US Government Uses Anti-Mafia Law To Charge Huawei

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Huawei misappropriated tech to significantly reduce its R&D costs, according to allegations.

(Image credit: Shutterstock)

The U.S. Department of Justice has officially charged the Chinese telecommunications equipment company Huawei with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) -- the same law used to bring down mafia leaders in the past

A 16-Count Charge

The 16-count indictment against the firm includes a charge of conspiracy to steal trade secrets as a “long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts,” according to DOJ’s allegations.

The list of indicted defendants includes Huawei and four official and unofficial subsidiaries: 

The U.S. government also indicted Huawei’s Chief Financial Officer (CFO) Wanzhou Meng in 2018 when she was extradited from Canada on fraud charges.

How Huawei Allegedly Misappropriated U.S. Technology

In order to misappropriate technology, the Huawei would enter agreements with American companies just to gain access to their technology and then it would break those agreements and use the technology for itself. The U.S. government also noted that Huawei has been rewarding employees financially if they stole technology from competitors.

According to the DOJ, all of this has significantly improved Huawei’s position in the telecommunications equipment industry by giving the company an unfair advantage. The company allegedly used the stolen trade secrets and technology to drastically cut down its own research time and launch competing products much sooner. 

The misappropriated IP included traded secrets and copyrighted information in the form of source code and user manuals for internet routers, antenna technology and robot testing technology (allegedly stolen from T-Mobile).

Lying to FBI, Obstruction of Investigations

According to the DOJ, Huawei executives have lied to the FBI in previous investigations and have also engaged in obstructive behavior to minimize litigation risk and the potential for a criminal investigation.

The allegations mention that Huawei also lied about its commercial relationships in sanctioned countries such as Iran and North Korea, as well about its relationship with Skycom, the company’s unofficial subsidiary. According to the U.S. government, Skycom has been aiding the Iranian government in domestic surveillance, including in 2009 during the Tehran demonstrations.

The U.S. government has previously accused Huawei of aiding the Chinese government in espionage. More recently, the American government accused Huawei of using the backdoor the U.S. government mandated for telecommunications equipment for its own law enforcement agencies. 

Huawei has denied all previous accusations of aiding the Chinese government in espionage operations, including the recent backdoor access ones, as well as the 16-count charge the U.S. government is making against the company now.

The RICO Act

The RICO Act is a U.S. federal law that passed in the 70’s in order to close a loophole that allowed leaders of “enterprises” or organizations to escape prosecution if they had ordered someone to do a crime on their behalf, instead of doing it themselves. The law was initially used to prosecute mafia leaders, but it has since seen more widespread use. 

The people found guilty of racketeering can serve up to 20 years in prison for each racketeering count.

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Lucian Armasu
Lucian Armasu
Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.
13 Comments Comment from the forums
  • waltc3
    Wow...had no idea it was this serious. China's been misappropriating our IP since way back in the Billy-Bob Clinton era, apparently with help from the Clintons, so this has been long in coming! RICO is for "organized crime"--under which the Mafia has been prosecuted. But it actually exists for any organized business or groups engaging in crime. I can think of a couple of state governments the DOJ should charge under the RICO acts--like NY and CA, for instance...;) Unfortunately, that's not going to happen, most likely...!
    Reply
  • King_V
    waltc3 said:
    since way back in the Billy-Bob Clinton era, apparently with help from the Clintons, so this has been long in coming! RICO is for "organized crime"--under which the Mafia has been prosecuted. But it actually exists for any organized business or groups engaging in crime. I can think of a couple of state governments the DOJ should charge under the RICO acts--like NY and CA, for instance...;) Unfortunately, that's not going to happen, most likely...!

    Whatever point you might have had loses any and all credibility when you engage in baseless accusations. Yes, we get it, you hate the Clintons, you want to punish NY and CA because you don't like them, or whatever.

