US Issues Criminal Charges Against Aventura For Fraudulently Selling Hikvision And Other China Products
By John Honovich, Published Nov 07, 2019, 12:25pm ESTThe US government has made an unprecedented move on the video surveillance supply chain, charging a US company, Aventura for "having conspired with PRC [China] manufacturers" primarily Hikvision, "by falsely claiming that AVENTURA manufactured its own products" and claiming some to be made in the USA.
The US Attorney's presentation called out protecting the USA's "technology supply chain from foreign adversaries and those who would trade our national security for personal profit", as the clip below shows:
The 9-page complaint press release and the 56-page complaint spells out the details of the US government's case.
Conspired with PRC Manufacturers
The complaint alleges that Aventura 'conspired' with PRC manufacturers to falsely claim Aventura made its own products:
Dozens of video surveillance companies regularly and falsely claim to manufacturer their own products, backed by the US Security Industry Association, and this raises concerns for much of the industry.
Hikvision is PRC Manufacturer-1
Hikvision, 'owned by the Government of the PRC', per the complaint, is at the center of the China side, identified throughout as 'PRC Manufacturer-1' and when Hikvision USA is mentioned as 'PRC Manufacturer Subsidiary-1' as shown below:
The complaint's allusion to Hikvision above is confirmed by Schwartz's LinkedIn Profile:
A Hikvision USA employee promised to change Hikvision products such that it would not be discovered that the products were from Hikvision, says the complaint:
Even as recently as the end of 2018, the complaint alleges that Aventura worked with Hikvision USA to hide Hikvision's brand:
Many industry people will retort this is common practice and it is. However, there has long been ethical questions of Hikvision and other China manufacturer's practice to hide their branding and involvement from generally unsuspecting American end-users.
Moreover, the US government emphasized the contradiction about Aventura's head Cabasso calling out Hikvision's government ownership and cybersecurity concerns:
IPVM broke the news in 2016 about The US Embassy in Afghanistan using Hikvision. Hikvision was created and is owned by the PRC Chinese government.
Hikvision was Aventura's largest supplier, according to the complaint, both in terms of shipments:
And in total dollar amount:
The second-largest partner, 'Manufacturer-7', is identified as shipping from Shenzhen but without enough other details to determine who 7 is. However, 7 is alleged to have shipped products as faked 'Made in the USA' as the complaint describes:
And an example of the fake 'Made in the USA' camera (from PRC man 7) in the complaint is shown below:
Cybersecurity Risk
The US government press release emphasizes the vulnerabilities in equipment sold as well as concealing the source:
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)
Indeed, the very start of the US Attorney's presentation made it clear this was not just about cybersecurity but 'national security' to 'protect our military and government technology infrastructure from being compromised' as the excerpt below shows:
Hidden Re-Selling of Chinese Equipment Widespread
Hidden re-selling of Chinese equipment has been widespread in the video surveillance industry for many years. It has been so widespread that many, if not most, industry people view it as normal. For example, Honeywell hid OEMing Dahua for many years, as we exposed in this report and video below:
Our directories of China OEMs featuring big names including Panasonic, Honeywell, Stanley have been viewed 100,000+ times over the past year as buyers and industry people try to determine who makes what equipment. See:
Some companies are honest and forthright about what they are selling but most companies, in our experience, normally deny the true source.
Moreover, the US Security Industry Association has facilitated this deception to help their members, like Aventura, profit as we examined in 2018 - SIA Plays Dumb On OEMs And Hikua Ban.
In the announcement, the FBI added:
We have heard many industry people now are now scared. They should be. The industry's complacency about accepting vendors hiding PRC-made products and misrepresenting them as their own needs to stop.
Update: Indictment Filed
The indictment was filed on December 9, 2019:
Most of the points made look to be the same from an initial scan, though more details have been added about specific accounts frozen.
2 reports cite this report:
Comments (165)
Update and correction: the document we shared earlier is technically the complaint press release.
I've found the full 56-page complaint - download here, screencap below:
We need to read through and then will update our reporting. Anyone who finds anything interesting, of course, feel free to share in the comments immediately.
why aren't the prc manufacturers named in the documents ? or they are named and I missed it.
it mentions 4 companies in total
I don't know why they are not named but there are no explicit names in the complaint or any document we have seen.
So far, the only one that we can identify is Hikvision. They are the biggest partner and the government provides lots of identifying details.
Related, here is a table from the document:
Altogether, there are 7 manufacturers mentioned across the documents.
