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New York tech firm sold Chinese equipment to U.S. military, feds say

Seven people were charged with selling cameras and other products to the Army, Navy and Air Force — and falsely claiming they were "made in the USA."
Image: Federal agents raided a Long Island tech firm amid concerns the company was selling Chinese-made equipment to the U.S. military while claiming it was manufactured in the U.S., on Nov. 7, 2019.
Federal agents raided a Long Island tech firm amid concerns the company was selling Chinese-made equipment to the U.S. military while claiming it was manufactured in the U.S., on Nov. 7, 2019.NBC New York

A New York tech company made millions by selling Chinese-made equipment to the U.S. military that it falsely claimed were built in the U.S., the Justice Department charged Thursday.

The scheme carried out by Aventura Technologies exposed the federal government and multiple military branches, including the Army, Navy and Air Force, to serious cybersecurity risks and created a channel through which "hostile foreign governments could have accessed some of the government's most sensitive facilities," according to the U.S. Attorney's Office for the Eastern District of New York.

Federal prosecutors charged seven current and former Aventura employees in the plot. The charges were announced hours after federal agents raided the headquarters of the Long Island based surveillance and security equipment company.

"Greed is at the heart of this scheme, a reprehensible motive when the subjects in this case allegedly put into question the security of men and women who don uniforms each day to protect our nation,” FBI Assistant Director-in-Charge William Sweeney said in a statement.

New York prosecutors say Aventura generated upwards of $88 million since 2006, including over $20 million in federal government contracts, by selling equipment it claimed was built at its headquarters. In actuality, the company produced nothing on its premises and instead imported products primarily from China and then resold them as American made, court papers say.

The equipment made in China and sold by Aventura has been installed on dozens of Army, Navy and Air Force bases, Department of Energy facilities and other places including Navy aircraft carriers, court papers say.

The products include a $13,500 laser-enhanced night vision camera ordered by the U.S. Navy and 25 body cameras purchased by the U.S. Air Force, prosecutors said.

The plot's alleged mastermind, Jack Cabasso, went to extraordinary lengths to conceal the multi-million dollar scheme with the help of his Chinese business partners, prosecutors said.

Cabasso exchanged multiple emails with his colleagues and Chinese partners stressing the importance of procuring products that gave no indication of their true provenance. In November 2018, Cabasso wrote to an employee of a Chinese manufacturer of surveillance equipment, emphasizing the need to take steps so "they cannot trace" the product to the company.

"The biggest problem," Cabasso said in a subsequent communication, according to court papers, was that the Chinese manufacturer's initials were marked on its circuit boards — an issue that Cabasso said had cost him several potential customers in the past.

The Chinese employee responded that the company's initials would be removed from all circuit boards shipped to Aventura, prosecutors said.

Jack Cabasso, his wife Frances Cabasso, and two other defendants, Jonathan Lasker and Christine Lazarus, were also accused of falsely representing that the company was run by Frances. The bogus claim allowed Aventura to secure government contracts that were set aside for women-owned small businesses, prosecutors say.

The other three defendants were identified as Wayne Marino, Eduard Matulik and Alan Schwartz.

Image: Clockwise, from top left: Jonathan Lasker; Frances Cabasso; Alan Schwartz and Eduard Matulik.
Clockwise, from top left: Jonathan Lasker; Frances Cabasso; Alan Schwartz and Eduard Matulik.NBC New York

All seven were charged with unlawful importation and conspiracy to commit mail and wire fraud. The Cabassos were also charged with money laundering conspiracy for allegedly siphoning Aventura's illegal profits out of the company through a network of shell companies.

"As 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 U.S. Attorney Richard Donoghue.

Jack Cabasso has a lengthy criminal history which includes convictions for wire fraud, grand larceny, mail fraud and conspiring to influence a juror, according to court papers.

The latest charges come amid ongoing concerns about Chinese economic espionage and theft of trade secrets. The Justice Department has brought several cases over the past few years involving allegations of Chinese spycraft.

The raid on Long Island involved dozens of investigators seen hauling away containers of equipment around 9 a.m. Trucks and other law enforcement vehicles could be seen as the search continued at Aventura, located in Commack.

A call to the company for comment was not immediately returned. Lawyers for the defendants could not immediately be reached.