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.

The Spied Spy

By spying on Huawei, U.S. found evidence against the rogue firm

By Brendan Pierson, Karen Freifeld

NEW YORK -- U.S. authorities gathered information about Huawei Technologies Co Ltd through secret surveillance that they plan to use in a case accusing the Chinese telecom equipment maker of sanctions-busting and bank fraud, prosecutors said on Thursday.
Assistant U.S. Attorney Alex Solomon said at a hearing in federal court in Brooklyn that the evidence, obtained under the U.S. Foreign Intelligence Surveillance Act (FISA), would require classified handling.
The government notified Huawei in a court filing on Thursday of its intent to use the information, saying it was “obtained or derived from electronic surveillance and physical search,” but gave no details.
The United States has been pressuring other countries to drop Huawei from their cellular networks, worried its equipment could be used by Beijing for spying. 

Brian Frey, a former federal prosecutor who is not involved in the Huawei case, said FISA surveillance, which requires a warrant from a special court, is generally sought in connection with espionage.
“The reason they typically would have gotten the surveillance through a FISA court is where we suspect someone may be spying on behalf of a foreign power,” Frey said.
The U.S. government has been concerned about espionage by Huawei for years, he added.
In the Brooklyn case, Huawei and its chief financial officer, Meng Wanzhou, are accused of conspiring to defraud HSBC Holdings Plc and other banks by misrepresenting Huawei’s relationship with Skycom Tech Co Ltd, a Huawei front company that operated in Iran.
Meng was arrested in Canada in December at the request of the United States to face the charges of bank and wire fraud laid out in the indictment, which was not unsealed until January. 

Huawei last month pleaded not guilty to the 13-count indictment. 

Chasen Skinner, a spokesman for the company, declined to comment on Thursday on the secret U.S. surveillance, saying the company does not comment on pending litigation.
Huawei has said Skycom was a local business partner, but prosecutors said in their indictment against Huawei and Meng that it was an unofficial subsidiary used to conceal Huawei’s Iran business.
Huawei used Skycom to obtain embargoed U.S. goods, technology and services in Iran, and to move money via the international banking system. 

The charges against the company include violating U.S. sanctions on Iran.
Last month, Reuters detailed how U.S. authorities secretly tracked Huawei’s activities by collecting information copied from electronic devices carried by Chinese telecom executives traveling through airports.
Reuters also broke news of the bank fraud charges in December and exclusively reported in February how an internal HSBC probe helped lead to the charges against Huawei and Meng.
The U.S. sanctions investigation was spurred by Reuters reports over six years ago that Skycom offered to sell embargoed Hewlett-Packard computer equipment to Iran's largest mobile-phone operator and detailed the close ties between Huawei and Skycom. (reut.rs/2sUq8RT here)
Trump told Reuters in December that he would intervene in the case if it helped secure a trade deal with China. 

The next court date in the Brooklyn case is set for June 19.

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. 

Huawei and China Have Limited Ways to Answer U.S. Charges

By Paul Mozur and Raymond Zhong

Wilbur Ross, the United States secretary of commerce, speaking on Monday about charges of bank fraud and stealing trade secrets against Huawei of China.

SHANGHAI — Ever since Meng Wanzhou, the chief financial officer at the Chinese technology giant Huawei, was arrested in Canada nearly two months ago, Chinese officials have denounced the move as “wrongful” and “arbitrary” — a political affair cloaked in a judicial one.
Now that the United States has laid out its case against Meng in greater detail, neither Huawei nor the Chinese government has easy options for responding or retaliating.
Huawei, the world’s largest provider of the equipment that powers mobile phone and data networks, said on Tuesday that it was innocent of charges unveiled in Washington the day before that it had misled the United States government about its business in Iran, obstructed a criminal investigation and stolen American industrial secrets.
China’s Foreign Ministry called, once again, for the United States and Canada to release Meng, who is a daughter of Huawei’s founder and chief executive, Ren Zhengfei.
But should Meng be brought from Canada to the United States to face charges, as American officials say they plan to request before a deadline on Wednesday, Beijing will have few ways to force Washington’s hand.
China is in the middle of a trade war that it is anxious to end as its vast economy slows. 

Any effort to get tough on the United States — such as by detaining American nationals, as it did to Canadians after Meng was arrested — could scuttle the negotiations. 

Those talks are set to resume on Wednesday.
And Huawei’s Washington operations have undergone drastic turnover as it appears to rein in its sales ambitions in America and shift tactics in its relations with the government. 