Update: The DoJ shared with IPVM a copy of the detention memorandum for Jack Cabasso:
One notable point is that "Cabasso has a lengthy criminal history, including numerous crimes involving deceit and efforts to interfere with judicial proceedings". There is literally a long list, excerpted below:
- "On April 30, 1982—when Cabasso was just 23 years old – he was convicted of two counts of grand larceny in the second degree, in violation of N.Y.P.L. § 155.35(1) for which he was sentenced to 50 days’ imprisonment and 58 months’ probation."
- "on December 6, 1985, Cabasso was convicted of attempted grand larceny in the second degree, in violation of N.Y.P.L. § 155.35(1) for which he was sentenced to five years’ probation. "
- "He was convicted in 1992 of conspiring to influence a juror, in violation of 18 U.S.C. § 371. See United States v. Cabasso, et al., No. 92-CR-697 (ADS) (E.D.N.Y.) (the “1992 Case”). That conviction arose from Cabasso’s attempt to influence a juror serving in a separate criminal case charging him with another wire fraud scheme."
- "In March 2000, Cabasso was convicted of, among other charges, enterprise corruption, in violation of N.Y.P.L. § 460.20, for his participation in a stock-fraud scheme that reportedly stole $176 million from 16,000 investors."
Key claim from the press release:
In some cases, cameras shipped from the PRC were pre-marked with Aventura’s logo and the phrase “Made in USA,” accompanied by an American flag. In many instances, the items were later resold to government agencies to whom the defendants falsely represented that the products were American-made. [emphasis made]
UPDATE/ CORRECTION: The compliant does identify the source of the 'made in USA' stickers, it is from 'manufacturer-7' with a Guandong Province address but unnamed and without enough detail for us to identify.
It will be interesting to see what the FBI, DoJ, etc. does to the PRC manufacturers who shipped products falsely labeled as made in the USA.
Labeled as "Made in USA" and shipped in directly from China...
If true, I see this as certainly an issue. Did the OEM do this, did Aventura hire another contractor in China to do this? All possible.
Still reading through the full complaint but this section alludes to a Hikvision USA employee promising that Hikvision would adjust the firmware so the cameras being sold to Aventura would not be detected as from Hikvision:
Hikvision clearly had knowledge and contributed to this, such as the action above.
On the other hand, you can certainly say "This is something Hikvision et al normally do", however, the practice has always been shady, to say the least.
WOW!
If they were having the manufacturer put "Made In USA" stickers on the products right from the factory, thats just boldly dumb.
Im surprised they were able to get away with it this long.
Here is an example from the Complaint of an Aventura camera labelled 'Made In the USA':
I knew this from many years back when Aventura installed a project and all cameras where labeled Aventura but MACs, formats and even exploits were all Hikvision.
I'm not sure I like this development. I'm no fan of HikVision, but this seems pretty heavy-handed. I would have thought that they* could just issue a large fine and move on. I guess lying about the country of origin makes it illegal importation, which is the same as smuggling and gets treated the same way?
Reminds me of a time in Oklahoma City when the police were en route to a target for a raid of some sort, and one of the guys with them was a health inspector, and he said, "Hey, I need to do an inspection of this restaurant and it's on the way," so the restaurant got to have a bunch of police men wearing guns barge into the kitchen and look around. Somebody had to issue an apology after that. (I can't find the article on the Oklahoman's website, so I may have gotten part wrong, but I believe the gist of it is accurate.)
I fail to see why cybersecurity is mentioned in the complaint. It is not illegal to sell devices with cybersecurity issues in the U.S. (thankfully, else Amazon and Walmart would have been shut down long ago). Do they have to prove harm in order to charge with illegal importation? Otherwise it looks irrelevant as it is not providing direct evidence for any charge.
* Commerce Department? Not sure who has oversight.
#4, we are still trying to digest the complaint but the allegations in them are pretty serious. It is not simply they sold Hikvision (e.g., ADI is not going to be arrested for selling branded Hikvision) or other Chinese equipment.
The DoJ is saying that they schemed to cover this up and make US government buyers think it was made in the USA.
I just added in this section of the complaint to the body but I will copy it here since it's pretty significant allegation:
In November 2018, Jack Cabasso exchanged emails with an employee of a PRC manufacturer of surveillance equipment (PRC Manufacturer-2), identifying the need to “hide” the name of PRC Manufacturer-2 from Aventura’s customers. Cabasso wrote that Schwartz was “putting together a list” of steps to be taken. One week later, Cabasso stressed the need to take steps so that “they cannot trace” the product to PRC Manufacturer-2, adding, “The housings are a problem since you publish them on your website but nothing we can do about that.” Cabasso added that “the biggest problem” was that PRC Manufacturer-2’s initials were marked on its circuit boards, and said that he had “lost several potential customers” because of similar practices by another PRC manufacturer (PRC Manufacturer-1). [emphasis added]
Btw, this means that the FBI, et al. have copies of emails to Chinese manufacturers, including Hikvision, so there is also the risk of the complicity of those companies in this.
