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United States charges NY firm with illegal Chinese equipment sales

10 November 2019

A Commack-based company imported Chinese-made surveillance technology with known cyber-security vulnerabilities, slapped "Made in The USA" labels on the products, and sold them to to the US military for years, federal prosecutors alleged.

"The defendants falsely claimed for years that their surveillance and security equipment was manufactured on Long Island, padding their pockets with money from lucrative contracts without regard for the risk to our country's national security posed by secretly peddling made-in-China electronics with known cyber vulnerabilities", said Richard P. Donoghue, U.S. Attorney for the Eastern District of NY.

Aventura and the seven defendants faces charges of unlawful importation and conspiracy to commit wire and bank fraud. He added: "Obviously it's a grave concern to the United States that infrastructure is compromised by hardware and software made in the People's Republic of China".

Prosecutors said Aventura reported having sold US$20.7 million of security equipment to the US government through the end of 2018 via US General Services Administration contracts.

In complete the corporate collected $88 million in gross sales with each private and non-private sector shoppers since November 2010, prosecutors say.

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Six of the defendants are slated to be arraigned in Brooklyn Federal court Thursday afternoon.

The company's largest customers are U.S. government agencies including the Army, Navy and Air Force, though it also sold to private companies, making about US$88 million since 2010, prosecutors said.

Donoghue said the equipment had known cybersecurity vulnerabilities and that Aventura was, "trading our national security for personal profit".

A phone message seeking comment was left Thursday at Aventura's headquarters in Commack, New York.

Despite all this, prosecutors allege he attempted to rat out other government contractors for running the exact same scheme as his company. Aventura and legal counselors for the Cabassos couldn't quickly be gone after remark.

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Jack Cabasso was detained; he did not have a bail package to offer today.

The pair allegedly lied about the arrangement to gain access to government contracts reserved for women-owned businesses. He was convicted of a handful of crimes relating to fraud, grand larceny, and corruption, among others, dating back to 1982.

According to the Justice Department, federal investigators uncovered the scheme by intercepting the shipments Chinese manufacturers sent to Aventura, and tracking their eventual arrival to the company's government customers. Authorities have seized more than $3 million along with Cabasso's 70-foot luxury yacht, but believe that Cabasso has significant offshore assets, as well as ties to jurisdictions from which extradition is practically impossible, including China.

The defendants had gone to lengths to hide any footprint of the products Chinese origin, prosecutors said, including requiring a Chinese supplier to erase its initials from the product's circuit board.

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United States charges NY firm with illegal Chinese equipment sales