Supply chain scheme —
Government has seized $5 million in assets so far.
Tim De Chant
Under CEO Tim Cook’s watchful eye, Apple has become famous for its tightly managed supply chain. Yet even the most finely tuned machines run into problems from time to time. The case of Dhirendra Prasad appears to be one of those times.
Prasad’s time at Apple coincided with the company’s meteoric rise. He joined in 2008, just after the iPhone was released, and spent the next decade there as a buyer in the company’s Global Service Supply Chain group, which sources repair parts from a range of vendors.
During that time, Prasad devised a scheme with two other men, Robert Gary Hansen and Don M. Baker, who owned vendors that Apple worked with, the Department of Justice says.
The alleged scam worked something like this: Prasad would receive a list of parts and services that Apple needed. He would then request quotes from vendors, negotiate with them, and choose which ones would get the business. From this position of power, Prasad could put his thumb on the scale, and he apparently gave Hansen’s and Baker’s companies a leg up in exchange for something on the side.
“Mr. Prasad used his position of trust at Apple to engage in multiple schemes to defraud Apple, including taking kickbacks, stealing parts using false repair orders, and causing Apple to pay for items and services it never received, resulting in a loss of more than $10,000,000,” the filing says.
Prasad’s alleged scheme appears to have ramped up as it went on. In 2017, Prasad reported that his income was $1,215,000, the government alleges. “In fact, as defendant knew and believed, defendant had taxable income for 2017 that was greater than the amount reported on the tax return.”
US attorneys believe that Prasad attempted to launder that money by purchasing five properties, most of them in California’s Central Valley, and stashing funds in various investment accounts, 529 college savings plans, and a retirement annuity. The seized assets are worth about $5 million, the government estimates.
Hansen and Baker were charged last year, and the US attorney’s office is requesting that their cases be combined with Prasad’s. Together, the vendors “each conspired with Prasad to commit fraud and money laundering,” the US attorney’s office for the Northern District of California said in a criminal filing.
Prasad is being charged with conspiracy to commit wire and mail fraud, two counts of conspiracy to engage in money laundering, conspiracy to defraud the United States, and tax evasion. Each of the first three counts carries a maximum sentence of 20 years, while the latter two carry maximum sentences of five years. Prasad is scheduled to appear in court on March 24.