A superseding indictment was issued yesterday in an ongoing criminal case against Chinese technology company Huawei in the Eastern District of New York. The indictment conveyed a litany of charges against the company relating to an alleged scheme to “misappropriate” intellectual property. Charges include racketeering conspiracy, conspiracies to steal trade secrets, commit wire fraud and bank fraud (and actual wire and bank fraud), and to defraud the United States, to evade sanctions, and to launder money.
The indictment lays out a massive scheme to misappropriate intellectual property from six companies, whose names were known to the grand jury who issued the indictment but were not named in the complaint. The grand jury alleged that Huawei had an established practice of entering into confidentiality agreements with the victim companies and then violating those agreements. In other instances, Huawei used “proxies such as professors working at research institutions or third party companies, purporting not to be working on behalf of the IP Defendants, to gain access to the Victim Companies’ nonpublic intellectual property.” Huawei also allegedly maintained an internal policy offering bonuses to employees who are able to obtain trade secrets from their competitors.
The grand jury also alleged violations of the International Emergency Economic Powers Act, which enables the President to sanction countries in the event of a declared national economic emergency. Huawei executives allegedly lied to agents of the United States government when interviewed regarding Huawei’s business in Iran, stating that Huawei only sold to Iranian civilians, not the Iranian government. Similarly, Huawei executives also allegedly lied about infrastructure projects in North Korea. Both nations are subject to sanctions under IEEPA.
Notably, Huawei was charged under the Racketeer Influenced Corrupt Organizations Act, which is normally used to prosecute large organized crime entities.
Huawei’s alleged acts in the case date back to at least 1999. More recently, Huawei has found itself subject to economic action by the United States, as the United States intelligence community has raised concerns that Huawei mobile technology may facilitate espionage by the Chinese government against American citizens and infrastructure.