Aventura Press Conference 11 7 2019

Aventura Press Conference 11 7 2019


good morning and thank you for being
here I’m Richard Donoghue the US Attorney here
in the Eastern District of New York safeguarding our national security is
the number-one priority of the Justice Department and our law enforcement
partners to accomplish that mission we work together every day to protect our
military and government technology infrastructure from being compromised
today we are here to announce the unsealing of charges against an American
technology company and seven of its current and past executives and
employees for criminal conduct that directly undermines our national
security early this morning the court here in the Eastern District of New York
unsealed a federal criminal complaint charging Aventura technologies and seven
of its current and former employees including its entire senior management
with selling sensitive security equipment such as networked surveillance
cameras to both government and private customers by falsely claiming that
Aventura was manufacturing its equipment in Commack New York in fact the
equipment that I’ve insurer was selling was manufactured by companies in the
People’s Republic of China it was relabeled and passed off by a
Ventura and its executives and employees as
american-made as they operate this scheme for more than a decade the owners
and operators of Aventura grew rich trading our national security for
personal profit I do want to note that the criminal complaint is an allegation
and that all of the defendants are presumed innocent unless and until
proven guilty I want to first thank the Assistant United States Attorney’s
Alexander Mindlin Ian Richardson Kayla Benson and Claire Kadeshian for their
extraordinary work in leadership in this case I also want to thank our partners
for their close cooperation in this exemplary instance of interagency effort
they are the FBI the u.s. General Services Administration office of the
inspector general the u.s. department of defense Criminal Investigation service
and each of the law enforcement agencies for our military branches the Naval
Criminal Investigative Service the army Criminal Investigation Command and the
Air Force Office of Special Investigations as well as US Customs and
Border Protection IRS Criminal Investigation the Treasury Inspector
General the Treasury Inspector General for tax administration and the US
Department of Energy Office of the inspector general you’ll be hearing from
several of those partners in just a few moments in addition to have insurer
itself the individuals charged in the complaint
are Jack Cabasso Aventuras de facto owner and operator Francis Cabasso his wife
Anne Aventuras’ purported owner and chief executive officer and its senior
executives Jonathan Lasker Christine Lavonne Lazarus and Edouard Matulik as
well as current employee Wayne Marino and recently retired
employee Allen Schwartz as charged in the complaint for more than 13 years
aventura has imported networked security products from PRC manufacturers and
resold them to US military and other government installations while claiming
falsely that they were american-made some of these PRC manufactured systems
had known cyber security vulnerabilities the vast majority of that PRC made
equipment was imported into the United States at John F Kennedy International
Airport the investigation revealed that Aventura received approximately 1,000
shipments from the PRC a sophisticated electronic equipment since 2010 and that
the company has sent millions of dollars to the PRC as payment for that equipment
because of misrepresentations made to the US government Ave insurer was paid
tens of millions of dollars for Chinese manufactured surveillance systems
that ended up on Army and Air Force bases in Department of Energy facilities
on Navy installations and even on US aircraft carriers insurer similar
deceived private customers in the United States and abroad who paid a premium for
what they believe to be american-made goods in the course of this scheme
haven’t sure enough right its customers but also exposed them to
serious known cyber security risks and created a channel by which foreign
adversaries and other actors could potentially access some of our
government’s most sensitive facilities and computer networks as alleged in the
complaint the defendants conspired with PRC manufacturers to modify their
product to conceal the fact that they had been
manufactured in the PRC the sophisticated techniques used by the
defendants to conceal their crimes presented unique challenges for the
investigators the defendants went to extraordinary lengths to perpetrate this
fraud including modifying the markings on circuit boards and even removing
identifiers included in the software code used to operate the systems in some
cases the products were imported to the United States with fake made in the USA
labels already affixed to Chinese made equipment as you can see on the first
board here to my left the shipping crates indicate that the equipment
inside is made in China however the equipment inside is fraudulent as made
in the USA despite the flags and the made in the USA markings on the
equipment itself the investigation clearly revealed that that surveillance
equipment was made not in Commack but in China in carrying out this scheme the
defendant Jack Cabasso was so brazen that he actually complained to US government
officials that competitors were carrying out the very same fraudulent scheme that
he was perpetrating as mentioning the complaint and as you
can see from this board here mr. cabassa communicated to government officials
warning them that other competitors were using or potentially using products made
in China by a certain manufacturer the very same manufacturer he was using to
supply his equipment and he warned that that company quote is actually the
Communist Chinese government and has significant cyber security issues a
aside from statutory compliance so as far as taa goes it
doesn’t get any worse the trade agreements act is an agreement and act
