Chinese Telecommunications Conglomerate Huawei And Subsidiaries Charged In Racketeering Conspiracy And Conspiracy To Steal Trade Secrets: Charges Also Reveal Huawei’s Business In North Korea And Assistance To The Government Of Iran In Performing Domestic Surveillance

The U.S. Justice Department released the below information:

A superseding indictment was returned yesterday in federal court in Brooklyn, New York, charging Huawei Technologies Co. Ltd. (Huawei), the world’s largest telecommunications equipment manufacturer, and two U.S. subsidiaries with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO).

Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division; John C. Demers, Assistant Attorney General of the Justice Department’s National Security Division; Richard P. Donoghue, U.S. Attorney for the Eastern District of New York and Christopher A. Wray, Director, FBI, announced the charges.

The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from the China-based company’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts.

The indicted defendants include Huawei and four official and unofficial subsidiaries — Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng).  The new superseding indictment also contains the charges from the prior superseding indictment, which was unsealed in January 2019.

As revealed by the government’s independent investigation and review of court filings, the new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business.  The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.  Huawei, Huawei USA and Futurewei agreed to reinvest the proceeds of this alleged racketeering activity in Huawei’s worldwide business, including in the United States.

The means and methods of the alleged misappropriation included entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use, recruiting employees of other companies and directing them to misappropriate their former employers’ intellectual property, and using proxies such as professors working at research institutions to obtain and provide the technology to the defendants.  As part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors.  The policy made clear that employees who provided valuable information were to be financially rewarded.

Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology were successful.  Through the methods of deception described above, the defendants obtained nonpublic intellectual property relating to internet router source code, cellular antenna technology and robotics.  As a consequence of its campaign to steal this technology and intellectual property, Huawei was able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.  

When confronted with evidence of wrongdoing, the defendants allegedly made repeated misstatements to U.S. officials, including FBI agents and representatives from the U.S. House Permanent Select Committee on Intelligence, regarding their efforts to misappropriate trade secrets.  Similarly, the defendants engaged in obstructive conduct to minimize litigation risk and the potential for criminal investigations, including the very investigation that led to this prosecution.

The superseding indictment also includes new allegations about Huawei and its subsidiaries’ involvement in business and technology projects in countries subject to U.S., E.U. and/or U.N. sanctions, such as Iran and North Korea – as well as the company’s efforts to conceal the full scope of that involvement.  The defendants’ activities, which included arranging for shipment of Huawei goods and services to end users in sanctioned countries, were typically conducted through local affiliates in the sanctioned countries.  Reflecting the inherent sensitivity of conducting business in jurisdictions subject to sanctions, internal Huawei documents allegedly referred to such jurisdictions with code names.  For example, the code “A2” referred to Iran, and “A9” referred to North Korea. 

Huawei employees also allegedly lied about Huawei’s relationship to Skycom, falsely asserting it was not a subsidiary of Huawei.  The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran.  In fact, the indictment alleges Skycom was Huawei’s unofficial subsidiary that, among other services, assisted the Government of Iran in performing domestic surveillance, including during the demonstrations in Tehran in 2009.

The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The government’s investigation is ongoing.  Individuals with knowledge of misconduct by Huawei, its subsidiaries, employees or agents should contact the FBI’s New York Field Office at 1-800-CALL-FBI.

The FBI’s New York Field Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (HSI) New York Field Office, U.S. Department of Commerce Office of Export Enforcement’s (OEE) New York Field Office and the Defense Criminal Investigative Service’s (DCIS) Southwest and Northeast Field Offices are jointly conducting the investigation.  Agents from the FBI, HSI and OEE offices in Dallas provided significant support and assistance.  The government’s case is being handled by the U.S. Attorney’s Office for the Eastern District of New York, the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the National Security Division’s Counterintelligence and Export Control Section (CES). 

