Huawei Et Al Indictment 0

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EROOKLYN OFFICE

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF N3W YORK

UNITED STATES OF AMERICA SUPERSEDING

INDICTMENT

~ against -
Cr, No. 18-457 (8-2) (AMD)

C18, USC, $9 371, s81@UNC
‘82(0\(1), 982e)(2), 9820H)(1), 134,

HUAWEI TECLNOLOGIES CO., LID.
HUAWEI DEVICE USA INC,

SKYCOM TECH CO. LTD. 1344, 1349, 1512(6), 1956(h), 2 and

WANZHOU MENG, 3551 et eqs 7.21, USC, § 853): T.
also known as “Cathy Mong” and 28, US.C, § 2461(6 T. 50, USC,
‘sabrina Meng” §8 1702, 1705() ane 1705(@))

Defendants

‘THE GRAND JURY CHARGES:
INTRODUCTION
Atal mes celevent to this SypersedingTadictment, wales otherwise
indicted

I TheDel

dants
1, The defenéunt IMUAWAI TECHNOLOGIES CO. LTD. (IUAWED")

‘was a global networkirg, telecommunications and services company headquarrered in

Shenzhen, Gnaagdong, inthe People’s Rezublic of China (“PRC”). HUAWET was owned
by a parent compeny (“Huawei Parent”), an entity whose idectity is known fo the Grand

Jury, registered in Shenzhen, Guangdong, in the PRC. Ax of the date of the filing of this
Snperseding Indictment, HUAWEI was the largest telecoramunieations equipment
‘mamafaeturc inthe would,

2, HUAWEI operated numerous subsidiaries throughout tke world,
‘including in the United States. One U.S. subsidiary was the defendant HUAWEI DRVICE,
USA INC, (‘HUAWEI USA"), whose hondquarters were in Plano, ‘Texas

3, The defendant SKYCOM TECH CO. LTD. (“SKYCOM”) was
corporaticn registered in Hong Keng whese primary operations were in Iran, SKYCOM.
‘metioned as HUAWET's tran-based subsidiary, As of 2007, Huawei Parent owned
SKYCOM through a subsidiary (“Huawei Subsidiary 1”), an entity whose identity is known
to the Grand Jury. Inor about November 2007, Hnawei Subsidiary 1 transferred its shares
of SKYCOM to enother entity (*Luawsi Subsidiary 2°), am entity whose identity is known to
the Grand Jary, and which was purportedly a third party inthe transaction but was actually
controlled by HUAWEL Following this transfer of SKY¥COM stares from Huawei
Subsidiary 1 to Muawei Subsidiary 2, HUAWEI falsely elaimed that SKYCOM wes one of
HUAWE?’s local business pertness in Iran, as opzosed to one of IUAWEI’s subsidieries or
sfiliates.

4, The defendant WANZHOU MENG, also inown as “Cathy Meng” and

yen of the PRC, Fvom ét least in or about 2010, MENG served as

“Sabrina Meng,” was a:
Chief Financial Officer of HUAWEI Between approximately February 2008 aad April
2009, MENG served on the SKYCOM Board of Dizectoss. Mose recent'y, MENG also

served as Deputy Chairwomea of the Bored of Directors for HUAWEL.
Tl, The Viotim Fngncial Insti‘ions

7. Financial Institution 1, an entity whose identity is known to the Grand

Jury, was a multinational banking and financial which operated

services company

subsidiaries throughout the world, inclucing in the United States and in Turozone countries

S, Sabsicia-y 1"),

Is United States-based subsidiary (*U. entity whose identiy is known to
the Grand Jury, was a federally chettered bank, che dapasits of waich were insured by the
Federal Deposit Insurance Company (“FDIC"). Among the services offered by Financial

Institution | to is clients were T1.S.-dellsr elearing throngh 1.8, Subsidiary 1 and other

sanciul institutions located in the United Slates, and Euto closing throagh Financial

Tstitation 1 subsidiarios and other financial institutions located in Eurozone countries.

