A Former Employee Will Spend Three Years In Prison For Defrauding Apple

A former Apple employee was charged with taking kickbacks, stealing parts, inflating invoices, and causing the company to pay for items and services it never received.

A former Apple  (AAPL) - Get Free Report employee will spend three years behind bars and pay some hefty fines and penalties for bilking the computer giant out of $17 million.

Dhirendra Prasad, 55, conspired with two separate Apple vendors to defraud Apple by taking kickbacks, stealing parts, inflating invoices, and causing the company to pay for items and services it never received, the U.S. Attorney's Office for the Northern District of California said.

Prasad, who pleaded guilty in November, also acknowledged that he evaded tax on the proceeds of his schemes.

The case focused on Prasad’s employment at Apple from December 2008 through December 2018. He was a buyer for most of that time in Apple’s Global Service Supply Chain.

It was his job to facilitate the process where Apple bought parts to perform warranty repairs on older devices

"Prasad was given substantial discretion to make autonomous decisions to benefit his employer," prosecutors said in a statement. 

"Prasad betrayed this trust, and abused his power to enrich himself at his employer’s expense – all while accepting hundreds-of-thousands of dollars’ worth of compensation from Apple in the form of salary and bonuses," officials said. 

He also used his insider knowledge of Apple's fraud detection practices to avoid being caught for several years.

Splitting the Profits

Prasad will also forfeit $5.5 million worth of assets, pay a judgment of $8.1 million, and restitution of $17.4 million to Apple and $1.9 million to the IRS. 

The two company owners, Robert Gary Hansen and Don M. Baker, who engaged in business with Apple were also involved in the scheme, were charged in separate federal cases and pleaded guilty as well.

Prasad had motherboards shipped from Apple to Baker's company, CTrends. Baker would then have the components of the motherboards harvested while Prasad arranged for Apple to purchase those same components.

Prasad caused Apple to pay the fraudulent invoices, and then he Baker split the proceeds of the fraud.

In 2016, Prasad would have components from Apple's inventory sent to Hansen's company, Quality Electronics Distributors, Inc., allowing Hansen to repackage these components and charge Apple for them. 

The profit from these purchase orders placed by Prasad was also split between the two. Prasad admitted he began to defraud Apple as early as 2011.

In 2016 Prasad arranged to have components shipped from Apple’s inventory located in a Nevada warehouse to Hansen’s business.

Hansen intercepted the components, removed them from their packaging, placed them in new packaging, and shipped them back to Apple’s warehouse. 

 Prasad created purchase orders for the components, and Hansen submitted invoices to Apple for them, thus billing Apple for its own components.