that permits supply by foreign countries it’s important to note that the PRC is
not a taa authorized country in addition to the importation scheme aventura and
four of the individual defendants are also charged with defrauding the United
States government by falsely claiming that the company was a woman owned and
operated business in titling it to special consideration under US
government contracting rules to carry out that scheme the defendants claimed
that Frances Cabasso was actually the owner and operator of a venture in fact
a venture was owned and operated by her husband Jack Cabasso while Frances
Cabasso was employed as a bookkeeper in an unrelated company on Long Island both
Jack Cabasso and Frances Cabasso were also charged with money laundering for their
concealment of the proceeds of the fraudulent schemes in addition to the
criminal charges our asset forfeiture team worked with the investigators to
identify and seize earlier today twelve bank accounts containing more than three
million dollars in a 70-foot yacht that the Cabasso obtained as a result of
their fraud and you can see the yacht to the far left board there it is currently
in the custody of the United States government and leaving the New York area our investigation is ongoing and in the
coming days we will contact other potential victims of aventuras frauds
including victims in the private sector the FBI has established an email hotline
for potential victims of the crimes charged in this complaint if you believe
you have been a victim of one of Ave insurer’s frauds
please send an email to NY – aventura victims at fbi.gov and you can find that
email in the press release as well today’s charges demonstrate that we will
partner with law enforcement agencies across the government to protect our
technology supply chain from infiltration and compromised by foreign
adversaries and those who would trade our national security for personal
profit thank you I will now turn the podium over to assistant director in
charge Bill Sweeney of the FBI thanks rich good morning everybody we allege
that Jack and Francis Cabasso along with their co-conspirators risked the
security of the United States by selling tens of millions of dollars of
prohibited surveillance equipment and other products to US government agencies
and private sector customers with the majority of that money going to PRC
based manufacturing companies barred by law from having these contracts in the
first place they did it all for one reason and one reason only to make money
over the course of the past decade their company of insurer Technologies made
upwards of eighty million dollars including approximately 36 million in
federal government contracts do not let the fraud and money laundering charges
distract you from the real threat created by their conduct it is
outrageous there should be no question in the mind of any American as to the
absurdity of doing business as we allege today with a PRC based manufacturer of
video surveillance technology with known cyber security vulnerabilities
falsely representing products is made in the USA is dangerous business when
American servicemen and women around the globe among others are dependent upon
the security of the technology supporting and surrounding them of
insurance clients were deliberately deceived by the fake made in USA labels
which were added to the Chinese manufactured products representing the
products as manufactured here in this country in reality the only thing made
the United States where the lies have ensure is sold to its victims if there
are any other vendors out there who are considering cutting corners like the
kobato’s today’s announcement should serve as a warning to you your decisions
have broader implications beyond your company’s bottom line and inappropriate
decisions you make will likely result in similar consequences many thanks rich to
you and your team your work was outstanding thanks to all the agencies
that are represented by the leadership here today I personally wanted to note
CBP Troy and Frank and your team the diligence exhibited initially by your
personnel and calling this problem to our attention is outstanding it really
got the ball rolling and to the agents a special agency analysts linguists and
even the college interns that worked on this case job well done you have the
security of a country first and foremost at the top of your mind you did a great
job thank you good morning my name is Joseph Dattoria I am a special agent in charge with the u.s. General Services Administration
Office of Inspector General New York field office the General Services
Administration provides systems and programs to help federal government
agencies to purchase the goods and services they need to serve the American
public this investigation was initiated by the Office of Inspector General in
2017 as a result of a complaint submitted to GSA OIG hotline that
Aventura Technologies Incorporated was lying to the government cleaning
products sold to the US government were made in America when in fact they were
actually manufactured in China our joint investigation not only established
probable cause to substantiate these allegations but uncovered other
potential criminal schemes involving the subjects arrested today it is vital
GSA’s acquisition systems and programs have integrity and be free from
manipulation in corruption GSA contractors must be honest and
forthcoming when doing business with the US federal government
today’s allegations are not about technical errors in a database or on a
form nor are they about an administrative violation this
investigation is about corrupt behavior a conspiracy to intentionally break the
law and deceive the government in order to improperly obtain an allelic skews me
illegally profit from federal government contracts the GSA Office of Inspector
General with our law enforcement partners and the United States
Attorney’s Office will continue to investigate fraud corruption and other