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler and Sarah Evans, MLARS Trial Attorneys Laura Billings and Christian Nauvel and CES Trial Attorneys Thea D. R. Kendler and David Lim are in charge of the prosecution, with assistance provided by Assistant U.S. Attorney Brendan G. King of the Civil Division of the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorneys Margaret O’Malley and John Riesenberg of the Criminal Division’s Office of International Affairs.  Additional Criminal Division and National Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Northern District of Texas, the Northern District of Illinois, the Eastern District of Texas, the Western District of Washington and the Northern District of California have provided valuable assistance with various aspects of this investigation.

Ten Puerto Rico Police Officers Indicted For Allegedly Running Criminal Organization Out Of Police Department

The U.S. Justice Department released the below information:

Ten Puerto Rico police officers have been indicted for their alleged participation in a criminal organization, run out of the police department, that used their affiliation with law enforcement to make money through robbery, extortion, manipulating court records and selling illegal narcotics, announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.

“The criminal action today dismantles a network of officers who, we allege, used their badges and their guns not to uphold the law, but to break it,” said U.S. Attorney Rodríguez-Vélez.  “The indictment portrays a classic criminal shakedown; but the people wielding the guns and stealing the drugs here weren’t mob goodfellas or mafia soldiers – these were police officers violating their oaths to enforce the law, making a mockery of the police’s sacred responsibility to protect the public.”

“Corruption is at the root of all evil,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division.  “These police officers violated the trust of the people of Puerto Rico and not only dishonored the police department, but also their fellow, honest, and hardworking officers.  The FBI, along with the United States Attorney's Office, will continue to attack corruption at all levels.”

The indictment, returned on Sept. 24, 2015, by a federal grand jury in the District of Puerto Rico, includes 11 charges against the following police officers: Shylene López-García aka “Plinia;” Ángel Hernández-Nieves, aka “Doble;” Xavier Jiménez-Martínez, aka “Negro;” Alvin Montes-Cintrón, aka “Vinillo;” Ramón Muñiz-Robledo, aka “Marmota;” Guillermo Santos-Castro, aka “Caco Biftec;” Luis Flores-Ortiz, aka “Piquito;” José Neris-Serrano; Manuel Grego-López; and David Centeno-Faría, aka “David Bisbal”.

The defendants are charged with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.  Other charges against certain defendants include extortion under color of official right, narcotics trafficking, civil rights violations and false statements to federal agents.

According to the indictment, the officers charged with RICO conspiracy were members of a criminal organization who sought to enrich themselves through a pattern of illegal conduct.  The officers worked together to conduct traffic stops and enter homes or buildings used by persons suspected of being engaged in criminal activity to steal money, property and narcotics.  The officers planted evidence to make false arrests, extorted narcotics and firearms from individuals in exchange for their release.  The members of the enterprise gave false testimony, manipulated court records and failed to appear in court when required so that cases would be dismissed.  The officers also sold and distributed wholesale quantities of narcotics. 

For example, in January 2012, defendants Hernández-Nieves, Muñiz-Robledo and Grego-López, in their capacity as police officers, released a federal fugitive from custody in exchange for firearms.

In another example, the indictment alleges that in February 2013, defendants López-García and Montes-Cintrón, in their capacity as police officers, stole at least 500 grams of cocaine during the course of a police intervention, which Jiménez-Martínez sold afterward in furtherance of the goal of the enterprise.  

The indictment charges that the defendants frequently shared the proceeds they illegally obtained and that they used their power, authority and official positions as police officers to promote and protect their illegal activity.  Among other things, the indictment charges that they used the Police of Puerto of Rico’s (POPR) firearms, badges, patrol cars, tools, uniforms and other equipment to commit the crimes and concealed their illegal activity with fraudulently obtained court documents and falsified POPR paperwork to make it appear that they were engaged in legitimate police work.

The case is being investigated by the FBI’s San Juan Division.  The case is being prosecuted by Assistant U.S. Attorneys Mariana Bauzá-Almonte and Teresa Zapata-Valladares of the District of Puerto Rico.

The charges contained in the indictment are merely accusations.  The defendants are presumed innocent unless and until proven guilty.

Citizens of Puerto Rico with allegations of law enforcement corruption are encouraged to contact the FBI’s San Juan Division at (787) 754-6000.