Oof. That and the quote from #3 put it in the conspiracy to commit fraud range. That guy was really something.
If he hadn't been intentionally trying to deceive people (and especially the government) about the source of the products, do you think they might have gone a little easier with a simple fine like I suggested?
I imagine that what he did is slightly more egregious than what other importers/OEMs have done.
If he hadn't been intentionally trying to deceive people (and especially the government) about the source of the products, do you think they might have gone a little easier with a simple fine like I suggested?
If he hadn't been trying to deceive people, he probably would not have had a company. His whole premise seemed to revolve around the fraudulent Made In The USA claims and positioning of the products. He used this to market heavily to US Government entities (based on my interpretation of the complaint filing).
Without the deceit, he is just another Nelly's / LTS / etc.
I imagine that what he did is slightly more egregious than what other importers/OEMs have done.
Probably, though on the other hand, I would not have previously guessed Cabasso/Aventura did things like "take steps so that “they cannot trace” the complaint alleges since they are obviously dangerous.
The question becomes - what have other importers / OEMs said privately to partners and customers? And what importers / OEMs are being investigated right this minute?
If he hadn't been intentionally trying to deceive people
The way I read is that intentional deception is core to the complaint. If Aventura said "We want to sell you Hikvision / China-2 / China-4 products", I would think there would be no issue.
#1 Lying to the Government is a very big deal.
#2 What are the odds Honeywell gets raided?
#2 What are the odds Honeywell gets raided?
From what I have seen, Honeywell has not claimed their Dahua OEMed products are Made In the USA. Maybe they have privately or in places I have not seen. I would guess that would help them.
But this reinforces gone are the days where you can play coy or brush off concerns about whether you are relabelling Chinese products as one's own.
Cabasso stated that PRC Manufacturer-1 “will acknowledge they manufacture no products outside of China,” and appended an article about the removal of cameras manufactured by PRC Manufacturer-1 from the U.S. Embassy in Afghanistan.
do we know if this refers to the IPVM article?
perhaps, when reading the Embassy expose, the GSA serendipitously came across the Aventura article...
or at least i’d like to think so ;)
My first reaction was one of relief that DOJ is taking this very seriously. It wouldn't surprise me if additional charges are piled on after forensics on their files and records are completed, including espionage act charges. As a retired Navy man, I am very happy with this operation, and I suspect this is only the start of a large scale crackdown. Aventura is likely not alone in this sort of scam, and as I write this I'll bet you DOJ has already identified others. Want to stay legit? Sell safe, effective products that are manufactured by friendlies at market wages. Hopefully a side benefit will be a correction of the cost curve in IP markets.
I forgot all about Aventura. I remember talking to them a few years ago about a project that was spec'd with their products. Lavonne told me they were the only USA made IP camera manufacturer at the time. Don't remember if I bid the project or not. As far as Aventura was concerned their products were better than sliced bread.
According to Aventura (Jack Cabasso in his own words), the project they implemented on my Caribbean island could not be understood and/or maintained by anyone on the island as we do not have sufficient knowledge for this.
Kudos to the intrepid member (Undisclosed #1) who posted in this thread in 2015 Is Aventura Really An American Manufacturer?
He or she was on to it almost 5 years ago!
Excellent work, make America great !
Finally!
I am glad to see that Aventura has been exposed and publically charged. I recall several years ago on a tender in the Middle East that Aventura was specified and part of the tender required products to be Made in America. I pushed my partner to challenge this, but he stated that while several questioned the ability of Aventura to supply 100% American made products that Aventura actually produced Country of Origin documents that all of their IP products were in fact Made in the USA.
We went further and suggested to our partner that the end-user request a factory visit to validate this. At our advice the end-user did that, but received a BS story back that Aventura would be happy to host them at their HQ, but couldn't allow them to visit the factory. The story at the time was that they do so much business with government entities around the world that their factory is too "top secret" to allow individuals to visit.
#hilarious
Ultimately, the end-user didn't go with our bid, but at least wised up and didn't choose Aventura!
NBC News has a video of this:
What is explained is not new but there is video of the Aventura office, etc. And the fact that it is being covered on the news shows the attention this is getting it.
While the China element is the lead of the complaint, interestingly they are also charged with fraud for falsely claiming to be a woman-owned business:
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.
