Huawei Corporate Entities Indicted for Theft of Trade Secrets, Wire Fraud, and Obstruction Of Justice

Huawei Corporate Entities Conspired to Steal Trade Secret Technology and Offered Bonus to Workers who Stole Confidential Information from Companies Around the World Conspired to Steal Trade Secret Technology and Offered Bonus to Workers who Stole Confidential Information from Companies Around the World

A 10-count indictment unsealed today in the Western District of Washington State charges Huawei Device Co., Ltd. and Huawei Device Co. USA with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice.  The indictment, returned by a grand jury on January 16, details Huawei’s efforts to steal trade secrets from Bellevue, Washington based T-Mobile USA and then obstruct justice when T-Mobile threatened to sue Huawei in U.S. District Court in Seattle.  The alleged conduct described in the indictment occurred from 2012 to 2014, and includes an internal Huawei announcement that the company was offering bonuses to employees who succeeded in stealing confidential information from other companies.

“Today we are announcing that we are bringing criminal charges against telecommunications giant Huawei and its associates for nearly two dozen alleged crimes” Acting Attorney General Matthew G. Whitaker said.  “As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law.  I’d like to thank the many dedicated criminal investigators from several different federal agencies who contributed to this investigation and the Department of Justice attorneys who are moving the prosecution efforts forward. They are helping us uphold the rule of law with integrity.”

“The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” said FBI Director Wray. “To the detriment of American ingenuity, Huawei continually disregarded the laws of the United States in the hopes of gaining an unfair economic advantage. As the volume of these charges prove, the FBI will not tolerate corrupt businesses that violate the laws that allow American companies and the United States to thrive.”

“This indictment shines a bright light on Huawei’s flagrant abuse of the law – especially its efforts to steal valuable intellectual property from T-Mobile to gain unfair advantage in the global marketplace,” said First Assistant U.S. Attorney Annette L. Hayes of the Western District of Washington.  “We look forward to presenting the evidence of Huawei’s crimes in a court of law, and proving our case beyond a reasonable doubt.  Fair competition and respect for the rule of law is essential to the functioning of our international economic system.” 

According to the indictment, in 2012 Huawei began a concerted effort to steal information on a T-Mobile phone-testing robot dubbed “Tappy.”  In an effort to build their own robot to test phones before they were shipped to T-Mobile and other wireless carriers, Huawei engineers violated confidentiality and non-disclosure agreements with T-Mobile by secretly taking photos of “Tappy,” taking measurements of parts of the robot, and in one instance, stealing a piece of the robot so that the Huawei engineers in China could try to replicate it.  After T-Mobile discovered and interrupted these criminal activities, and then threatened to sue, Huawei produced a report falsely claiming that the theft was the work of rogue actors within the company and not a concerted effort by Huawei corporate entities in the United States and China.  As emails obtained in the course of the investigation reveal, the conspiracy to steal secrets from T-Mobile was a company-wide effort involving many engineers and employees within the two charged companies. 

As part of its investigation, FBI obtained emails revealing that in July 2013, Huawei offered bonuses to employees based on the value of information they stole from other companies around the world, and provided to Huawei via an encrypted email address. 

Under the maximum sentencing provisions applicable to corporate entities, Conspiracy and Attempt to Commit Trade Secret Theft are punishable by a fine of up to $5,000,000 or three times the value of the stolen trade secret, whichever is greater.  Wire Fraud and Obstruction of Justice are punishable by a fine of up to $500,000. 

The charges contained in the indictment are only allegations.  A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.  If convicted of any offense, the sentencing of the defendants will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

The case is being investigated by the FBI.  The case is being prosecuted by Assistant U.S. Attorneys Todd Greenberg and Thomas Woods of the Western District of Washington, with assistance from the Department of Justice’s National Security Division’s Counterintelligence and Export Control Section.

U.S. Attorney Brian T. Moran has been recused from this matter because of legal representations he undertook before he joined the Department of Justice.  Per direction from ethics officials in the Department of Justice, First Assistant U.S. Attorney Annette L. Hayes will act as U.S. Attorney with respect to this matter pursuant to the authority conferred by 28 U.S.C. § 515.

Source: FBI

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