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.

Rogue Company: Huawei Sinks Deeper As The World Turns Its Back

Governments worldwide have started to view Huawei's expansion as a serious threat
By David Volodzko

In this Jan. 9, 2019, photo, a security guard stands near the Huawei company logo during a new product launching event in Beijing. The Chinese Foreign Ministry said late Friday, Jan. 11, 2019, it is "closely following the detention of Huawei employee Wang Weijing" on charges of spying for China.

Huawei Technologies now faces shocking new charges, in addition to a growing litany of scandals, suggesting the world's second-largest smartphone maker is working with the Chinese military to steal our technology, defraud our institutions and spy on us using our own devices.
The company, its chief financial officer Meng Wanzhou and subsidiaries Skycom Tech and Huawei Device USA now face criminal charges for bank fraud, wire fraud, violating U.S. sanctions against Iran and conspiring to obstruct justice. 

Governments worldwide have started to view its expansion as a serious threat.
"It's been a longstanding concern of the U.S. intelligence community," former Director of National Intelligence James Clapper said, "that any of the Chinese IT and telecommunications companies like Huawei, like ZTE, for example, have to be considered as extensions of Chinese intelligence service — in fact, Chinese law encourages, if not mandates, that when called upon, these companies will cooperate with the Chinese government."
The latest charges claim Meng delivered a presentation to a bank executive in 2013, during which she repeatedly lied about Huawei's relationship with Skycom, which tried to sell U.S. technology to Iran despite sanctions. 

Then in 2017, when Huawei became aware of the U.S. investigation, Huawei Device USA tried to obstruct justice by attempting to move witnesses who knew about its operations in Iran back to China, where FBI agents couldn't interview them.
On December 1, Canadian officials arrested Meng for extradition to the United States. 

But Meng is the daughter of Ren Zhengfei, who formerly worked as a technology engineer for the Chinese military before founding Huawei, which makes her Chinese corporate royalty — and Chinese officials made no attempt to mask their outrage.
Days later, Chinese Vice Foreign Minister Le Yucheng summoned Canadian Ambassador to China John McCallum to protest Meng's arrest, calling it "vile in nature" and threatening Canada with "grave consequences."
China then arrested consultant Michael Spavor and former diplomat Michael Kovrig, both Canadian nationals, on charges of endangering state security. 

This past weekend, another Canadian national was arrested on fraud charges.
The pressure was enough to force some Canadian officials to openly question the government's move. “From Canada’s point of view," McCallum said at a charity lunch in Vancouver, "if [the U.S.] drops the extradition request, that would be great for Canada."
McCallum, an outspoken critic of his government's decision to arrest Meng, has previously said she has “strong arguments” to fight extradition. 

Canadian Prime Minister Justin Trudeau fired him after these recent remarks.
Meng remains detained in Vancouver, but the fraud allegations involving her are only part of Huawei's problems. 

The U.S. Justice Department has separately accused two Huawei affiliates of stealing trade secrets, wire fraud and obstruction of justice over violating agreements with T-Mobile in 2012 by secretly taking photos of its Tappy robot technology, which mimics human fingers to test smartphones, and stealing a piece so Huawei engineers could reverse engineer it.
North America isn't the only place turning its back on the company, either. 

Earlier this month, the Huawei sales director for Poland was arrested for espionage.
Australia's TPG Telecom has abandoned plans to build a new mobile telephone network that would have relied on Huawei technology. 

French European Affairs Minister Nathalie Loiseau said last week European states must stand united when dealing with Huawei.
And Vodafone has announced it is halting the purchase of Huawei technology for its new 5G networks in Europe.
But some are wondering why this awakening didn't take place sooner, since Huawei has for years been mired in scandal. 

In July 2012, vulnerabilities were found in its routers that could allow remote access to the devices. In early 2015, German cybersecurity company G Data reported it had found malware pre-installed on Lenovo, Xiaomi and Huawei smartphones enabling audio surveillance and location tracking. 

In January 2018, African Union officials accused China of hacking the computer system at its headquarters every night for the past five years. 

The building, located in Addis Ababa, Ethiopia, had been built by Chinese contractors — including Huawei.
Then there's a slew of accusations, such as that Huawei has provided surveillance equipment to the Taliban. 

Or the case of Shane Todd, the American engineer who apparently committed "suicide" in Singapore in June 2012 under suspicious circumstances, in connection with work he had been doing involving a semiconductor amplifying device purportedly for Huawei, with potential military applications.
Todd had evidently told his family the project could endanger U.S. national security, and that he felt he was in danger.
China continues to respond with denial and threats. 

