The Santa Clara County District Attorney's Office charged six former Apple employees in a scheme in which they tricked the tech company into matching thousands of dollars in donations to children's charities, when the employees were not, in fact, donating anything.
For three years, the six tech employees defrauded both the State of California and Apple's Matching Gifts Program. Under the direction of Siu Kei (Alex) Kwan, five defendants all pretended to make donations to the American Chinese International Cultural Exchange (ACICE) or Hop4Kids.
In fact, they were given the donations back and Kwan – the CEO of Hop4Kids and accountant for ACICE – kept Apple's matching funds. Meanwhile, all the donors wrote off their "charitable donations" on their tax returns.
The defendants, Siu Kei (Alex) Kwan, Yathei (Hayson) Yuen, Yat C (Sunny) Ng, Wentao (Victor) Li, Lichao Ni, and Zheng Chang, are charged with multiple felony offenses including grand theft, conspiracy to commit felony grand theft, perjury, and tax fraud.
They also face charges under the aggravated white-collar crime enhancement due to the substantial sums involved.
If convicted, they could face time in jail, be forced to pay back restitution, and be levied fines and fees.
District Attorney Jeff Rosen emphasized that the case underscores their commitment to prosecuting individuals who defraud the tech community and misuse charitable programs and state resources. He commended Apple for coming forward and actively collaborating with the office to uncover the fraud.
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So, how did the scheme work?
The accused employees are alleged to have made donations through a third-party platform called Benevity.
Once a donation was made by the employee, Apple matched the donation either 100 percent or 200 percent, and Benevity would disperse the funds to the charity.
Kwan would leverage his position with the charities and reimburse the employees while keeping the matching funds for himself. This elaborate scheme resulted in Apple losing approximately $152,000 and the defendants overreporting around $100,000 in charitable contributions as tax deductions.
According to online sources, Benevity is a platform that connects nonprofits to millions of supporters at purpose-driven brands worldwide. It offers an integrated suite of community investment, employee, customer, and nonprofit engagement solutions.
If true, Kwan was committing embezzlement; specifically, the matching funds from Apple. The others violated federal and state laws that prohibit taking fraudulent tax deductions.
The final takeaway for employers is to perform due diligence on all NPOs prior to allowing them to participate in any form of matching program, including programs through an online platform.
Sources: https://www.latimes.com/california/story/2024-12-03/former-apple-employees-charged-for-stealing-152-000-in-charity-matching-donation-scheme-da-says and https://benevity.com/ and https://da.santaclaracounty.gov/former-apple-employees-charged-charity-fraud-scheme