My perception is a number of industry companies try to take advantage of such situations. At the same time, I doubt it's common for the government to crack down on that alone, it's worth keeping in mind for people who do this or consider doing this.
This is great news. As to the excuse about a factory audit we are also in the business of supplying the federal government and have no issue with factory visits.
Transparency is a good thing. I hope the crackdown continues and whoever PRC# that helped with this conspiracy is banned from all sales in the US.
is selling hik products that are made elsewhere (e.g. India ) also banned ?
Hikvision products, as of today, work this way:
- Products made in China and imported to the USA are generally assessed a special / additional tariff, depending on its code / category.
- Hikvision now has a factory in India. If Hikvision ships those products from India and the US accept them as made in India, those products will not be subject to the made in China special tariffs. So far, we have not seen Hikvision ship any products from India to the USA, that, of course, could change in the future.
- Hikvision is commercially generally not banned in the USA. Hikvision products are banned for USA federal government use. In 9 months, the NDAA ban is scheduled to add bans for projects with federal funding and for those who sell Hikvision commercially (though this has been contested and has some possibility of being withdrawn).
The specific problem here is beyond the general Hikvision 'issue', it has to do with the allegations that Aventura passed off Hikvision and other Chinese manufacturer products as Made In The USA, which is considered fraud.
To be clear, fraud is the problem here, not Hikvision. The seller was deliberately hiding the country of origin while claiming that the products were made in the USA. It seems they were specifically pursuing contracts that called for "Made in the USA" products, which led to them getting a lot of fraudulent sales to the US government.
You can sell Hikvision as much as you want if you're honest about it. This company was very much not honest.
The problem is indeed hikvision. They sold what we believe are HIK products fraudulently, yes, and that is the basis of the warrant. However, this would never have been an issue if there wasn't a HIK, and all of the nefarious facts surrounding it. The base problem is hik, the allure of a cheap product with strings attached (that nobody talked about, especially to clients) that lowlifes like this flooded our economy with. If that allure didn't exist, and installer/integrators had same damn ethics, I don't think we'd be seeing this. Not a HIK problem? Think about your statement for a while.
it is not a hik problem. not at all. it's the buyers problem.
people sourced hik for the price, not for their chinese food ... hik was answering a market demand driven by buyers in the west.
plenty of alternatives out there, people choose where and what to buy.
I think it’s a buyer problem and a Hik problem. You can’t absolve the criminal because the victim fell for it. Low bid bullshit fosters these opportunities, if it’s too good to be true it’s not true. But let’s not forget Hik did bad things here, I frankly don’t understand how anyone could still be selling it. Certainly not someone here blaming the buyer.
No sir, this is an Aventura problem. Hik may have been complicit by agreeing to obsfucate details that it was made in China (and should be investigated if found to be true), but ultimately this was Aventura as the manufacturer of record claiming their products were "Made in USA".
Fascinating how many people hit "disagree" on your post.
What you stated is 100% correct. If you voted 'disagree', you're clearly not paying attention.
Added: here is a 30-minute video of the DoJ announcement:
SIA provided us the following statement in request to our inquiry:
The Security Industry Association finds today’s charges issued by the U.S. District Court, Eastern District of New York, against Aventura Technologies and members of its management team to be very serious, and if true, would represent business practices that SIA does not condone. The SIA Board of Directors has begun to review these charges and the status of Aventura’s membership in SIA. SIA strongly encourages its members to operate ethically and comply with all U.S. laws and regulations. SIA also continues to fully support federal government efforts to strengthen the integrity of our nation’s supply chain.
"SIA strongly encourages its members to operate ethically and comply with all U.S. laws and regulations. SIA also continues to fully support federal government efforts to strengthen the integrity of our nation’s supply chain."
Isn't Hikvision a major SIA donor?
And the meat of this criminal charge is putting America's national security at risk because of vulnerable Hikvision products operating in federal buildings. Meanwhile Hikvision USA and HQ were complicit in the scheme.
Is SIA a joke or am I missing something?
Update, SIA says:
Aventura Technologies’ membership in SIA has been suspended. The suspension precludes participation by any of their employees on SIA committees. SIA is following the requirements of its bylaws and the California Corporations Code to implement this action.
Note, the California Corporations Code they refer to requires a 15-day notice / response period in which Aventura could contest the suspension. Given Aventura's status, that's unlikely.
Reading through the materials, Hikvision was clearly aware that Aventura was representing Hikvision products as Made in USA, and as being sold to US Government entities.
I would wager that certain high-level Hikvision USA employees are booking flights to China, or minimally, Canada.
This is likely not the end of the arrests in this case.
My guess is the email correspondence is all with Hikvision employees in China.
