U.S. Charges Huawei Under RICO Act

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A federal court Thursday returned an indictment charging telecom equipment manufacturer Huawei, and two U.S. subsidiaries, with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO). The DOJ and the FBI announced the charges – some of them related to Huawei’s alleged theft of cell phone technology. The 16-count 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,” according to the DOJ and FBI.

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

The government says its investigation shows the new charges relate to the alleged decades-long efforts by Huawei and subsidiaries, both in the U.S. and in the People’s Republic of China, to steal intellectual property (IP), including from six U.S. technology companies. The “misappropriated” IP included trade secrets and copyrighted works, such as source code and user manuals for internet routers, cellular antenna technology and robot testing technology. 

The U.S. government says Huawei would sign confidentiality agreements with the IP owners and then violate the terms by stealing the IP for its own commercial use. The government also alleges Huawei recruited employees of other companies and told them to steal their former employers’ IP. Huawei allegedly launched a bonus program to reward employees who obtained confidential information from competitors. Huawei’s efforts enabled it to “drastically” cut its R&D costs, giving the company a significant and unfair competitive advantage, according to the indictments.

When confronted with evidence of wrongdoing, the defendants allegedly repeatedly lied to FBI agents and representatives from the U.S. House Permanent Select Committee on Intelligence. The new 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.

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