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Financial Crimes
01/28/2013

2 charged in bribery scheme

SANTA ANA, Calif. – Federal prosecutors filed criminal charges Monday against the CEO of an Orange County electronic components company who paid kickbacks for years to ensure contracts for his firm, and against an official with Panasonic's American subsidiary who accepted the bribes.

The two men charged Monday with "honest services" wire fraud are William McMahon, 47, of Norco, the CEO and co-owner of Trustin Technology, and Sean Volin, 38, of Oakland, New Jersey, a manager with Panasonic Corporation of North America in Secaucus, New Jersey.

In addition to criminal informations filed in U.S. District Court, prosecutors filed plea agreements in which both men admitted their criminal conduct and agreed to cooperate in the ongoing probe conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI.

According to court documents, for the past decade, Trustin sold RAM modules and hard drives to Panasonic – Trustin's largest and most important customer – for use in at least one line of laptop computers.

Approximately 10 years ago, Volin approached the then-CEO of Trustin to discuss a price reduction for hard drives Trustin was supplying to Panasonic. In response, the then-CEO proposed a kickback scheme in which Panasonic would continue to pay the same price for hard drives, but Trustin would give Volin half of the proposed price reduction for each unit sold. Volin "agreed with the former CEO's proposal, did not obtain a price reduction for Panasonic, and a stream of illicit payments between Trustin and Volin began," according to Volin's plea agreement.

McMahon became CEO of Trustin in 2005, and he learned of the kickback arrangement that had already paid more than $100,000 to Volin. The payments stopped under McMahon's watch for a period of time, but resumed as McMahon's relationship with Volin developed. Instead of paying a kickback for each hard drive sold to Panasonic, McMahon made regular payments in exchange for Volin "looking out for Trustin's interests and as a reward for his prior assistance to Trustin," according to Volin's plea agreement.

From November 2005 through the end of 2011, McMahon oversaw payments of more than $555,000 that went to a company Volin had established to accept the illicit payments from Trustin. In total, Volin was paid more than $664,900 by Trustin. Volin and McMahon also admitted in the court documents that Volin received other benefits, including trips to the Kentucky Derby and Napa Valley.

"In exchange for this stream of payments, and acting with the intent to defraud Panasonic of Volin's duty of honest services, Volin continued to assist Trustin in obtaining additional business from Panasonic, resulting in Panasonic's designating Trustin a 'master vendor,' according to court documents, which say that as a result of the scheme "Trustin was able to obtain tens of millions of dollars of business from Panasonic."

McMahon and Volin will be summoned to appear in federal court in Orange County in February. The wire fraud charge alleged in the two cases filed Monday carries a statutory maximum penalty of 20 years in federal prison.

Panasonic Corporation of North America fully cooperated with the government's investigation.