The Santa Clara County District Attorney's Office charged six former Apple employees in a charity fraud scheme that exploited Apple's Matching Gifts Program and defrauded both the company and the State of California.
The scheme, which ran from July 01, 2018, to April 06, 2021, involved the employees falsely claiming to donate to children's charities - specifically the American Chinese International Cultural Exchange (ACICE) and Hop4Kids - through a third-party platform called Benevity.
Under the leadership of Siu Kei (Alex) Kwan, who served as CEO of Hop4Kids and accountant for ACICE, the employees were reimbursed for their "donations," while Kwan retained the matching funds provided by Apple. This manipulation allowed them to extract approximately $152,000 from Apple's program and falsely report around $100,000 in charitable deductions on their tax returns.
The individuals charged include Siu Kei (Alex) Kwan of Castro Valley, Yathei (Hayson) Yuen of San Jose, Yat C (Sunny) Ng of Milpitas, Wentao (Victor) Li of Hayward, Lichao Ni of Sunnyvale, and Zheng Chang of Union City.
They face multiple felony charges, including grand theft, conspiracy to commit felony grand theft, perjury, and tax fraud, along with enhancements for aggravated white-collar crime due to the large sums involved. If convicted, they could face jail time, restitution payments, and financial penalties.
District Attorney Jeff Rosen emphasized the importance of protecting charitable programs and praised Apple for its cooperation in uncovering the fraud, urging others in the tech community to report similar misconduct, especially during the holiday season when charitable giving is most needed.
Source: https://da.santaclaracounty.gov/former-apple-employees-charged-charity-fraud-scheme
Commentary
In the above source, one of the employees charged, Kwan, was the CEO of of one of the charities involved with the fraud. Consequently, Apple was paying Kwan as an employee and paying Kwan's NPO. This is a classic example of fraud via self-dealing.
Self-dealing undermines the integrity of charitable initiatives and can lead to reputational and financial harm for the donating entity and the charity.
The use of Benevity, a third-party donation platform, without rigorous verification of recipient organizations and their leadership structures, further enabled the fraud.
Lax due diligence - such as failing to cross-check charity leadership against employee rosters or to audit donation patterns - allowed the scheme to persist undetected.
To prevent such abuse, organizations should implement stricter controls, including conflict-of-interest disclosures for employees involved in charitable giving, automated checks for overlapping affiliations, periodic audits of donation records, and tighter vetting of eligible nonprofits.
The final takeaway is that donation programs are excellent, but loss prevention steps are needed to ensure that organization philanthropy remains transparent, ethical, aligned with its intended purpose and does not perpetrate fraud.