Lawmakers urges U.S. Treasury to reject Aleris sale to China aluminum giant

Reuters

United States Secretary of the Treasury Steven Mnuchin speaks at a news conference on Parliament Hill in Ottawa June 9, 2017.

More than two dozen U.S. lawmakers have urged U.S. Treasury Secretary Steven Mnuchin to reject the proposed sale of U.S. aluminum products maker Aleris Corp to China Zhongwang Holdings Ltd to protect U.S. security interests.
In a June 9 letter to Mnuchin shared with Reuters, the 27 lawmakers said it would be a "strategic misstep" to allow the $2.33 billion sale to go ahead.
"It is critical that CFIUS (Committee on Foreign Investment in the United States) exercise extreme caution when a foreign investment transaction includes the transfer of military proficiencies and sensitive technology to China," the lawmakers wrote.
They added: "It would be a serious strategic misstep to permit a company like Zhongwang Holdings Ltd to take control of a U.S. aluminum firm like Aleris."
The lawmakers said Aleris was involved in the production and testing of specialized alloys used by the defense industry, and the company's research and technology were critical to U.S. economic and national security interests.
"Chinese entities, including state-owned or state-controlled enterprises, maintain relationships with China's military, compounding the risk that U.S. technologies will fall into the wrong hands," they wrote.
Additionally, Zhongwang was under investigation by the U.S. Department of Commerce for evading U.S. import duties, and was being probed by U.S. agencies over allegations of smuggling, conspiracy and wire fraud, they said.

Zhongwang, backed by Chinese aluminum magnate Liu Zhongtian, announced the deal in August, in a bet by the billionaire that the nascent U.S. automotive aluminum sector will be the industry's next big growth market.

Last November, a dozen U.S. senators wrote to then Treasury Secretary Jack Lew urging him to launch a review of the deal by the Committee on Foreign Investments by the United States.
Lawmakers who signed the new letter include House of Representative Democrats David Loebsack, Tim Ryan, Gene Green, Debbie Dingell, Seth Moulton, Marcy Kapur, Pete Aguilar, Tony Cardenas, Brenda Lawrence, Norma Torres, Linda Sanchez, and Republicans Robert Pittenger, Keith Rothfus, and French Hill.

Theft Empire

Three Chinese accused of hacking law firms, insider trading
By Nate Raymond | NEW YORK

Three Chinese have been criminally charged in the United States with trading on confidential corporate information obtained by hacking into networks and servers of law firms working on mergers, U.S. prosecutors said on Tuesday.
Iat Hong of Macau, Bo Zheng of Changsha, China, and Chin Hung of Macau were charged in an indictment filed in Manhattan federal court with conspiracy, insider trading, wire fraud and computer intrusion.
Prosecutors said the men made more than $4 million by placing trades in at least five company stocks based on inside information from unnamed law firms, including about deals involving Intel Corp and Pitney Bowes Inc.
The men listed themselves in brokerage records as working at information technology companies, the U.S. Securities and Exchange Commission said in a related civil lawsuit.
Hong, 26, was arrested on Sunday in Hong Kong, while Hung, 50, and Zheng, 30, are not in custody, prosecutors said. 

Defense lawyers could not be immediately identified.
The case is the latest U.S. insider trading prosecution to involve hacking, and follows warnings by U.S. officials that law firms could become prime targets for hackers.
"This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals," U.S. Attorney Preet Bharara in Manhattan said.
Prosecutors said that beginning in April 2014, the trio obtained inside information by hacking two U.S. law firms and targeting the email accounts of law firm partners working on mergers and acquisitions.
Prosecutors did not identify the two law firms, or five others they said the defendants targeted.
But one matched the description of New York-based Cravath, Swaine & Moore LLP, which represented Pitney Bowes in its 2015 acquisition of Borderfree Inc, one of the mergers in question.
The indictment said that by using a law firm employee's credentials, the defendants installed malware on the firm's servers to access emails from lawyers, including a partner responsible for the Pitney deal.
Cravath declined to comment. 

In March, Cravath confirmed discovering a "limited breach" of its systems in 2015.
Prosecutors also accused the defendants of trading on information stolen from a law firm representing Intel on the chipmaker's acquisition of Altera Inc in 2015.
Intel's merger counsel on the deal was New York-based Weil, Gotshal & Manges LLP. 

The law firm declined to comment.
In Beijing, Chinese Foreign Ministry spokeswoman Hua Chunying said she was aware of the reports about the case but knew nothing about it.
The case is U.S. v. Hong et al, U.S. District Court, Southern District of New York, No. 16-cr-360.