Guilty plea in leaked Apple secrets via ‘expert networks’ (AAPL)

Walter Shimoon has added to the tally of guilty pleas associated with so-called ‘expert networks,’ which the U.S. government claims is less ‘expert’ and more ‘insider.’ According to the New York Times,

Walter Shimoon, a former employee at electronic manufacturer Flextronics, is the 12th person to plead guilty in the government’s investigation of expert network firms. Last week, a co-defendant, Mark Anthony Longoria, pleaded guilty while Winifred Jiau, a former consultant at an expert network firm, was convicted following a trial in Federal District Court in Manhattan.

Mr. Shimoon pleaded guilty to two counts of conspiracy to commit wire fraud and one count of security fraud. He is scheduled to be sentenced in July 2013.

Rather than being a relatively uninteresting securities violation, Shimoon’s case involves secrets siphoned from the pinnacle of the tech industry, Apple inc (NASDAQ: AAPL):

Among the secrets Mr. Shimoon was accused of leaking were actual and forecast sales figures for iPhones and iPods in the third and fourth quarters of 2009. Flextronics manufactured chargers for the iPhone among other things, and as an employee, Mr. Shimoon was privy to nonpublic information about Apple’s supply chain.

In addition to sales figures, prosecutors said Mr. Shimoon also tipped a cooperating witness to Apple’s plans to develop a new iPhone. But later in the call, according to a transcript from prosecutors, Mr. Shimoon leaked word of an even more secret product in development, the iPad, which at the time was referred to as K48.

Another interesting thing is that Shimoon recognized the importance of the product immediately. According to BusinessInsider:

Here is  what the FBI recorded Shimoon saying about the iPad:

They have a code name for something new. It’s, it’s totally.. it’s a new category altogether. And, uh, I speculate, it doesn’t have a camera in it, what I figured out. So, I speculated that it’s probabl a reader… Something like that.”

And he also had a lot to say about the iphone:

Shimoon told CW-2 that Apple was going to be producing a new “iphone” cellular telephone that would be “coming out early next year,” and that the new iphone “is gonna have two cameras.” When Shimoon told CW-2 this information, CW-2 asked when the new iphone was coming to market.  Shimoon replied: “I was being asked the same question by my boss this morning. Um, ’cause we’re working with them on the camera. They [Apple], you know, they;re very secretive, right?… So I don’t have an exact time frame but i’ve concluded we;ll start building modules probably in March.”

“It’ll be a neat phone ’cause it’s gonna have five megpixel auto-focus camera and it will have VGA forward-facing video.”

Covestor models that hold AAPL as of 7/5/11:

Sources:

“Executive Pleads Guilty to Leaking Apple Secrets” New York Times, 7/5. http://dealbook.nytimes.com/2011/07/05/executive-pleads-guilty-to-leaking-apple-secrets/

“Alleged Inside Trader Shimoon On iPad In 2009: “It’s, It’s Totally… It’s A New Category Altogether” Business Insider, 12/16/2010. https://www.businessinsider.com/alleged-inside-traders-had-codenames-for-the-ipad-2010-12?r=US&IR=T