    The Clintons aren't and NY and CA state governments aren't responsible for whatever crime you imagine they're violating. Partisan propaganda, and willfully posting false information, are not welcome here.
    Reply
  • bryanc723
    King_V said:
    Whatever point you might have had loses any and all credibility when you engage in baseless accusations. Yes, we get it, you hate the Clintons, you want to punish NY and CA because you don't like them, or whatever.

    The Clintons aren't and NY and CA state governments aren't responsible for whatever crime you imagine they're violating. Partisan propaganda, and willfully posting false information, are not welcome here.
    The CA government is stealing taxpayer $ to fund government employees pensions. The Clinton administration sold trade secrets to China for personal gain(this was the 90s btw).
    While this isn't a political site, the person you responded to did indeed state facts, albeit with a bit of a political undertone. All state governments violate the constitution on a regular basis.
    Reply
  • King_V
    bryanc723 said:
    The CA government is stealing taxpayer $ to fund government employees pensions.
    And their salaries, too, no doubt. Do you understand what taxes are used for?

    bryanc723 said:
    The Clinton administration sold trade secrets to China for personal gain(this was the 90s btw).
    I'm aware of the 90s, I was around then. That doesn't make it any less of a fabrication.

    It's the fantasy peddled by right-wing pundits. Somehow, I'm sure, a bunch of intrepid Internet Partisans somehow have access to evidence that the entire GOP, spending 6 years and $60 million on just the Independent Counsel's investigation alone, somehow could not manage to find. Is that what I am to believe?

    bryanc723 said:
    While this isn't a political site, the person you responded to did indeed state facts, albeit with a bit of a political undertone.
    All state governments violate the constitution on a regular basis.

    Both of these are claims. I could claim anything I want to - and you'd have to believe it because, why? Because I'm a stranger on the internet?

    Just WANTING to believe HARD enough does not constitute fact. EVIDENCE is what backs facts.


    Keep the partisan falsehoods and attempts at topic derailment for the purposes of your own partisan axe-grinding out of the discussion. Don't sit here and try to re-write the 90s, or complain about states you have a grudge against.

    The ONLY politics that have any relevance here are those pertaining to the tariffs, restrictions (and waivers) related to Huawei, and so forth.
    Reply
  • pug_s
    US Companies steal IP's from each other all the time. Why don't the US government charge them with RICO act?
    Reply
  • bit_user
    bryanc723 said:
    The Clinton administration sold trade secrets to China for personal gain(this was the 90s btw).
    This is fake news. The Republicans had a special prosecutor looking to get Clinton on anything they could. The best thing they could come up with is the Lewinsky affair.

    bryanc723 said:
    While this isn't a political site, the person you responded to did indeed state facts, albeit with a bit of a political undertone.
    No, they were wild accusations, with no supporting evidence. Stating something as a fact doesn't make it so. It's just partisan (or Russian) trolling.

    bryanc723 said:
    All state governments violate the constitution on a regular basis.
    When they do, you can sue them.
    Reply
  • bit_user
    pug_s said:
    US Companies steal IP's from each other all the time. Why don't the US government charge them with RICO act?
    You're talking about patent infringement, which is different. That's civil matter, and companies are quite competent at handing that by themselves.

    When they find evidence of industrial espionage, I'm pretty sure they involve the authorities and pursue criminal investigations, as well.
    Reply
  • waltc3
    Stepped on a few toes, no doubt...;) Jeeez. Rough crowd.
    Reply
  • King_V
    waltc3 said:
    Stepped on a few toes, no doubt...;) Jeeez. Rough crowd.
    We try to stick to facts here, not derailing the topic with wishful thinking and conspiracy theories. If that's too tough of a requirement, there are, I'm sure, plenty of other sites that would be more accommodating.
    Reply
  • waltc3
    I could argue this very easily--but I won't...;) Yes, I probably shouldn't have said as much as I have here...;) 'bound to provoke opposite opinions. I agree that politics should always be divorced from tech! --moment of weakness, I suppose. Mea Culpa.
    Reply