Between approximately 2010 and 2014, Financial Institution 1 ard U.S. Subsidiary I cleared

‘more than $100 million worth of transuetions related to SKYCOM through the United

In or shot 2017, Financial Tnstittion 1 verbally eommunieated to HUAWEI representatives
‘hal ¢ was tenminating its banking relationship wich HUAWEL

8. Financial Inst:ution 2, an entity whose identity is known to the Grand

Jory, was a multinationel banking and financial scrvieces company, which operated

subsidiaries throughoat the world, including in tie United States and in Burozone countries.
“Among the sczvives offtved by Fluancial lusttution 2 w its eL.outs were U.S.-dollas cleaving
Ghrough a Financial Institution 2 subsidiary and other financial institutions Iecated in the
United States, and Faro clearing through Finansisl Institution 2 subsidiaries and other
‘financial institutions located in Burozone countries.

9, Financial Instidition 3, an entity whose identity is kmovan to the Grand
Jury, was a wultinational banking and financial services company, which operated
subsidiaries throughout the world, including in the United Stazes and in Eurozone countries,

incncial Instivction 310 ite clients were U.S. dollar clearing

Among the services offered
rough Financial Institution 3 subsidiaries and other financial irstitutions lovated in the
United States, andl Ruro clessing through Financial Institution 3 suhsidieries ond other
financial institutions located ia: Eusezone counties.

10, Finencial Institution 4, an entity whose identity is mown to the Grend

Jury, wat a multinational banking and financial services company operating subsidiaries

‘throughout the world, inctuding in the United States and in Eurozone countries, Among the
services offered by Financial Institution 4 to its cents were U.S dollar elearing through,
Fineneitl Institution 4 subsidiaries and olher finsneial insitutions located in the United

States, and Euro clearing shrough Finencial Institution 4 subsidiaries and other financial

{institutions Iocated in Eurozone counties. 4 subsidiary of Financial Institution 4 ("U.S.

‘Subsidiary 4"), an entity whose identity s known to the Grand Jury, was a financial
instittion organized in the United States offering banking and financial services throughout
the world, U.S, Subsidiary 4 offered HUAWEI and its affilies banking servives und cash

‘management services, including for accounts in the United States
LL, ven though the U.S, Department ofthe Treasury's Oifice of Foreign

Assets Contcol’s (“OF AC") Iranian Transactions anc

Sanctions Regulations (“

ey 31
CARR. Part S60, proscribed the export of US.-origin goods, eehnology and services to ran

and tie Goyseument cf Iran, HUAWEI operated SKYCOM as am urofficia! subsidiary (0

oblaia otherwise prohibited U.S.-origin goods, technology and services, including banking
services, for HUAWEI Irun-based business while ooneealing the link to UAWEL
HUAWEI could thus attempt to claim ignorance with respect to any illegal act committed by
SKYCOM on bohalf of HUAWEI, inching violations ofthe ITSR and other applicable
US. law. Tn addition, contrary Wo U.S. law, SKYCOM, on behalf of TUAWEL, esmployed in
Tran at least ons U.S. citizen (“Employee 1”), whose identity is known to the Grand Jury.

2. Sines in or about July 2007, HUAWEI repeatedly misrepresented to the
U.S. goveonment and to vacious vietim financial institutions, including Financial Tnst-cutions
1,2,3 and 4, and their U.S. and Furozone subsidiaries and branches (collectively, the
“Victim Institutions”), that, although HUAWEI coveted business in Irea, it did so ia a
‘manner tha did not violete applicsble U.S. law, including the ITSR. In reality, HUAWEL

conduct

ied its business in Iran in a manner that vialated epplicuble U.S. law, which insludes
the ITSR,

13. For example, in or about July 2007, agents with the Federal Bureau of
Investigation (“FBI”) interviewed the founder of HUAWEI (“Icdlividual-1"), whose identity
is knowa to the Grand Jury, in New York, New York. Individual-1 stated, in sum and

substance, that he was wlling to provide information sbou: HUA WEL.
14. During the interview, amongst other (sings, Individual-1 falsely stated,

in substance and in part, that HUAWEI did not conduct any aetivity in violation of U.S

export laws and that HUAWEI operated in compliauce with 2.1 U.S, export laws.

ndividadl-1 also falsely stated, in substance and in part, chet HUAWET had noi dealt dirs

‘ly
‘vith any anion company. Individual farther stated that he balieved LTUAWH kad sole
culprit to dd party, possibly is Egypt, which in tum sold tho equipment co ra.