financial crimes impacting GSA with particular emphasis on products that
endanger the safety and welfare of the government employees or compromised
government infrastructure and systems we encourage anyone with knowledge of
wrongdoing involving a government contract or government contractor to
report such to GSA’s office of inspector general for investigation thank you for
your time good morning my name is Troy Miller I’m
the director of field operations for Customs and Border Protection here in
New York US Customs and Border Protection takes great pride in working
with our federal state local enforcement partners and industry stakeholders to
play cross-border trade and dangerous and illicit goods the case this case is
a great example of collaborative law enforcement efforts to uncover dismantle
cripple and dismantle criminal enterprises that seek to defraud the
United States government for personal gain while jeopardizing our national
defense and causing economic harm to their competitors based on a request
from the Inspector General of the general service Services Administration
CBP initiated a focus operation CBP tracked more than 500 shipments that
Adventura imported into the United States from China between May 2017 and
today CBP along with our partners determined
that Aventura imported many fully assembled and finished products and
viktoras imported goods did not bear a country of origin markings when they
arrived at JFK John F Kennedy Airport and many items arrived preassembled with
aventuras logo at American flags United States law requires that all imported
goods with few exceptions must be marked with the country of origin at the time
of import this is a perfect example of how law enforcement comes together to
bring these individuals to justice thank you good morning everyone my name is William Kalb I’m the special agent in charge of the Treasury Inspector General for tax
administration northeast field division the signal office of Investigations is
charged with the detection investigation and Prevention of fraud waste and abuse
within the Internal Revenue Service and Internal Revenue Service programs
including federal contracts the federal contracts and procurement process
today’s arrests represent the culmination of years of complex and
multifaceted investigative efforts requiring coordination by federal law
enforcement officers and prosecutors from over 10 US government agencies
these defendants fraudulently line their pockets with millions of dollars in
taxpayer funds while potentially placing the security of the United States in
jeopardy the defendants knowingly made false
statements to secure US government contracts worth millions of dollars
the defendants then took affirmative steps to secure the goods and products
from outside of the United States while purporting and creating the illusion
that these products were all made in America
the tigner office of Investigations is committed to working independently and
with our law enforcement partners to root out this type of fraud from the
government contracting and procurement process I want to thank US Attorney
Donoghue and for his steadfast support and that of his talented prosecutors
that they all gave to this investigation and to our law enforcement partners as
well thank you all the boarding my name is John Pesnichak
the acting Special Agent in Charge IRS Criminal Investigation New
York field office this morning 34 IRS special agents along with our partners
participated in arrest warrants search warrants interviews and seizure warrants
in today’s global economy individuals businesses and government alike take
pride and comfort in purchasing products marked made in America but defendants
like the ones charged today threaten that trust we put this valued label and
furthermore risk of our country’s national security what is most shocking
about this crime in an air when Nash when we were so focused on US
manufacturing and ongoing trade talks are focused on protecting our national
security that there would be so many co-conspirators who had knowingly
defraud the United States government and put American lives at risk for personal
enrichment while 70% of IRS Criminal Investigation are tax related charges
the investigators early on realized that money-laundering related to the
siphoning of illicit proceeds through shell companies and attorneys was the
most appropriate and most impactful charges as a representative of IRS
Criminal Investigation I’m also often asked why IRS would be involved in a
national security investigation like this one or similar type case IRS agents
investigate significant and complex cases where any economic gain or pure
greed or the motivation of the underlying crime today’s charges send a
clear message I RS criminal investigation and its law enforcement
partners work tirelessly to expose con artists devising elaborate schemes that
exploit our financial system for their personal gain we are proud to be
standing here today with our law enforcement partners and we thank all of
them for the work that they did in the Aventura investigation thank you good
morning my name is Leo Lamont I’m the special agent in charge for the Naval
Criminal Investigative Service northeast field office product substitution is not
a victimless crime it is a serious offense that puts our brave men and
women in uniform at risk these servicemembers are putting their
lives on the line every day and we need to have the conference and they need to
have confidence in their Western systems and equipment they are issued and it
will not fail them at the worst possible moment our sailors Marines and other
armed service personnel deserve to have the equipment that meets the highest
standards and safety and performance counterfeit and substandard parts and
components simply cannot be dependent upon
American taxpayers are also victims the flagrant and wrongful misuse of
taxpayers dollars erodes the public trust and jeopardizes the Department of
Navy’s efforts to obtain the best technology and equipment for our sailors