In the second shake-up of its American leadership in less than a year, the company is replacing Regent Zhang, its head of government affairs in Washington, with Joy Tan, currently its head of global communications.
The broad language of the Justice Department’s indictments suggests that other Huawei leaders, including Ren, a former officer in the People’s Liberation Army, might wish to exercise caution while traveling to countries that have an extradition treaty with the United States.
“If I was his lawyer, I would advise him to be careful,” said Julian Ku, a professor of law at Hofstra University.

Meng Wanzhou, Huawei’s chief financial officer, in Vancouver, British Columbia, in December. China and Huawei alike have few easy options if she is extradited to the United States.

But that kind of caution could make it more difficult still for Huawei to hold on to its business in places like Europe. 

Already, the United States has been applying pressure on all sides against Huawei, fearing that the Chinese government could use the company’s gear to sabotage other countries’ communication networks.
Previously, Canadian officials had said that Meng was accused of tricking financial institutions into making transactions that violated United States sanctions on Iran. 

One of the two indictments unsealed on Monday outlines a broader effort.
The indictment says that Huawei’s misrepresentations to the United States government and four multinational financial institutions began in 2007. 

It cites an interview between agents of the Federal Bureau of Investigation and Ren around July of that year, in which Ren said that his company complied with all American laws and that it had not dealt directly with any Iranian company.
The indictment also cites 2012 testimony before the United States Congress in which a Huawei executive said that the company’s business in Iran had not violated sanctions. 

That executive was Charles Ding, a corporate senior vice president. 

Ding, who was not mentioned by name in Monday’s indictment, couldn’t be reached for comment.
Also in the indictment is a reference to a file found on an electronic device that Meng was carrying when she arrived at New York’s John F. Kennedy International Airport in 2014. 

Officials detained her for a couple of hours when she arrived, according to a person with knowledge of the events. 

During that time, they briefly confiscated her electronic devices, said the person, who asked for anonymity because the events haven’t made public.
The file she was carrying, which the indictment said may have been deleted before being discovered, contained “suggested talking points” about Huawei’s relationship with Skycom, the company that prosecutors accuse Huawei of using as an unofficial subsidiary to obtain American-sourced goods, technology and services for its Iranian business.
The indictment also said that Skycom employed at least one United States citizen in Iran, a violation of American law. 

And it said that after Huawei found out that the United States was pursuing a criminal investigation in 2017, the company destroyed evidence and tried to move unspecified witnesses who knew about its Iranian business to China, beyond the reach of the American government.
The other indictment, which concerns the theft of trade secrets from the American wireless provider T-Mobile, refers to internal emails describing a plot to steal testing equipment from T-Mobile’s lab in Bellevue, Wash.
Huawei has contended that its employees were acting on their own to learn more about a robot that T-Mobile used to test smartphones, nicknamed Tappy because it could rapidly tap a phone screen. 

But the indictment cites multiple emails exchanged between Huawei engineers urging those with access to Tappy to take increasingly precise measurements.
Eventually, the indictment says, a Huawei engineer was sneaked into the Tappy laboratory by other Huawei employees who had access. 

He was caught and thrown out but returned, the indictment said.

Ren Zhengfei, the founder and chief executive of Huawei, is Meng’s father.

Later, after all but one Huawei employee had their access to the robot revoked, the employee took a Tappy robotic arm home for closer study, according to the indictment. 

A Huawei investigation into the issue, which concluded there was minimal coordination among the engineers, contained false statements, the indictment said.
The indictment also cites a Huawei program started in 2013 to reward employees for stealing confidential information from competitors. 

They were directed to post such information to an internal Huawei website, or in special cases to an encrypted email address, the indictment said. 

Bonuses were apportioned to those who stole the most valuable information, it said.
The evidence presented in this week’s indictments bolsters the American case for extraditing Meng, said Mr. Ku of Hofstra University.
“The standard for extradition is whether a Canadian court would send her to trial,” Mr. Ku said. “Essentially, is there enough evidence to indict someone? I think this will help meet that standard.”
Prosecutors redacted the identity of at least one of the defendants, most likely to leave open the option of arresting that person. 

That person isn’t likely to be Ren, said Mr. Ku, because he is mentioned later in the indictment. 

But that doesn’t guarantee prosectors won’t target him later.
Huawei has worked for a reset in Washington as relations with the American government have worsened. 

Last year it cut staff in Washington after investigations into the company deepened and AT&T walked away from a deal to sell Huawei’s phones. 

Further personnel shifts in recent weeks appear to be focused on improving its image in America.
Tan, Huawei’s incoming head of government affairs in Washington, has for years played a key role in the company’s media relations. 

