acquired by Prasad with the fraud proceeds, including multiple real properties he purchased and numerous financial accounts containing funds traced to Prasad's crimes. These assets have an aggregate value of approximately $5 million. Today, Prasad agreed to forfeit all the assets to the United States."
Prasad pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud, carrying a maximum sentence of 20 years, and he also admitted one count of conspiracy to defraud the US "in violation of 18 U.S.C. § 371." This carries a maximum sentence of five years. It is, of course, for the court to decide the length of the sentence. ®
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[1] https://www.justice.gov/usao-ndca/pr/former-apple-employee-admits-defrauding-apple-more-17-million
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y2KiMBoK7EQxhF3UbLmasAAAAFM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.theregister.com/2022/10/19/nikola_founder_fraud/
[4] https://www.theregister.com/2022/10/13/prison_11m_schwab_fraud/
[5] https://www.theregister.com/2022/10/05/konnech_election_software_china/
[6] https://www.theregister.com/2022/10/05/paige_thompson_sentence_doj_unhappy/
[7] https://www.theregister.com/2022/03/22/apple_buyer_fraud_allegations/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y2KiMBoK7EQxhF3UbLmasAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y2KiMBoK7EQxhF3UbLmasAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://whitepapers.theregister.com/
Re: So ig I read this correctly,
This depends on who investigated this first. If Apple found about this before the IRS did, they will have certainly sued him to oblivion. And Apple has some fierce lawyers! In this case, it looks like Apple was unaware of the entire scheme, before the IRS found out.
If it's not that, then Apple was playing stupid. But I doubt it - why would they?
Re: So ig I read this correctly,
Usually when you see scams like this, they're undone by getting greedy and things get to ridiculous levels. However, $17m, over the span of about 10 years, at a company the size of Apple, is fairly tame and likely to fly under the radar as not being big enough to trigger alarm bells with auditors. Things go missing all the time, even with the best inventory system, or they could be damaged in transit... Around $1m/year is a pretty reasonable figure for lost/damaged parts. The main problem is if someone notices that one person always seems to "lose" around $1m worth of parts every year. Not to give anyone ideas, but you need several people who can spread out the losses. Of course that then means everyone's cut is lower and thus the scam is undone.
That all said, my guess is Apple tipped off the IRS and was asked to hold off on any legal action while a case was built. There will likely be civil charges filed by Apple soon enough.
Re: So ig I read this correctly,
Why would they [play stupid]?
Because federal law. If the bad boys were only in California, they won't be federally prosecuted for "interstate" crimes like wire fraud.
As soon as the Nevada connection is discovered, then the feds can be brought in.
(There's an old story about a small biz, Illinois I think, that discovered their bookkeeper was stealing from them. Knowing this, they waited until she transferred some ill-gotten gains to a relative in another state. Bingo, federal charges! Federal time! IRS tax audit!
Revenge is best served via a US federal prison.)
Inferior components
Looking at this from a customer perspective: there are Apple products floating around that contain inferior components.
Are there customers that have been denied service because of allegations of third-party repairs?
So ig I read this correctly,
He likely was caught only because Uncle Sam didn't get his cut. You can get away with any other crime, but don't pay your taxes and you'll be reeled in. The taxman is always there, and always gets his cut.