China's Organized Crime Syndicate

Huawei Charged With Racketeering, Stealing Trade Secrets

U.S. Prosecutors Hit Huawei With New Federal Charges

By MERRIT KENNEDY

The Chinese technology firm Huawei is facing a raft of U.S. federal charges, including racketeering conspiracy.

Federal prosecutors have added new charges against Chinese telecom giant Huawei, its U.S. subsidiaries and its chief financial officer, including accusing it of racketeering and conspiracy to steal trade secrets from U.S.-based companies.
The company already faced a long list of criminal accusations in the case, which was first filed in August 2018, including bank fraud, wire fraud and conspiracy to defraud the United States. Prosecutors filed the expanded indictment in federal court in Brooklyn on Thursday.

"The Trump administration has repeatedly made clear it has national security concerns about Huawei, including economic espionage," NPR's Ryan Lucas reported. 

Recently, President Trump tried to convince the U.K. not to contract with Huawei to provide equipment to build a 5G network, but British leaders did so anyway.

Sens. Richard Burr, R-N.C., and Mark Warner, D-Va., said in a joint statement that the indictment "paints a damning portrait of an illegitimate organization that lacks any regard for the law."

Huawei is also accused of doing business in countries subject to U.S. sanctions such as North Korea and Iran. 

Prosecutors accuse Huawei of helping Iran's government "by installing surveillance equipment, including surveillance equipment used to monitor, identify and detain protesters during the anti-government demonstrations of 2009 in Tehran, Iran."
They say that for decades, Huawei has worked to "misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei's business."
Huawei pushed its employees to bring in confidential information from competitors, even offering bonuses for the "most valuable stolen information," according to the indictment.
The 56-page indictment is rife with examples of Huawei scheming to obtain trade secrets from U.S. companies. 

They also attempted to recruit employees from rival companies or would use proxies such as professors working at research institutions to access intellectual property.
For example, starting in 2000 the defendants took source code and user manuals for Internet routers from an unnamed northern California-based tech company, and incorporated it into its own routers. 

They then marketed those routers as a lower-cost version of the tech company's devices. 

During a 2003 lawsuit, Huawei claimed that it had removed the source code from the routers and recalled them, but also erased the memories of the recalled devices and sent them to China so they could not be used as evidence.
In an incident that drew headlines last year, a Huawei employee in 2012 and 2013 repeatedly tried to steal technical information about a robot from an unnamed wireless network operator, eventually going as far as making off with the robot's arm. 

The details match those in a separate federal lawsuit in Seattle where the company is accused of targeting T-Mobile.
A subsidiary of the firm also entered into a partnership in 2009 with a New York and California-based company working to improve cellular telephone reception. 

Despite a nondisclosure agreement, Huawei employees stole technology. 

The subsidiary eventually filed a patent that relied on the other company's intellectual property.

Chinese Peril

The Chinese threat to U.S. research institutions is real
By Josh Rogin
Sen. Rick Scott questions Department of Justice Inspector General Michael Horowitz during a Senate Committee On Homeland Security And Governmental Affairs.

