The United States Attorney's Office for the Eastern District of New York ("EDNY") filed a superseding indictment against the China-based technology manufacturing company Huawei Technologies Co., Ltd. and several U.S.-based subsidiaries, with new counts of racketeering, money laundering, and violating U.S. sanctions against Iran. Huawei and its chief financial officer were previously charged for fraud and intellectual property ("IP") theft in an indictment filed in January 2019.
According to the indictment, Huawei engaged in a broad conspiracy to steal intellectual property from six U.S.-based competitors using a variety of methods, including:
- misappropriating the IP of victim companies in violation of the terms of their confidentiality agreements;
- employing proxies such as research professors and third-party companies to gain access to victim companies' non-public IP; and
- implementing a "bonus program" to incentivize employees to steal confidential information.
In addition, the superseding indictment claimed that Huawei conducted business with Iran, North Korea and other "high-risk" jurisdictions, and committed bank and wire fraud by making false claims to various financial institutions.
Commentary Joseph Moreno
Bringing Racketeer Influenced and Corrupt Organizations (RICO) charges against Huawei is a particularly aggressive move by EDNY, indicating that the U.S. Government has no plans to back down against an organization it clearly views as a threat to national and global security. It is a highly unusual strategy to argue that a huge multinational corporation is effectively a criminal enterprise, and it will require federal prosecutors to prove that a variety of underlying crimes were tied to an enterprise-level scheme to profit from those crimes. But if they pull it off, the criminal and civil forfeiture consequences to Huawei could potentially be devastating. The action in New York is, no doubt, also designed to apply increased political pressure both on Canada, to extradite the company's chief financial officer who remains under house arrest in Vancouver, and on the United Kingdom, to reverse its recent decision to allow the incorporation of Huawei products into its national telecommunications infrastructure.