CENTRAL ISLIP, N.Y. (CN) — A New York technology company on Tuesday admitted to an $88 million scheme to misrepresent security equipment made in China as being American-made and sell the products to U.S. government agencies, branches of the military and customers overseas in both the public and private sectors.
Aventura Technologies pleaded guilty to two counts of mail and wire fraud conspiracy and one count of illegal importation in a federal court on Long Island.
The company will dissolve itself and its top brass has to for forfeit over $3 million in seized assets, including its headquarters, a 70-foot yacht and more than 7,000 seized items of merchandise.
U.S. District Judge Arlene R. Lindsay, a Bill Clinton appointee, presided over Tuesday's hearing.
Beginning in 2006, the company sold the Chinese-made surveillance equipment to the U.S. Army, U.S. Navy and U.S. Air Force under the misrepresentation that the products, which included security cameras with night vision, were made domestically. As a result, Aventura generated more than $88 million in sales revenue from 2010 to when the charges were brought in 2019, according to federal prosecutors.
Prosecutors also say Aventura misrepresented Frances Cabasso as its chief executive officer to gain access to government contracts earmarked for women-owned small businesses — even though her husband, ex-CEO Jack Cabasso, controlled the company.
“For years, the defendants, while pretending to be a women-owned business, intentionally corrupted the U.S. military supply chain by passing off Chinese-made networked electronics with known vulnerabilities as American-made,” U.S. Attorney for the Eastern District of New York Breon Peace said in a statement. “This case highlights the importance of national and international inter-agency cooperation in securing our cyber supply chain and protecting our military readiness.”
In federal court Tuesday, Assistant U.S. Attorney Alexander Mindlin said Aventura’s warehouse employees deliberately removed incoming shipping labels that marked the surveillance equipment as coming from China and applied new labels destined for U.S. recipients.
“Customers who inquired about the origin of Aventura’s products were shown fake pictures of the U.S. factory, actually taken at an assembly line in China,” Mindlin said. “Visitors were shown a fake lab, complete with white coats left on chairs for the supposed lab employees. Visitors were even shown a building where secret government work took place — actually an unrelated building that Aventura did not even own.”
Had the case gone to trial, she added, prosecutors would have presented testimony from employees who lied on Aventura’s behalf; phone recordings of Aventura employees lying to undercover U.S. government agents about the origin of products; and records that proved Frances Cabasso lied about her leadership role at the company in order to secure government contracts.
All seven individual defendants previously pleaded guilty, including Frances and Jack Cabasso. Senior executives Jonathan Lasker, Christine Lavonne Lazarus and Eduard Matulik, as well as employees Wayne Marino and Alan Schwartz entered guilty pleas, too.
Aventura Technologies, Jack Cabasso and Frances Cabasso are expected to be sentenced on July 24.
Samuel Braverman, an attorney with Anderson Kill representing Aventura Technologies, declined to comment.
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