Federal prosecutors have filed criminal charges accusing a New York company of exposing the U.S. government and private customers to security risks by illegally importing and selling surveillance and security equipment from China.
The criminal complaint was unsealed today in federal court in Brooklyn is charging surveillance and security equipment company Aventura Technologies, Inc. (Aventura), located in Commack, New York, and seven current and former employees with selling Chinese-made equipment with known cybersecurity vulnerability to government and private customers while falsely representing that the equipment was made in the United States and concealing that the products were manufactured in the People’s Republic of China (PRC). Aventura has generated more than $88 million in sales revenue since November 2010, and the charged scheme has been ongoing since 2006.
In addition to Aventura, the individual defendants charged in the complaint are Jack Cabasso, Aventura’s Managing Director and de facto owner and operator; Frances Cabasso, his wife and Aventura’s purported owner and Chief Executive Officer; senior executives Jonathan Lasker, Christine Lavonne Lazarus and Eduard Matulik; current employee Wayne Marino; and recently retired employee Alan Schwartz.
Four of the individual defendants are also charged with defrauding the U.S. government by falsely claiming that Frances Cabasso was the owner and operator of the company in order to obtain access to valuable government contracts reserved for women-owned businesses when, in fact, Aventura was actually controlled by her husband, Jack Cabasso. The Cabassos are also charged with laundering the monetary proceeds of these fraudulent schemes.
Six of the defendants were arrested this morning and are scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr. Law enforcement agents executed search warrants at Aventura’s headquarters in Commack, New York, and at the home of Jack and Frances Cabasso in Northport, New York. The government has also seized the Cabassos’ 70-foot luxury yacht, and has frozen approximately $3 million in 12 financial accounts that contain proceeds from the defendants’ unlawful conduct.
“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,” stated United States Attorney Donoghue. “With today’s arrests, the defendants’ brazen deceptions and fraud schemes have been exposed, and they will face serious consequences for slapping phony ‘Made in the U.S.A.’ labels on products that our armed forces and other sensitive government facilities depended upon.”
Founded in 1999, Aventura describes itself on its website as a “true ‘single-source’ manufacturer” providing security hardware, software and peripheral products to government, military and enterprise customers.
Prosecutors said that over the past decade, Aventura made upwards of $88 million, including over $20 million in federal government contracts, while claiming that it was manufacturing its products at its headquarters in Commack. In fact, since at least 2006, Aventura has been importing products primarily from the PRC, then reselling them as American-made or manufactured in a small number of other countries.
Notably, Aventura imported networked security products from PRC manufacturers with known cybersecurity vulnerabilities, and resold them to U.S. military and other government installations while claiming that they were American-made. Aventura similarly deceived private customers in the United States and abroad who paid a premium for what they believed to be American-made goods.
Between 2016 and 2018, Aventura transferred approximately $2 million to an attorney escrow account belonging to a Long Island, New York-based law firm, some of which appears to have been intended to conceal the source of the funds.