She will be tasked with engaging an American administration that has grown hawkish on China. 

Her predecessor in Washington, Zhang, had previously been responsible for sales in Mexico.
The mounting global skepticism toward Huawei and other Chinese tech suppliers is starting to have practical effects on the telecommunications industry.
On Tuesday, TPG Telecom, an internet provider in Australia, said it has been forced to cancel the construction of its mobile network because of the Australian government’s decision last year to forbid Huawei from supplying 5G equipment.
In a stock-exchange filing, TPG said that it had already spent around $70 million on its new network, largely on Huawei gear. 

But the company said that it did not make sense to invest further in a network that could not later be upgraded to 5G.

Huawei is a spy agency of the Chinese Communist Party

Beijing's three revenge hostages for arrest of tech princess prove that smartphone maker is part of China's plan to dominate the 21st Century

• China expert Steven W. Mosher argues that Chinese tech firm Huawei is part of Communist spy apparatus
• Huawei CFO Meng Wanzhou faces extradition the the US on charges of bank fraud and sanction violatons
• China has furiously retaliated by detaining three Canadians on vague charges 

By KEITH GRIFFITH 

Beijing's furious response to the arrest of a tech 'princess' who is a top executive at Huawei reveals that the company is part and parcel of China's spying apparatus, an expert has argued.
'Huawei is much more than an innocent manufacturer of smartphones. It is a spy agency of the Chinese Communist Party,' wrote China expert Steven W. Mosher in a column on Saturday for the New York Post.
Mosher points out that since the December 1 arrest of Huawei CFO Meng Wanzhou in Canada, where she faces extradition to the U.S. on bank fraud and international sanction violation charges, China has rounded up at least three Canadian 'revenge hostages'.
'Beijing hints that the hostage count may grow if Meng is not freed and fast,' writes Mosher. 

'Even for a thuggish regime like China's, this kind of action is almost unprecedented.'

Huawei Technologies CFO Meng Wanzhou as she exits the court registry following the bail hearing at British Columbia Superior Courts in Vancouver, British Columbia on December 11

Chinese dictator Xi Jinping is seen on a state visit to Portugal earlier this month. Experts argue that 'private' tech firm Huawei is actually an arm of China's spy apparatus

Mosher, the author of Bully of Asia: Why China's Dream is the New Threat to World Order, says the dramatic response adds to evidence that Huawei, the second largest smartphone maker in the world after Samsung, is no simple private competitor to other tech firms around the world.
Huawei has been nourished by China's ruling Communist Party and military through low-interest loans and protected access to the domestic market, Mosher writes.
China has also repeatedly declared that all Chinese companies, private or not, must assist the government with gathering intelligence.
Under Chinese law, 'all organizations and citizens... must support, assist with, and collaborate in national intelligence work, and guard the national intelligence work secrets they are privy to.'
All of which has led the U.S. and its allies to view Huawei with extreme skepticism as the company attempts to spearhead the roll out of 5G network technology worldwide, potentially giving the Chinese government access to and control over information networks.
Huawei has already been labeled a national security threat by U.S. officials, who urged allies who host American military bases to ban the use of Huawei products in their communications infrastructure.
'Huawei stands in the same relationship to the Chinese Communist Party as German steelmaker Alfried Krupp did to Germany's National Socialists in the days leading up to WWII,' writes Mosher.
German arms maker Krupp effectively became a wing of the Nazi party during the war, Mosher notes.
Adding to the drama of Meng's arrest is the fact that she is no simple executive - she is the daughter of Huawei founder and president Ren Zhengfei, a former officer in the People's Liberation Army and a Communist Party elite.

Meng (above) is the daughter of Huawei's founder and president

Meng was arrested in Vancouver on an American warrant accusing her of a scheme to sell U.S. equipment to Iran in violation of sanctions law, and of falsifying bank records to cover up the transactions.
Lawyers for Meng have argued that she broke no U.S. or Canadian laws, and she is currently free in Canada on bail of C$10 million.
Since her arrest, China has arrested at least three Canadian citizens: former diplomat Michael Kovrig, consultant Michael Spavor and most recently teacher Sarah McIver.
Kovrig and Spavor were detained on December 10 and accused of engaging in activities that 'endanger China's national security'.
McIver's detention was confirmed on Thursday, when Beijing confirmed that it had arrested the Alberta native for 'working illegally' in the country.
Canadian officials said that McIver's case appeared to be more routine and unrelated to the earlier arrests.
Family friends of the woman said she had communicated that she would be held for 10 days and then returned to Canada.