It looks like at least some of it was with "Subsidiary 1", presumably in the US. That could also lead to discovery of other emails, particularly if Hik employees were trying to push business to Aventura once Hik was formally boxed out.
I would be shocked if several Hik USA employees were not fully aware of this.
ouch, maybe be time to book a ticket indeed.
Very likely true. HikVision and HikVision USA are two different companies for the purpose of this discussion and Raid. Unless you can establish that HikVision USA executives were involved or even aware of this, the North American contingent of Hik is likely safe here.
Aventura is doing in excess of $10M/year, a large chunk of it, if not the majority, with Hikvision equipment.
Aventura was selling into government entities, a market that Hik USA definitely wanted to be in. You think Hik USA executives and top sales leaders were not aware of an organization in the US doing millions of dollars in business via fraudulently labelled Hikvision equipment? Equipment that Hikvision appears to have conspired with Aventura on hiding the origin of?
This was not some small operation, it was large enough to warrant an ongoing investigation, and ultimately raid, by multiple government agencies. The main guy is said to have travelled to the PRC frequently, presumably to Hik's headquarters on at least some of those trips. You think that Hikvision USA executives were not aware that Aventura was visiting Hik China?
At a minimum, Hik China executives would likely have to warn Hik USA executives to not stir the pot on this and to ensure that Aventura was able to maintain their fraud.
Unless you can establish that HikVision USA executives were involved or even aware of this
It's in the complaint - Hikvision USA is 'PRC Manufacturer Subsidiary-1' and there is an example where a Hikvision USA employee "promised that users would not "discover this as a [Hikvision / PRC Manufacturer-1" camera."
Given everything that is going on with the US government banning and sanctioning Hikvision plus the evidence found in the Aventura case, it seems reasonable that there is more investigation going on into Hikvision USA behind the scenes with a possibility for future further action.
If the camera can be seen/identified on HikVision's SADP, or Dahua's ConfigTool it should not be on a government network. I am just curious how was Aventura able to keep this scheme going for so long? It literally takes only 30 seconds to check the OUI of a MAC Address. It doesn't sound like these guys were smart enough to buy their own block of OUIs.
WireShark OUI Lookup Tool:
If you can see it via SADP and/or it has has Hik OID, then it is most likely a Hikvision camera. However, all that can be altered, and it looks like there was work requested by Aventura to suppress the ability to identify the software/camera as a Hikvision device.
It doesn't sound like these guys were smart enough to buy their own block of OUIs.
They had A8:75:E2 registered to them, and in use on at least some of their devices (I would suspect all of their devices).
Do you think if they bought their own block of OUI's they would have never been caught?
They actually had SADP installed on the network of an implementation they did. Even if OUI and SADP don't work, their exploits will :-)
Very glad to see this happening, hope these guys get charged with treason.
Jack Cabasso came to a customer site I was only doing infrastructure work for at the time and pitched this product. This site is ultra-critical to our military and this bozo was trying to infiltrate it. It’s treason.
This reminds me a bit of the Audi emissions scandal. There is zero chance you get away with this long term.
Update: the post has been significantly re-written to incorporate the recorded conference and the 56-page complaint.
We have obviously not covered every aspect (e.g., there is the yacht and lots of other details). Some of these have already been discussed in the comments and happy to discuss more later. Obviously, we will be reporting more on this in the days and weeks to come.
Note: the fake 'Made In the USA' claim for Hikvision products is not new, e.g., in 2016, we covered how various Hikvision products listed in the US GSA were declared as being 'Made In the USA':
Those listers were not Aventura but other companies as the screencaps above show.
For a long time, we wondered what GSA was doing (or more specifically not). Evidently, today is a signal that things are being done.
First mention of Aventura on IPVM - from the Best and Worst ASIS 2013 IPVM show report:
The H.265 Exhibit
We only found one company exhibiting surveillance products using H.265 - Aventura.
The two cameras at the top of the display are using H.265. The image below is 3MP/20fps/1mbps.
Rival manufacturers mainly dismissed the company, because of its less well known brand, skepticism of the implementation and lack of 3rd party support. However, if Aventura can deliver on this, and they say they are shipping very soon, they will have the last laugh, as interest in H.265 is very high, as shown by our traffic stats over the last 6 months.
Aventura was very focused on Goverment projects; had bumped heads with them on VA projects in the past. It would be very interesting to know how many of those projects will have to be ripped out and replaced. Just the financial liability on that alone has to be enormous.
Few smaller updates:
SIA deleted its new member profile of Aventura, which was posted in December 2017 and still live as of Tuesday. Here is an archived version.