15, Adeitionaliy, HUAWEI repestedly misrepresented to Finacist
Insiuton 1 tha TUAWET would not ase Financial Intttion Landis afiliates to process
‘ny transactions regarding HUAWEI’ Ieanchased busines in ceality, HUAWEI used US.

T8-

Subsidiary 1 and other financial institutions operating in the United States to proce

dollar clearing ttansectiors involving millions of dollars in Surtherence of HUAWI's Iren-
‘based busiress, Sore of these transactions passed through the Baste District of New
‘York.

16, Inoz about late 2012 and early 2013, various news organizations,

including Reuters, reported thet SKYCOM had vold and attempted to sell embargacd U.S.-

origin goods to Iran in vielation of U.S. Jaw, and that RUAWET in fact owned and operated

SKYCOM. In December 2012, Reuters published an article purparting to contain

‘HUAWEL off.cial statement adelossing and denying thase allegaticns. In Jancary 2013,

Renters published a sccond atticls purporting to contain x HUAWET official statement, agnin

addressing and cenying che Iran sllegetions, ‘The purported statements oy HUAWET in

these art

s were relied on by the Victim institutiors in determining whether to continue

their bankirg rolationships with HUAWEI and its subsidiaries
17. Following publicstion of the December 2012 ané January 2013 Reuters
articles, various HUAWEI representatives nd employees communicated to the Victim,
“nstittions and fo tne public tha the allegations regarding NUAW's ownership and
conteol of SKYCOM were false ancl that, in fact, HUAWEI did comply with applicable U.S
Jay, which includes We TTSR. Based in part on these fie representations dhe Viet

I Ships with ITUAWEL and its subsidiaries and

tutions continued their banking relatio

affiliates

For eximpl, in or about June 2013, tho defendant WANZHOU MENG:
requested an in-persor. meeting with a Financial Institution 1 exccutive (the “Financial
lnstitaton 1 Executive"), whose identity is known to the Grand Jury. During the meeting,
‘which took place on o: about August 22,2013, MENG spc in Chinese, relying, in part on a
PowerPoint presentation written in Chinese. Upon request by the Financial Instittion |
-Excoutive, MENG srranged for an English-language version ofthe PowerPoint presentation
to be delivered to Financial Institution | on or about September 3, 2013.

19, Tn levant part, the PowerPoint presentation included numerous
rmiscepresentations regarding HUAWHI's ownership and conttal of SKYCOM and
HCAWEY’s compliance with applicable U.S. law, including that (L) HUAWEI “operates in
‘can in strict compliance with eppl:cable laws, regulators and sanctions of UN, US and EU";
(2) “HUAWET’s engagement with SKYCOM is normal business coeperation”; (3) the
defendant WANZHOU MENG’s participation on the Board of Directors of SKYCOM was
to “help HUA Whi to better understand SK YCOM's financial results and business

performance, ado strengthen and monitor SKYCOM?s compliance”; ard (4) “UAW!
subsidiaries in sensitive countries will not open accounts at [Financial Institution 1], nor have
businoss transactions with [Financial Institution 1].” These statements were all false

20, Ineaely 2014, several months alte: the meeting, with Firaneial
Institution 1 Executive, the defendant WANZHOU MENG traveled to the United States,
antiving # Joba F. Keanedy International Airport, which is located in the Fae Disiriet of
New York. When she entered the United Slates, MENG was carrying an electronic device
thet contained a file in unallocated space—indicating that the file may heve been deleted —
containing the following text:

Suggested Talking Points

‘The core of the suggested talking points regarding, Iran/Skyeom:
Huawoi's operation in Iran comports with tke ws, regulacions
and sanctions as recuited by the United Natiors, the United
Stetes and the European Union. The relationship with Skyeom 's
that of normal business eocperssion, Throngh regulated trade
‘organizations ené procedares, Huawei requires thst Skycom
promises fo abide by relevant Inws and regulations and export
controls. Key information 1: In the past— ceased to hold
Skycom shares 1, With regards to cooperation: Skycom was
estublished in [998 and is ane of the agents for Huawei products
and scrviees, Skycom is meinly an agcat for Have,

Cer text in the sure Te appeared to refer to adocument announcing the appointment of
Huse employees that was “signed by MENG Wanzheu,” the dofondent.