and Marines investigating product substitution and mitigating risks to the
Department of the Navy supply chain is a top priority for the Naval Criminal
Investigative Service and tests will continue to aggressively seek out and
combat fraud in all forms that impact the Department of Navy thank you okay I think that’s all the speakers
that we have this morning we do have time for a few questions if we don’t get
to your questions today please just send them to two John Marzulli and we’ll
get you a question today yeah well there were a couple different ways that this
was brought to the attention the investigators but you’re right there is
a an explanation in the complaint and I’ll stick to the the four corners that
complained but essentially there it says that one of the members of an Air Force
security unit noticed that there was an image in the software that related to a
Chinese security service and so obviously that raised some questions why
would there be an image of a badge of a Chinese security service uploaded into
the software of an American camera and that led to the inspection of the camera
and the inspection revealed as inspections throughout the course the
investigation revealed that that equipment was actually manufactured in
China and that the software was from China again I’d have you take a look at
the the complaint which lays it out in more detail but essentially what you’re
talking about our network surveillance systems so you’re not just talking about
a standalone camera that was manufactured in China you’re talking
about surveillance systems and other electronic equipment that you put in
your installation and you use in your installation to take note of what is
going on and to record what’s going on so obviously when you have Chinese made
cameras with PRC software loaded into them networked into sensitive
installations such as army bases Navy bases do a facilities and even American
aircraft carriers that causes a great grave concern for our national security I’m not gonna go beyond what’s in the
complaint but you’ll see the complaint it does set forth and as we’ve said this
morning that there were known cybersecurity risks here meaning that
this software that was then deployed into u.s. systems was known to have
vulnerabilities that would allow others to access those networks and had we
known that this was Chinese software we may have been able to take steps to
patch it and address that risk but because this was masked and we did not
know it was Chinese software in many instances those steps were not taken we
are in the process of working with our partners to make sure that is all
removed and remediated I can’t say exactly where we are in that process
right now you will see in the complaint that
there’s some very explicit conversations and email and otherwise between Jacques
cabasso and individuals in the PRC who are supplying this equipment where he’s
making it very clear that the origin must be masked so there have few
modifications made to the software because if trade spots just look at the
software they can see where it comes from so he makes requests to have that
information that ident identifying information removed similar to the way
they miss marked the hardware itself again I won’t go past the complaint but
you can see that individuals in China were well aware where this was going and
that the end-user should not be in a position to learn the origin of the
equipment Jonathan yeah I don’t want to go what beyond
what’s in the complaint we do not specify the impact on naval or military
operations I will say obviously we had to go in there and remove this equipment
so there was an impact on operations I certainly would go so far as to say
ships were taking a service or anything like that you know the investigation has
taken a number of months I think the the complaint might give you a better
understanding I believe it was CBP who first recognized the scope the scale in
the nature of the problem and then brought in a larger team to address it
but it had been underway for quite some time it’s a thirteen-year scheme right
and so obviously we were deep into it before anyone the US government had any
inkling that there was something wrong here and that required us to go back and
then for some certain short period of time we also have to let shipments go
through so for instance the shipping on the board that I showed you previously I
was a shipment that came through JFK that was intercepted opened marked in
ways that the recipients would not be able to recognize and then allowed to
proceed so that we can then see them ultimately delivered to the end-users in
u.s. facilities and confirmed that in fact those were the pieces of equipment
that aventura brought from China there’s nothing in the complaint about that and
we don’t have any information about that today but I just think it is interesting
to show the brazenness of the scheme that he is accusing others of using the
equipment that he himself is submitting to the US government we executed a search warrant this
morning in a venture we already have a lot of their business records but we’re
certainly going to be going through those to make sure that we are aware of
any shipments that they have brought to the US and run those down and remove a
remediate there are no allegations of the complaint about the Chinese
government itself and we’re not making any today obviously it’s a grave concern
to the United States that infrastructure is compromised by a hardware and
software made in the People’s Republic of China
all right maybe one more question as far as we tell at this point aventura simply
ordered it from the PRC they relabeled it repackaged it and sent it off to US
government and private customers all right again thank you all for being here
today if you have any further questions please direct them to John Moore Zhu Li
and we’ll get you an answer thank you and once again thank you to the
Assistant United States Attorney’s and our great partners who made this case you

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