On February 13, 2020 the United States filed a sixteen-count superseding indictment against Huawei Technologies Co., Ltd. and several U.S. based subsidiaries (collectively “Huawei”) charging Huawei with racketeering, money laundering, and violating U.S. sanctions against Iran. The new charges, announced by the United States Attorney’s Office for the Eastern District of New York, the Justice Department’s Criminal and National Security divisions, and the FBI, are the latest of a number of enforcement actions by the U.S. Government against Huawei, and yet another escalation in the U.S. Government’s quest to prevent Huawei from stealing trade secrets and other sensitive intellectual property from American companies.

The superseding indictment alleges that Huawei and several subsidiaries executed a scheme to operate and grow business through the deliberate and repeated misappropriation of various forms of intellectual property from companies in the United States. As one example, the indictment alleges that Huawei misappropriated operating system source code for internet routers, and subsequently incorporated the misappropriated source code into Huawei routers that were then sold in the United States from April 2002 until December 2002. The indictment alleges that Huawei employed a widespread and systematic scheme to gain access to the targeted intellectual property. Specifically, Huawei (i) entered into confidentiality agreements with the owners of the intellectual property and then intentionally violated the terms of those agreements by misappropriating the intellectual property for the defendants’ own use; (ii) recruited employees from targeted American companies and used those employees to access the intellectual property of their former employers; (iii) targeted professors employed at research institutions or third party companies to access various companies’ nonpublic intellectual property; and (iv) incentivized Huawei employees to steal intellectual property from other companies. Huawei did this by employing a formal bonus program rewarding its employees who successfully acquired intellectual property; it also provided an intricately designed method of delivering the stolen intellectual property by posting to Huawei’s website or by sending encrypted emails to Huawei itself.

The indictment further alleges that Huawei made repeated false statements to the United States government about the scope of Huawei’s business activities related to sanctioned countries such as Iran and North Korea.

The battle between the United States Government enforcement agencies and Huawei continues to intensify. Racketeer Influenced and Corrupt Organizations (RICO) charges against a multinational corporate organization, as opposed to a criminal enterprise, underscore the United States Government’s view of Huawei as a criminal threat to national security. Given Hauwei’s history with U.S. Government, the latest indictment is likely not the end of the story.

The case is United States of America v. Huawei Technologies Co., Ltd., et al, No. 1:18-cr-00457-AMD in the United States District Court for the Eastern District of New York.