RICO Conspiracy Charged in Payday Lending Case: First Federal Prosecution of Its Kind

The U.S. Attorney's Office, Eastern District of Pennsylvania, released the below information:

PHILADELPHIA—Adrian Rubin, 58, of Jenkintown, PA, has been charged with participation in a racketeering conspiracy for the operation of a “payday lending” business that allegedly violated the usury laws of Pennsylvania and other states, announced United States Attorney Zane David Memeger. Rubin is charged with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), one count of conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud and aiding and abetting mail fraud. It was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations.

According to the information unsealed today, between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.” Rubin allegedly conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included: (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender; (b) relocating his operations to a state considered “usury friendly;” and (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.

Rubin and his co-conspirators also allegedly went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record. It is further alleged that Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents. In total, it is alleged that Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.

Pennsylvania law makes it a crime to collect interest, fees, and other charges associated with a loan at a rate in excess of 36 percent per year. Payday loans are short-term loans of relatively small amounts of money, usually a few hundred dollars, which borrowers promise to repay out of their next paycheck or regular income payment, such as a social security check. Some loans have finance charges or fees of between 10 and 30 percent of the amount borrowed. Given the short-term nature of these loans, those charges can translate to annual percentage rates of interest (“APR”s) of 260 to 780 percent.

Rubin also was charged with helping his two sons with their own multi-million-dollar telemarketing scam that duped more than 70,000 people into buying a credit card http:/www.justice.gov/usao-edpa/pr/trio-charged-selling-worthless-credit-cards. The Platinum Trust card was falsely marketed as a general-purpose credit card that customers could use to buy merchandise over the Internet and improve their credit. Blake and Chase Rubin pleaded guilty and are awaiting sentencing.

If convicted of all charges, Adrian Rubin faces a possible advisory sentencing guideline range of at least 10 years in prison with a statutory maximum sentence of 65 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.

The case is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Joel M. Sweet.

An Information is an accusation. A defendant is presumed innocent unless and until proven guilty. 

Philadelphia Area Members Of Alleged Sports Betting Ring Charged With Racketeering

 

 

The U.S. Justice Department released the below information on August 8th:

PHILADELPHIA—A 23-count indictment was unsealed today charging 16 defendants in a conspiracy case involving the Mastronardo Bookmaking Organization, a multi-million-dollar sports betting operation with bettors throughout the U.S. At its peak, the alleged organization had more than 1,000 bettors and was generating millions of dollars a year. All but one defendant (Joanna Mastronardo) are charged with conspiracy to participate in a racketeering enterprise (RICO) and conducting an illegal gambling business.

The indictment alleges that between January 1, 2005 and January 1, 2011, the organization utilized Internet websites and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing, and other sporting events. Residents of Costa Rica staffed the Internet and telephone sites. The defendants allegedly hid more than $1 million in and around their homes, including in specially-built compartments and in PVC pipes that were buried in a yard.

Charged are Joseph Vito Mastronardo, Jr. (seen in the above photo) and John Mastronardo, the two alleged leaders; Joseph F. Mastronardo, Eric Woehlcke, Harry Murray, Joseph Vitelli, Anna Rose Vitelli, Patrick Tronoski, Edward Feighan, Kenneth Cohen, Schuyler Twaddle, Michael Loftus, Michael Squillante, David Rounick, Ronald Gendrachi; and Joanna Mastronardo, the wife of Joseph Mastronardo, Jr. All, with the exception of Twaddle, were arrested this morning.

The indictment was announced by U.S. Attorney Zane David Memeger, FBI Special Agent in Charge George C. Venizelos of the Philadelphia Field Office, Special Agent in Charge Eric Hylton of the Internal Revenue Service Criminal Investigation, and Montgomery County District Attorney Risa Ferman.

The indictment alleges that the defendants ran the organization using telephone, Skype, e-mail, text messaging, and in-person communication. They allegedly met bettors in-person, often in public buildings and parking lots, to collect or deliver payments that ranged from $1,000 to more than $100,000. The organization also allegedly used a gas station on Norristown Road in Blue Bell, Pennsylvania, as a mailing address and drop-off site to collect gambling payments.