The Chinese communists are pursuing a comprehensive, well-organized and well-funded strategy to abuse the open and collaborative research environment in the United States to advance their economic and military expansion at our expense.
But now U.S. research institutions are finally waking up to Beijing’s efforts to recruit American scientists for China’s benefit.
On Wednesday, H. Lee Moffitt Cancer Center & Research Institute announced the forced resignations of its chief executive and president, Alan List, Vice President Thomas Sellers and four researchers.
In a news release, the center said the employees committed compliance and conflict-of-interest violations. 
Specifically, the researchers didn’t reveal they had been recruited and paid by the Chinese government under its “Thousand Talents” program, a massive effort controlled by the Chinese Communist Party to recruit foreign scientists for its own purposes.
The Moffitt Center, located in Tampa, essentially fired its leaders after an investigation prompted by the National Institutes of Health, which had warned them “of foreign efforts to influence or compromise U.S. researchers,” the center said. 
The NIH, which is funded by U.S. taxpayers, is the source of more than half of the center’s $71 million in annual grant funding.
Although the center claims it found no evidence its research was compromised, the details of the relationships between its employees and the Chinese government are unknown.
The center is now working with federal officials on the case.
The FBI has been warning research institutions across the country that Chinese talent-recruitment programs are not only a threat to the integrity of the U.S. research environment but also a real national security concern.
In July, FBI Director Christopher A. Wray testified that the Chinese government and the Chinese Communist Party have many “so-called talent plans” that are not illegal but are routinely abused to steal intellectual property and take it back to China to advance Beijing’s various strategic and economic plans. 
The irony is that the U.S. taxpayer is essentially funding China’s economic resurgence, Wray said.
“The Chinese government knows that economic strength and scientific innovation are the keys to global influence and military power, so Beijing aims to acquire our technology — often in the early stages of development — as well as our expertise, to erode our competitive advantage and supplant the United States as a global superpower,” John Brown, the FBI’s assistant director for counterintelligence, testified in November.
FBI investigations have found that the Chinese recruitment programs — and there are more than 200 of them — have been connected to violations of U.S. laws, including economic espionage, theft of trade secrets, circumvention of export controls and grant fraud, according to Brown.
A 2019 report by the Senate Homeland Security and Governmental Affairs Committee outlined several examples of related abuses by Chinese employees at national labs, the Energy Department and graduate schools across the country.
Beijing, in response to new U.S. government and congressional scrutiny, decided to take the Thousand Talents program underground by deleting news articles and other online references to the program and its members, according to the committee’s report. 
Thousand Talents contracts even require the participants to keep their involvement secret.
Congress is pressing for more investigation, more transparency and more compliance in universities and research institutions across the country. 
Sen. Rick Scott (R-Fla.) sent a letter this month to all Florida universities calling on them to investigate and then reveal their researchers’ relationships with Chinese government programs.
“Everyone needs to be incredibly vigilant about Communist China’s growing influence,” Scott told me. “The situation at Moffitt just shows how far China will go to infiltrate American industries and institutions. I think every elected official needs to be sounding this alarm in their states.”
The Moffitt Center case is important also because it dispels the notion that any scrutiny of these programs represents anti-Chinese bias.
After the MD Anderson Cancer Center in Houston ousted three scientists in April over similar failures to disclose relationships with Chinese institutions, some speculated they were targeted due to their Chinese ethnicity.
U.S. research institutions have been asleep to Beijing’s efforts for a long time because they think of themselves as practicing “open science” — rather than “strategic science,” as the Chinese government does. 
Some believe that because the research will eventually be published, the China threat is overblown. But that ignores the huge body of evidence that the Chinese government is using talent programs not for mutually beneficial collaboration but as vehicles to steal non-public research to feed their own national ambitions.
The U.S. government and the U.S. research community must speed up efforts to work together to determine the extent of Chinese government infiltration into the U.S. research environment and neutralize the threat.
Then we need a national strategy for managing international scientific collaboration in a way that preserves the openness that characterizes our system while also protecting our national security.

Rogue Nation, Rogue Company

Huawei and Meng Wanzhou Face Criminal Charges
By David E. Sanger, Katie Benner and Matthew Goldstein

The Justice Department unveiled charges against Meng Wanzhou, the chief financial officer of Huawei, for helping evade American sanctions on Iran.