21, Basod in par: onthe false represeastions macl by the defendant
WANZHOU MENG end other, Financial Institution 1 contisucd its banking relaonskip
vith HITAWET and its subsites and afistes,

22, Tad the Viesim lnstiusfons known about HUAWEI's repeated
Violations ofthe FESR, they woul have reevatuated their banking relationships with

HUAWEI, inclnding the provision of U.S. dollar and Euro eleasing sorvices to HUAWEL
MIUAW’s Continued Scheme to Defraud Financial Institusions
23, Imor about 2017, Financial Institution 1 desided te terminate ils global
tclationship with HUAWEI because of risk eoncezns regarding IUAWII's business

practices, During a series of mectings and communications, Financiel Institution 1

repeatedly communicated to HUAWEI thatthe decision to tarminate its banking relationship
‘with HUAWEI had been made by Financial Institution I alone, and was not a nmutual
decision with HUAWEI.

24, After leaning of Financial Insttution 1’s decision to terminate its

relationship with HUAWI, HIUAWEL took steps ‘0 secure and expand ils banking,

relationships with other flaaacial insttutiozs, inokeding U.S. Subsidiary 4, In doing 20,
HUAWEI employees made material misrepresentations to U.S. Subsidiary 4, among other
financial institations, regacding the reason for the termination ofits relationship with

Finacial Institution 1 and the panty responsible fo the termination, claiming that [THA WEI,

not Financial Institution 1, had initiated the te-mination. Specifically, in meetings and

6 Siksitiey | AWE sles
er

considering te I Insitntion 1 because HUAWEI was

ccorrexponidence with representatives o:

rminating its relationship with Kinanei

dissstsfcd with Fiaanelal lustiudon T'slovel of sevice. HUAWEI’s mistepresetal

that it had decided to terminate its relationship with Financial Instittion { was

communicated te various components of US. Subsidiary 4, inching in Now York City,
25, Hased in parton these fae rep

defeadovis HAW? III oon other HUA

cmployees, U.S, Subsidiary 4 undsrlock to expand its banking relationship with HUAWEL

ations and omissions made by the
10

and its subsidiarios and affiliates, and contirned to maintain its existing banking relationship
with HUAWET globally, inckucing in the United States, Tad the defendants told U.S,
Subsidiary 4 the truth about Financial Institution 1's decision to terminate its relationship
with UAWEL, U.S. Subsidiary 4 would have reevaluated its relationshia with HUAWEL
and ils subsidiaries and affiliates.
V. The Scheme to Obstrvct Justice

26, In or about 2017, HUAWEI and HUAWEI USA became aware o* the
U.S. government's criminal investigation of HUAWEI snd ils effliates. In response to the
investigation, HUAWET ard HUAWEIUSA made efforts to move witnesses with
Inwwleige about TUAWEPs Trun-ased busines io the PRC, and beyond the jurisdiction of
‘he U.S, government, and to destroy and conceal evidence in the United States of
HUAWET = Iran-baved business

UNT ONE
(Conspiracy to Commit Bark Fraud)

27. The allegations contained in parag-aphs one througit 22 are realleged
and incorporated as ise: forth fully in chis paragraph,
28. Inorabout and between November 2007 and May 2015, both dates

being approximste and inclusive, withis the Bastern Discrist of New York and elsewhere, the

defendants HUAWEI, SKYCOM and WANZHIOU MENG, also known as “Cathy Meng”
und “Sabrina Meng," together with others, did knowingly and intentionally congpice 10
exocute a scheme and artifice to deftaud U.S. Subsidiary 1, « nancial instinuton, and vo
obtain moneys, funds, crodits and other property owned by and under the custody end eomirel

‘of said financial institution, by moms of ene ar more materially false and fraudulent