According to the indictment, members of the Mastronardo Bookmaking Organization laundered the gambling proceeds using check cashing agencies, private bank accounts, and international bank accounts and provided instructions so that a losing bettor could pay a gambling debt through a charitable donation.

According to the indictment, leader Joseph V. Mastronardo, Jr. supervised the agents, sub-agents, websites (www.betroma.com and www.betrose.com), office employees; laundered some of the betting proceeds; collected debts; and instructed others to collect debts. Mastronardo’s brother, John, also a leader in the organization, supervised agents and sub-agents, laundered proceeds, and collected debts. John’s son, Joseph F. Mastronardo, worked as an office employee, collected debts, and performed other financial duties. Eric Woehlcke was initially a bookmaker and office employee, then worked as an office manager, and eventually became a leader supervising agents and sub-agents and laundering proceeds. Harry Murray was a bookmaker who resided in Florida and laundered proceeds in and outside the U.S. Joseph and Anna Rose Vitelli owned J&A Check Cashing where, in 2006, they allowed the organization to occupy an office for the illegal gambling business and which was also used to aid in the laundering of proceeds. Tronoski, Feighan, Cohen, Twaddle, Loftus, Squillante, Rounick, and Gendrachi were all bookmakers.

The indictment alleges that in March 2010, Joseph V. Mastronardo, Jr., in a conversation with bookmaker Harry Murray, commented, “Well, times like this I’m happy I’m a bookmaker,” to which Murray responded, “Me too.”

“Technology allowed the defendants to allegedly expand their gambling and money laundering operation far beyond the borders of Pennsylvania,” said Memeger. “Unfortunately for the defendants, however, we have the necessary statutory tools to investigate and prosecute those who openly flout our illegal gambling and financial reporting laws.”

“Illegal gambling and money laundering are the financial engines that help drive criminal enterprises like the one alleged today,” said Special Agent in Charge Venizelos. “The type of gambling activity charged here is illegal. These types of extensive and long-term joint investigative efforts, worked with our partners like the IRS and Montgomery County Detectives, are intended to dismantle criminal organizations that profit from illegal activities.”

“This alleged racketeering operation was anchored in Montgomery County but had tentacles spreading across the U.S. and beyond,” said D.A. Ferman. “Despite our attempt to shut it down in 2006-2007 with a Montgomery County prosecution, my office discovered that the defendants, as is alleged in the indictment, were back in business. We partnered with our federal counterparts to examine the full scope of the alleged illegal gambling operation. Today’s indictment reflects the work of many law enforcement agents across multiple agencies. These defendants tried to ‘game’ the system. Today, they crapped out.”

“The indictments announced today are the result of a significant and complex investigation,” said Special Agent in Charge Eric Hylton. “With both law enforcement and financial expertise, our agents are uniquely qualified to assist with these types of cases by following the trail of money. Our office will continue to work aggressively to identify and target illegal financial gains.”

Joanna Mastronardo is charged with one count of structuring in which it is alleged that she participated in making approximately 72 deposits in amounts less than $10,000, totaling more than $500,000 in a 12-month period.

Joseph V. Mastronardo, Jr. is charged in all 23 counts of the indictment. The remaining 14 defendants are each charged with the RICO conspiracy and with prohibition of illegal gambling. The indictment also seeks forfeiture of more than $6.3 million as alleged proceeds of the illegal enterprise.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, the Montgomery County Detective Bureau, and the Montgomery County District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Jason P. Bologna.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.

Note: Joseph V. Mastronardo is the son-in-law of the late Philadelphia mayor and police commissioner Frank Rizzo (seen in the below photo). His daughter is Joanna Mastronardo.

You can read George Anastasia's piece in the Philadelphia Inquirer on the arrests via the below link:

http://articles.philly.com/2012-08-10/news/33119372_1_joe-vito-mastronardo-john-mastronardo-joey-mastronardo