A complaint unsealed by the Department of Justice on Thursday alleges a New York firm engineered a years-long scheme to deceive the U.S. government: selling Chinese manufactured cameras and other gear to the U.S. Military, the Department of Energy and other government agencies that it claimed were “Made in the U.S.A”.
Uncle Sam’s supply chain woes just got a lot worse.
A complaint unsealed by the U.S. District Court for the Eastern District of New York alleges that a Long Island firm sold more than $88 million worth of Chinese-made security equipment to the U.S. government for more than a decade, including networked surveillance cameras used in military bases and U.S. Department of Energy facilities.
A 56 page complaint filed in the U.S. District Court for the Eastern District of New York names seven individuals employed by Aventura Technologies of Commack, Long Island as participants in a years-long scheme that sold Chinese security hardware to a wide range of U.S. government agencies including the U.S. Army, Navy and Air Force, as well as the Department of the Treasury. In all, the company sold technology across more than 60 contracts with the U.S. Government.
The DOJ outlines an extensive fraud, including import fraud, defrauding the government and money laundering. Federal agents arrested six of the defendants on Thursday, executed search warrants at Aventura’s headquarters in Commack, New York, and at the home of company owners Jack and Frances Cabasso in Northport, New York. The government also seized the Cabassos’ 70-foot luxury yacht and froze approximately $3 million in 12 financial accounts, according to a statement.
Made in the PRC
Though Aventura claimed in its dealings with the U.S. Government that its cameras, night vision cameras, turnstiles and other technology were manufactured in a factory in New York, they were actually sourced from a range of manufacturers in China, some with ties to the Chinese government.
Cameras manufactured in China were outfitted with Aventura’s logo and the phrase “Made in USA” before being resold to U.S. government agencies. Cabasso and others took extensive measures to conceal the source of the hardware, urging their partners in China to remove the manufacturer’s name from circuit boards and communications sent between client and server software used by its networked cameras and other equipment.
U.S. Customs and Border Control intercepted numerous shipments sent from China to Aventura, surreptitiously marking items for later identification. A $13,500 March, 2019 shipment of laser-enhanced nigh vision cameras for the U.S. Navy, for example, was intercepted and marked. A camera from that order and surreptitiously marked it for later identification was delivered to Naval Submarine Base New London in Groton, Connecticut, the DOJ said. A similar interdiction of a $156,000 order of networked, automated turnstiles saw the Chinese hardware shipped to a Department of Energy facility in Tennessee, according to a statement by the DOJ.
In addition to their Chinese provenance, the firmware run by the cameras from two of the Chinese manufacturers used by Aventura is known to have remotely exploitable security vulnerabilities, DOJ noted.
Part of a pattern
The case is just the latest involving U.S. government efforts to root out Chinese made technology and gear from sensitive networks. Uncle Sam has gone public with concerns about gear sold by Huawei. In January, the DOJ unveiled a 13-count indictment and a 10-count indictment against Huawei executives and its U.Ss. affiliates Huawei Device USA Inc. and Skycom Tech Co. Ltd. for allegedly stealing trade secrets from U.S. mobile firm T-Mobile and deceiving U.S. stakeholders about its business activity in Iran, among a number of other fraud and conspiracy activities over a 10-year period.
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And that’s not all. In 2017, the Department of Homeland Security warned about government and commercial use of drones manufactured by the Chinese firm DJI, alleging that the firm was providing U.S. critical infrastructure and law enforcement data to the Chinese government.
Concerns were also raised after Bloomberg, in October 2018, published an explosive story alleging the Chinese government was planting spy chips on motherboards sold by the firm Super Micro and used by leading U.S. firms including Apple. No evidence proving the story has surfaced, though Bloomberg continues to stand behind it.