In the profile, SIA described Aventura as having "a strong history as an innovative manufacturer of hardware and software products and peripheral solutions for government, military and enterprise. "
Also, a journalist tweeted out this photo of FBI agents near two boats parked at the Aventura office:
Unclear who the boats belongs to, but I just thought that was interesting given the IPVM discussion last year about bosses parking their boats in the office lot.... the two boats can also be seen on Google Maps:
Those boats are, of course, tiny compared to the "Cabassos’ 70-foot luxury yacht" the FBI said they seized.
UPDATE: on the deletion of Aventura's profile, SIA tells IPVM
We have temporarily unpublished the profile while the Board review’s Aventura’s membership status.
In response, I asked SIA if they are reviewing Dahua and Hikvision's membership status for the US government implicating the two in human rights abuses.
Agreed and thanks for that effort. Does the industry not consider the espionage factor enough for blacklisting? I’m specifically talking about PRC engineered cyber vulnerabilities.
SIA has such high standards for their members' ethics and responsibilities, yet they let two of their largest donors go unhindered after being federally banned for national security threats and federally sanctioned for human rights abuses.
Searching the internet is not hard. Check the page footer.
Gallery – Luxury Yacht Charters
What’s On Board – Luxury Yacht Charters 69.5Feet got to be close to 70
Do not know Alan Schwartz, but his LinkedIn title seems to be an admission, no?
"Lead Recreator"?
Being listed in the indictment and all! :))
Rejoice not when thine enemy falleth, and let not thine heart be glad when he stumbleth:
Lest the Lord see it, and it displease him, and he turn away his wrath from him.
your gloating at their demise are a little over the top for me. these comments have little to contribute to the discussion.
I'm just sayin
Using The Bible in response to Hikvision may seem appropriate but remember The PRCs views on Christianity. Christianity has always been illegal but ignored until recently. Two Christian Churches have been burned down. Christian Churches must have video and audio systems installed so the PRC can review their sermons. It is now illegal to take a child under the age of 13 to a church service. There is a reward for turning in your neighbor for hosting a church service in their house. The sale of Bibles is now prohibited in China. The PRC seems to fear Christianity. One could make the argument that buying Hikvision helps fund the elimination of Christianity in China since Hikvision and the PRC are one.
I don't rejoice in this. Good innocent people have lost their jobs. I saw some poor guy just started there 2 weeks ago. But if Communism fails in China it will fail from the businesses that fund it. The people and Christians in China deserve a better life.
I agree
in fact, if folks were willing to have a civil discussion, I think there is room for a separate topic on religion / morality/ and being an integrator.
For example, How does ones personal world view and Christian / western values apply to an entire nation that doesn’t hold those views?
It is easy to quote scripture or any other holy book but those are not a common denominator.
He also worked for Speco and Everfocus... KT&C appears to be a Korean company with a US presence. Never heard of it. Guy looks to be in his 70's, Hard to believe he had a 50+ year career before turning criminal. Just sayin.
Although not near as severe as saying that your products are Made in USA, Im curious if this case will have any momentum of charging other companies who explicityly and fraudulently claim that they are a CCTV manufacturer when they are just bringing in products from overseas manufacturers?
who explicityly and fraudulently claim that they are a CCTV manufacturer when they are just bringing in products from overseas manufacturers?
Agreed and take it further, do companies now need to explicitly declare they are selling Hikvision products if they sell it under their own brand? From the US Attorney's presentation, it's pretty clear that they found the hiding the true identity of the products to be deceptive and Hikvision et al PRC products to be security risks.
Sean, I know you have been up front about your OEMing when asked but do you think this will make you more proactive about disclosing it up front, e.g., on your website? Would Hikvision allow that (since they do not want OEMs generally to disclose the source)?
We aren't allowed to explicitly put on our website "Hey, these are Hikvision products". Personally speaking, I wish we could publically advertise that our products are Hikvision but just unbranded version. I think its silly that we can't and I alluded to this here.
But we are always upfront about it when asked in our communications (email, phone, social media, etc)
As far as general OEM'ing and branding products across the industry. I dont think it should be required for a company to say "Hey here is our brand, but this is who manufacturers it" blatantly on their website. Building a brand that is manufactured by another company is fairly normal across many industries. But for one to say they are a manufacturer but they really arent, that is where deception comes in and in my opinion is what the US Attorney was alluding to.
Here is my question:
Have we 100% confirmed that the products being imported with already applied "Made In USA" stickers were indeed Hikvision? The only reason I question it is because no matter what you think about them, I honestly think they would be much smarter to do something like that. You can call them what you want, but "dumb" is not something I would call them.
