Former Apple supply chain buyer Dhirendra Prasad pleaded guilty in federal court this week to conspiracy to commit fraud and conspiracy to defraud the U.S. in connection with multiple schemes defrauding Apple.
Prasad, 52, of Mountain House, near Tracy, was arrested last March and his sentencing is set for next March.
In a written plea agreement filed Nov. 1, Prasad, 52, of Mountain House, near Tracy, admitted he began to defraud Apple as early as 2011 by taking kickbacks, inflating invoices, stealing parts, and causing Apple to pay for items and services never received. Prasad admitted these schemes continued through 2018 and ultimately resulted in a loss to Apple of more than $17 million, according to U.S. Attorney Stephanie M. Hinds and Internal Revenue Service Special Agent in Charge Mark H. Pearson.
Prasad was employed by Apple from 2008 through 2018 and acted for most of that time as a buyer in Apple’s Global Service Supply Chain. Prasad’s responsibilities involved purchasing parts and services for Apple from vendors.
Prasad admitted his co-conspirators in the fraud schemes were Robert Gary Hansen and Don M. Baker, who lives in the Central Valley. Hansen and Baker each owned vendor companies, and their companies engaged in business with Apple. Hansen and Baker were earlier charged in separate federal criminal cases, and they have admitted their involvement in the schemes, prosecutors said.
In one of several fraud schemes admitted by Prasad, Hinds said that in 2013 he had motherboards shipped from Apple’s inventory to Baker’s company, CTrends. Baker arranged to have the motherboards’ components harvested, and Prasad arranged for Apple to issue purchase orders for those harvested components, according to plea documents.
Baker shipped the harvested components back to Apple, and CTrends submitted invoices to Apple, thus billing Apple for its own components. Prasad caused Apple to pay the fraudulent invoices, and Baker and Prasad thereafter split the proceeds of the fraud, said Hinds.
In another example, in approximately 2016 Prasad arranged to have components shipped from Apple’s inventory located in a Nevada warehouse to Hansen’s business, Quality Electronics Distributors, Inc., said prosecutors.
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. Prasad caused Apple to pay the fraudulent invoices, and Hansen and Prasad split the proceeds of the fraud.
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.
Prasad agreed to forfeit all assets from the fraud proceeds to the U.S., with a total value of approximately $5 million.
Prasad pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud which carries a maximum sentence of 20 years in prison, one count of conspiracy to defraud the U.S.,which carries a maximum sentence of five years. Prasad remains free on bond pending his sentencing hearing.