Government: Apple Ripped Off SEC for $1M in Useless Gear

Government: Apple Ripped Off SEC for $1M in Useless Gear

Photo by Tom Raftery - http://flic.kr/p/8gPdHt

If you thought Apple was good at pushing its tech gadgets to consumers, that’s nothing compared to some government deals. What’s great about federal contracts, if $1M mistake is made, agencies will cover it up, a government watchdog reports.

An Apple salesman in 2008 “convinced” the Securities and Exchange Commission to buy storage gear from the Cupertino, Calif. company and its Ipartner Cloverleaf Communications, according to reports. When SEC employees told bosses the equipment was full of bugs and virtually useless, officials warned them to stay quiet, the agency’s inspector general David Kotz writes.

“This information doesn’t leave this room,” SEC high-ups said. Little wonder agency officials didn’t want the debacle to become public. “Kotz also found the SEC improperly shared budget information with Apple and went ahead with purchases before getting proper approval and before performing reviews,” reports Reuters.

Apple has had strained relationships with the U.S. government. Although the tech giant has witnessed a dramatic uptick in government sales, the company has repeatedly been the focus of federal investigations. Recently, Apple officials testified before the U.S. Congress about a so-called “location-gate” controversy spawn by reports iPhone and iPads were tracking owners.

In late 2010, Apple reportedly was the focus of an SEC insider-trading investigation. Questions were raised whether analysts were being fed insider information, wrongly manipulating stock prices.

The most recent questions about Apple center around the purpose for its huge North Carolina data facility. Although Cupertino officials have said the center will be operational soon, speculation is that the project could be part of Apple’s push into cloud computing.

Whatever the reality, guessing Apple’s next move has become the latest Silicon Valley parlor game and the iPhone maker is rapidly replacing Microsoft as a company on regulatory radar.

  • prof_peabody

    There is absolutely nothing in this article, nor is there anything in the original Reuters article, that would justify your headline, which is shameless lies at best.  Please explain in detail how their highly regarded storage products are “useless” and how selling them to someone is a “rip-off.”

    The original article states quite clearly that the SEC is actually investigating *itself* here, (not Apple), and the only assertions of wrong-doing, stupidity, or incompetence are being made against the SEC, (not Apple.)  

    Your headline is inaccurate, and your entire article is classic “yellow journalism.”

  • Spanky

    Now that Apple’s market cap is greater than Microsoft’s, expect the government investigations to intensify.  Also, expect them to continue until Apple gets the proper number of lobbyists working Washington…

  • Sophisticated_brotha

    @prof_peabody:disqus 

    thank you for your cogent reply to this…I work in Govt, the Sciences actually, and we use XServe and Storage, paid a pretty penny too….and their equipment have been quite reliable.  Also, I do think that the vendor we were pointed to made all of the difference….top notch.  And oh, when all of the bids actually came in, spec to spec comparison, Apple was actually 10% cheaper.

  • Sam

    How does the NC data Center and rumored cloud initiative relate at all to the title of this article or even the first two paragraphs? An linking the SEC’s poor decision to not perform due diligence in their procurement process is suppose to be linked to the location services issue and the insider trading investigation? I think Ed should go back to looking at apples under a tree. This is just shoddy work.

  • Scott

    So the SCC is mad because their people didn’t follow procedures for ordering $1 million worth of apple equipment?

  • CharliK

    Let’s face it Prof, inaccurate headlines and ‘yellow journalism’ is 95% of the site these days. they care more about getting hits and ad money than  being accurate. 

  • CharliK

    Sounds more like Apple made a pitch and someone grabbed it without doing their due diligence about whether it was the right setup or the right price. 

    Which is NOT Apple’s fault. 

  • djgrahamj

    ++

  • JDWages

    Who in the world is the “SCC”???

  • JDWages

    This article is confusing because it is so lacking in specifics.  It basically says “Apple ripped off the SEC because what was sold had bugs.”  Well, for crying out loud, what bugs did it have?  And what equipment specifically was this?  Use a little shoe-leather and find out, please.  If you know an SEC official said “This information doesn’t leave this room,” then clearly information did leave that room!

    The author’s closing phrase “whatever the reality” is infuriating because we, the readers, want to know specifics about the reality behind this article.  I therefore cannot help but feel that the author is more interested in “a negative story” to draw crowds versus a less-than-stellar “reality” that wouldn’t necessarily paint Apple in such a bad light.  If I’m wrong, prove it with facts about what really happened.

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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