But if they were doing that, wow, just really dumb.
already applied "Made In USA" stickers were indeed Hikvision?
From the complaint, that was Manufacturer-7 and Hikvision is Manufacturer-1 so there is no evidence in the complaint that Hikvision shipped with 'Made in USA' stickers.
The problem, though, is that the complaint is not simply about those stickers. The complaint calls out as fraudulent the commonplace practice of covering up the true manufacturer, excerpt:
AVENTURA, have conspired with PRC-based manufacturers of security and surveillance equipment and others, to defraud AVENTURA’s customers, including agencies and contractors of the U.S. government, by falsely claiming that AVENTURA manufactured its own products,
As you say above, it is Hikvision's fundamental business practice when OEMing to cover up who the true manufacturer is. But the US government is obviously very concerned that these products are being misrepresented as such.
Sean, raids and arrests change the level of risk for Hikvision and China OEMing generally.
If Hikvision was intentionally aiding in Aventura's practice of telling people that Aventura was a manufacturer, then that is wrong.
And if Hikvision was aiding Aventura in anything to make it look like the products were made in USA, that is really wrong!
But if all Hikvision was doing was essentially branding every aspect of the equipment to apply to Aventura's brand, then I dont think they deserve to be blamed at all in this case. As said, thats common across many industries, not just CCTV. Its not fair to blame Hikvision if this is indeed the case. If you are saying that it is fair to blame Hikvision in this case, then there are many other brands right now committing fraud, some that are very well respected.
To be honest, I'm a little confused as to why you chose to use "Hikvision" in the headline without knowing the full implications of Hikvisions involvement, and chose not mention anything about Aventura. Its like saying "Smith and Wesson gun used to kill many in mass shooting"
Again, I will say, that if Hikvision is to blame for anything in this case, then they deserve all the negative attention, but Im not so sure we have established that yet? Maybe you know something I dont?
But if all Hikvision was doing was essentially branding every aspect of the equipment to apply to Aventura's brand, then I dont think they deserve to be blamed at all in this case. As said, thats common across many industries
Just because it's common does not mean it's ethical or legal. Read the complaint yourself or read the excerpts in our original report above. The US government is not excusing this because it's common to fake being a manufacturer. And the US government clearly and repeatedly has called out the cybersecurity risks with these products.
If you are saying that it is fair to blame Hikvision in this case, then there are many other brands right now committing fraud, some that are very well respected.
And if I was an executive at those firms, I'd be having attorneys talking to the government to figure out what to do with this. The Aventura situation, given Cabasso's criminal history and government sales focus made it an understandable public choice. While I don't think Honeywell executives are going to be arrested, I'd be very skeptical if the US government either has not already or will soon talk to them about what they are doing with Dahua, as an example. Agree/disagree?
Hi Sean,
I have personally worked with an Aventura installation and I have confirmed that all cameras were Hikvision while carrying the brand Aventura. I have confirmed this through many means, mainly housings are identical and the software to configure and lookup cameras was SADP. The main proof was that all Hikvision exploits could be successfully executed on all the Aventura cameras. This was some years ago and I don't recall if the cameras had the label "Made in the USA" on them but what I know for 100% sure is that the cameras are Hikvision. At least the batch in that particular installation. What I do know is that they always said that their equipment is made in the USA.
As far as general OEM'ing and branding products across the industry. I dont think it should be required for a company to say "Hey here is our brand, but this is who manufacturers it" blatantly on their website.
I agree with this. I get that the company is Hikvision in this case and all that surrounds this, but many VMS servers are rebranded Dell servers or Supermicro servers. The companies sell them as their own and provide support for them. It's just a way to create an end to end system.
Outside the surveillance industry, this happens with major TV brands that create the illusion they are a manufacture. I believe the gray area is if the company engineered the products or not. Apple does contract manufacturing and I don't believe they own any manufacturing equipment, but they engineer their products and kind of support them.
In the audio industry, Danley "manufacturer's" their loudspeakers, but rebrands their amplifiers. They were using Crest audio, but have since moved to Linea Amplifiers. I know the wooden loudspeakers are manufactured in the US and are built well and the company that makes them for Danley does this for many other companies. They are all engineered by Danley though.
A lot of loudspeaker companies rebrand Xilica audio processors. They do this and then often provide their custom DSP settings applicable to their particular loudspeaker.
All of these companies do this for various reasons. A lot of it is to create the end to end experience and sometimes provide more money for the dealer by hiding the name of the original manufacture. When I have spoken with many of the companies, they don't really hide who makes the product. I just don't feel it needs to be stated on every website unless we are trying to expose companies who may be trying to simply create an end to end solution for the integrator to pass on the the customer.