WASHINGTON — The Justice Department unveiled sweeping charges on Monday against the Chinese telecom firm Huawei and its chief financial officer, Meng Wanzhou, outlining a decade-long attempt by the company to steal trade secrets, obstruct a criminal investigation and evade economic sanctions on Iran.
The pair of indictments, which were partly unsealed on Monday, come amid a broad campaign by the United States to thwart China’s biggest telecom equipment maker.
Officials have long suspected Huawei of working to advance Beijing’s global ambitions and undermine America’s interests and have begun taking steps to curb its international presence.
The charges underscore Washington’s determination to prove that Huawei poses a national security threat and to convince other nations that it cannot be trusted to build their next generation of wireless networks, known as 5G. 
The indictments, based in part on the company’s internal emails, describe a plot to steal testing equipment from T-Mobile laboratories in Bellevue, Wash.
They also cite internal memos, obtained from Meng, that link her to an elaborate bank fraud that helped Huawei profit by evading Iran sanctions.
The acting attorney general, Matthew G. Whitaker, flanked by the heads of several other cabinet agencies, said the United States would seek to have Meng extradited from Canada, where she was detained last year at the request of the United States.
The charges outlined Monday come at a sensitive diplomatic moment, as top officials from China are expected to arrive in Washington this week for two days of talks aimed at resolving a months long trade war between the world’s two largest economies.
Trump administration officials have insisted that Meng’s detention will not affect the trade talks, but the timing of the indictment coming so close to in-person discussions is likely to further strain relations between the two countries.
Meng is the daughter of Huawei’s founder and one of the most powerful industrialists in the country. Her arrest has outraged the Chinese government, which has since arrested two Canadians in retaliation.
The indictment now presents Canada with a politically charged decision: whether to extradite Meng to face the fraud charges, or make a political determination to send her back to Beijing.
A spokesman for Huawei, Joe Kelly, said it “is not aware of any wrongdoing by Meng, and believes the U.S. courts will ultimately reach the same conclusion.”
The indictment unsealed against Meng is similar to the charges leveled against the Huawei executive in filings made by federal prosecutors in connection with the bail hearing in Canada.
It claimed that Huawei defrauded four large banks into clearing transactions with Iran in violation of international sanctions through a subsidiary called Skycom.
Federal authorities did not identify the banks, but in an earlier court proceeding in Canada after Meng’s arrest, prosecutors had identified one of the banks as HSBC.
The most serious new allegation in the indictment, which could have bearing on the extradition proceeding in Canada, is the contention by federal prosecutors that Huawei sought to impede the investigation into the telecom company’s attempt to evade economic sanctions on Iran by destroying or concealing evidence.
Huawei moved employees out of the United States so they could not be called as witnesses before a grand jury in Brooklyn. 
The company destroyed evidence in order to hinder the inquiry.
Richard P. Donoghue, the United States attorney for the Eastern District of New York, said that the telecom firm’s actions began in 2007 and “allowed Iran to evade sanctions imposed by the United States and to allow Huawei to profit.”
The arrest of a top executive for sanctions evasion is unusual.
In 2015, Deutsche Bank was fined $258 million for violating American sanctions on Iran and Syria. No executives involved in the scheme were indicted, though six employees were fired.
Meng is under house arrest at one of two residences that she owns in Vancouver.
American officials said Monday that they will request her extradition before a deadline on Wednesday. 
The next stage of her case will be decided at the Supreme Court of British Columbia.
“Companies like Huawei pose a dual threat to both our economic and national security,” said Christopher A. Wray, the F.B.I. director, who joined Mr. Whitaker and two other cabinet members, Wilbur Ross, the commerce secretary, and Kirstjen Nielsen, the homeland security secretary.
Mr. Wray argued that “the magnitude of these charges make clear just how seriously the F.B.I. takes this threat.”
“Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice or jeopardize national and economic well-being,” he added.
Parts of the indictment were redacted and left open the question of whether the United States had secretly indicted Meng’s father, Ren Zhengfei, a former People’s Liberation Army officer and member of the Communist Party.
A United States government interview with Ren from 2007 is cited in one of the indictments, to make the case that he misled investigators, and the name of at least one of those indicted is blacked out from the publicly filed version of the indictment.
Mr. Whitaker fueled the speculation about an indictment of Ren when he told reporters on Monday that the criminal activity “goes all the way to the top of the company.”
The Justice Department also accused Huawei of conspiring to steal trade secrets from a competitor, T-Mobile.
The charges relate to a criminal investigation that stemmed from a 2014 civil suit between the two companies.
In that case, T-Mobile accused Huawei of stealing proprietary robotics technology that the telecom company used to diagnose quality-control issues in cellphones.
Huawei was found guilty in May 2017.
The indictment cited internal emails from Huawei and its American subsidiary that set up a bonus system for employees who could illicitly obtain the T-Mobile testing system.
“These are very serious actions by a company that appears to be using corporate espionage not only to enhance their bottom line but to compete in the world economy,” Mr. Whitaker said.
The legal drama now shifts to Canada, where the government has warned that it will not extradite Meng if it appears that the request is being made for political reasons.
Trump said after her arrest that he would consider using her case for leverage in the upcoming trade negotiations, which fueled speculation that the United States may be more interested in Meng’s value in winning trade concessions than in obtaining a conviction.
Canada’s ambassador to Beijing was fired over the weekend by Prime Minister Justin Trudeau for suggesting that the case against Meng was political and that Canada might accede to Chinese demands and return her home.
Mr. Whitaker declined to say Monday whether the White House would interfere in the criminal case against Meng.
But the array of officials present at the announcement was clearly intended to demonstrate a coordinated government effort to go after Huawei.
“Given the seriousness of these charges, and the direct involvement of cabinet officials in their rollout, today’s announcements underscore that there is a unified full-court press by the administration to hold China accountable for the theft of proprietary U.S. technology and violations of U.S. export control and sanctions laws,” said David Laufman, the former chief of the Justice Department’s counterintelligence and export control section.
The indictments could further complicate the trade talks that the administration is holding this week with Beijing.
The Trump administration is seeking significant changes to China’s trade practices, including what it says is a pattern of Beijing pressuring American companies to hand over valuable technology and outright theft of intellectual property.
“The Americans are not going to surrender global technological supremacy without a fight, and the indictment of Huawei is the opening shot in that struggle,” said Michael Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration.
Lawmakers like Senator Mark Warner, Democrat of Virginia, who have long argued for action to be taken against Chinese technology providers including Huawei and ZTE, a smaller firm that has faced similar accusations, called the indictment “a reminder that we need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets.”
Mr. Warner said that he would continue to press Canada to reconsider using any Huawei technology as it upgrades its telecommunications network.
On Tuesday, American intelligence officials are expected to cite 5G investments by Chinese telecom companies, including Huawei, as a worldwide threat. 
And the United States has been drafting an executive order, expected in the coming weeks, that would effectively ban American companies from using Chinese-origin equipment in critical telecommunications networks.