Flextronics VP Sued for Leaking Details about iPhone 4 and iPad
A report recently published by the Wall Street Journal describes how federal prosecutors have charged four corporate managers for allegedly accepting more than $400,000 to give insider financial details about Apple (NASDAQ:AAPL), and technical details regarding the iPhone 4 and the iPad before their release.
The four corporate managers at the centre of the charges worked on the side for Primary Global Research LLC, an “expert-network” firm based in California, and charges were also filed against a fifth person who was an employee of the company.
Flextronics is a major Apple (AAPL) partner that supplies camera and battery components to the company for its iPhone and other devices. It’s alleged that Walter Shimoon, former senior director of business development at Flextronics, leaked vital information regarding third-quarter iPhone sales during telephone conversations to an employee of a hedge fund, which was recorded by the FBI. Information which could be incredibly profitable to an investor who intended to use it to their advantage in the stock market.
Shimoon is accused of providing highly confidential sales forecasts and unreleased product details in exchange for $22,000, say prosecutors.
CNNMoney’s Philip Elmer-DeWitt notes in his report the two “bombshells” in the FBI’s case:
Apple, he is heard telling CW-2, was “coming out next year” with a new iPhone that’s “gonna have two cameras … It’ll be a neat phone because it’s gonna have a five-megapixel auto-focus camera and it will have a VGA forward-facing videoconferencing camera.” Apple announced the iPhone 4 — with its two cameras — eight months later.
Then he is heard telling CW-2 that “they [Apple] have a code name for something new … It’s … It’s totally … It’s a new category altogether… It doesn’t have a camera, what I figured out. So I speculated that it’s probably a reader. … Something like that. Um, let me tell you, it’s a very secretive program … It’s called K, K48. That’s the internal name. So, you can get, at Apple you can get fired for saying K48.” The iPad — code named K48 — was unveiled four months later.
All four corporate managers were arrested on Thursday on multiple fraud charges, and the fifth person, who pleaded guilty last week, is reported to be cooperating with investigators.