The U.S. Department of Justice has upped the pressure on Huawei, and will now go after the Chinese company by charging it with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act.

The DoJ said its “superseding indictment” levels new charges against Huawei including a legal charge of conspiracy to steal trade secrets. That the DoJ is invoking RICO, however, is what should worry Huawei.

RICO can be a potent prosecutorial tool. There are multiple disparate crimes that are included in RICO statutes, and using RICO gives prosecutors additional latitude, in that they can cite actions that aren’t necessarily crimes, but which support the contention that the defendant has engaged in a pattern of illegal behavior.

While RICO statutes have been used primarily to prosecute the leaders of organized crime organizations, including the Gambino, Lucchese, and Bonanno crime families, charges of violating the act have been used to also sue the Los Angeles Police Department, FIFA, and Donald Trump for his failed Trump University (Trump settled for $25 million).

While the RICO and conspiracy charges against Huawei are new, the bulk of the superseding indictment is a laundry list of every accusation leveled at Huawei of attempted technology theft that the DOJ was able to find. The document also apparently rehashes highly public lawsuits, all but one 10 years old or older. “Apparently” because the document obscures the names of the companies involved, assigning them numbers and referring to them all as entities “the identify of which [are] known to the Grand Jury.”

Again, consistent with RICO prosecutions, the Justice Department is attempting to demonstrate what it called in its announcement of the filing “the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property.”

The indictment explains at length how Huawei sometimes violated the terms of confidentiality agreements, attempted to recruit other companies’ employees “in order to gain access to intellectual property of their former employers,” incentivized IP theft, and frequently misled U.S. authorities.

The DoJ document provides plenty of references to details, but is generally lacking in specifics.

That said, in one of the few passages in which the charges approach specificity, the document says that in 2013 Huawei “launched a formal policy instituting a bonus program to reward employees who obtained confidential information from competitors.” The document says “Employees were directed to post confidential information obtained from other companies on an internal HUAWEI website, or, in the case of especially sensitive information, to send an encrypted email to a special Huawei.com email mailbox.” The Justice Department said Huawei sent a memo on the program to U.S.-based employees.

Roughly one-third of the 56-page document is devoted to explaining a half-dozen particular attempts by Huawei to steal trade secrets. They include:

Stealing source code and manuals for routers from “company 1” in 2003.

Attempting to hire away an engineer from “company 2” in 2003.

Attempting to hire away an engineer from “company 3” in 2004.

Violating an NDA with “company 4” in 2009.

Engaging in a scheme to “misappropriate robot technology” in 2012 or 2013 from “company 5.”

Attempting to steal technology from “company 6,” described as “a U.S. developer of architecture for memory hardware.”

The description of Company 1 perfectly fits Cisco, which sued Hauwei in 2003 for IP theft – theft specifically of router source code. That suit was settled a year later when Huawei admitted guilt and agreed to modify its products to remove Cisco IP.

Company 4 is very likely Motorola, which sued Huawei in 2010 for IP theft. That suit was also settled.

Company 5 is almost certainly T-Mobile, which sued Huawei for stealing IP associated with a robotic phone test system. The suit filed in 2014 concluded in 2017 with a $4.8 million judgement against Huawei.

Company 6 must be CNEX, which sued Huawei for years of having attempted to steal its IP.

Another multi-page section revisits the United States’ accusation that Huawei had done illegal business in Iran and North Korea, and that some of its financial activities in pursuit of this business constituted bank fraud.

RICO violations typically require charges against at least one named individual, and indeed the superseding indictment charges Huawei’s Wanzhou Meng (aka Cathy Meng) directly with conspiracy to commit wire fraud (one of the crimes included in the RICO statutes). Meng, the CFO of Huawei, was arrested in Canada at the request of the United States in May, 2019.

Huawei had yet to respond to the revised charges as this was written.

Related articles:

Timeline: History of Huawei’s Legal Woes in the U.S.