More arrests in tech insider-trading scheme

Justice Department unveils charges against five more, including an employee of an Apple supplier who's accused of leaking information about an unannounced iPhone as well as the internal name and details of the project that became the iPad.

Quite a lot more details just came out about the insider-information probe that hit the tech world last month, and they're juicy.

The Wall Street Journal has a full report on the whole scheme. Turns out one of the men indicted today, Walter Shimoon, worked for Flextronics, a supplier to Apple. In the papers unsealed today, the FBI caught Shimoon on tape allegedly relaying super-secret details about the yet-to-be-released iPhone last year as well as the internal code name for the project that turned into the iPad. Fortune found the details in the 39-page indictment, and called them out today.

Last month an FBI investigation resulted in the arrest of an executive of an "expert network" called Primary Global Research who was accused of selling or providing important, non-public information about high-profile tech companies to investors. More indictments were revealed today, resulting in more arrests. Those indicted were consultants of Primary Global Research that helped clients like hedge funds and mutual funds get information about their investment companies.

It's not wholly unsurprising that the most-secretive company in the technology world was one of the alleged victims of this scheme. Analysts, investors--not to mention bloggers --are desperate to get any nugget of information about what Apple is up to, whether it's timing of a new product or sometimes a single spec change on a gadget.

The indictment notes that the Flextronics employee was recorded by the FBI in October 2009 allegedly telling someone about third-quarter iPhone sales figures over the phone, and that Apple's next iPhone would have two cameras, "a five-megapixel auto-focus camera and it will have a VGA forward-facing videoconferencing camera." That was eight months before the iPhone 4, with cameras of those exact specifications, was introduced.

Shimoon also allegedly told his contact (who is not named) about a new product in the works for Apple. He is accused of saying, "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." A little over three months later, Steve Jobs introduced the iPad.

The information peddling was not limited to Apple. Inside information was provided about AMD, Dell, and Flextronics, according to the court documents.

Arrested in the scheme and charged with wire fraud and conspiracy to commit wire fraud today were: James Fleishman, Primary Global vice president and sales manager; Shimoon, senior director of business development at Flextronics; Mark Anthony Longoria, AMD supply chain manager; and Manosha Karunatilaka, account manager at Taiwan Semiconductor Manufacturing.

 

Join the discussion

Conversation powered by Livefyre

Don't Miss
Hot Products
Trending on CNET

HOT ON CNET

Looking for an affordable tablet?

CNET rounds up high-quality tablets that won't break your wallet.