In this case, there was clear deception from Aventura in many ways to make a profit. I believe they wanted to go further then most to hide where they got their product due to who they were selling to and the fact they heavily published that their products were made in the USA. If they also used WBE to further get contracts without the primary decision maker being a woman, this is also not good. I believe some of the comments in this discussion stem from just not liking Hikvision. I don't agree with everything related to Hikvision, but I believe they play a small part of this or perhaps a small group of Hikvision employees play a small part. I would feel differently if it was Hikvision who came up with the scheme of deception and used Aventura to carry it out. Based on Jack Cabasso's criminal history, I would presume this was all Cabasso's plan.
Generally, it's not hard to reverse image search products as someone mentioned in this discussion. Google generally is pretty good at it. However, generally just a name change and a product color change is all that is needed to convince most consumers. If the alarm company installed cameras with their name on it, they might tell they are company x's brand cameras. They don't get out the config tool and do a lot of work to find out who actually made it. I do this on products where I don't believe they actually made the product for various reasons. Sometimes this reason is that I don't believe a company could go from a few simple products to hundreds in a very short time period.
Other times I don't like when products rebrand for various reasons. Think Network Optix. Blue is a nice color and is easy on my eyes. Orange...not so much.
Apple does contract manufacturing and I don't believe they own any manufacturing equipment, but they engineer their products and kind of support them.
Kyle, Apple controls and does the software / firmware development, which from a cybersecurity standpoint is the key element.
Contrast to an IP camera OEM like Honeywell and they have no idea what software/firmware is inside. If there is a reported vulnerability they have to wait until Dahua does something, literally.
When I have spoken with many of the companies, they don't really hide who makes the product.
Sure, some people face to face admit, some don't. I have been lied to my face numerous times by OEMs and in a minority of instances told the truth. But even if everyone told the truth in person that's a problem for end users who would somehow then need to get a hold of an honest company employee.
Kyle, that said, I get that there are cases where OEMing is mundane but as more and more devices become IoT and online, there is increasing risk of hidden OEMing / relabeling. Ironically, if Hikvision / Aventura were selling analog cameras, this would not have been an issue....
I believe they play a small part of this or perhaps a small group of Hikvision employees play a small part. I would feel differently if it was Hikvision who came up with the scheme of deception and used Aventura to carry it out
There is a broader 'scheme of deception' going on with Hikvision, various China manufacturers and their US partners - that of supporting those US partners to pretend to be their own manufacturers, here is an example that came up recently:
Maybe all the government does is crackdown on Aventura or maybe Aventura is the beginning of a broader crackdown. I don't know.
The complaint though makes it clear the US government has obtained various internal correspondence from Hikvision and other China manufacturers. Given everything that is going on with the ban and sanctions, it seems entirely plausible that they are currentlly investigating those PRC manufacturers further. Yes/no?
In reference to the Backstreet Surveillance, this was brought up because one of my clients had contacted me to install a camera system at his home and all the cameras were already custom painted to match his house. The only issue...the installer was nowhere to be found. He wanted me to finish the install. When I walked in his house, I saw all this Backstreet Surveillance that I had never heard of, thus we started investigating the company and that map came up. For me to install it was more than he wanted to pay at the moment so he was going to hold off. Instead, I installed two Nest Hello doorbell cameras integrated with his intercom system for the chime and an indoor camera. He wants to add one more to the corner of the house. This was supposed to be a short term solution, but it's been almost a year.
Yes, I'm fully on-board with the large issues surrounding security and the delay in patching rebranded units with updated firmware. When Robert was with Savvytech, he made it much easier to get the proper firmware for particular cameras. Now that he isn't there, ENS has been terrible at communication regarding updated firmware. Because of this, CVI cameras are a relatively safe bet, but anything else, I'm leaning toward the original manufacturer for hardware. At least this way it's easier to get the correct firmware.
it seems entirely plausible that they are currentlly investigating those PRC manufacturers further. Yes/no?
Yes, I don't doubt they will be investigated and I don't feel that companies should really be rebranding cameras without changing anything. If all these companies bought cameras and used software/firmware completely developed in house, I would say they did something positive and could mostly call it their camera at that point. I don't really see evidence of this happening. SnapAV claims they have custom firmware, but I didn't really see anything different but a splash page telling me to only use Internet Explorer when opening with Chrome.
Is IC Realtime any different? They seem to still be rebranding Dahua cameras. I get that they offer some value add, but it looks mostly like a Dahua portfolio offering "...residential, commercial, government, and military security markets."
I would also agree that if Honeywell has a camera in their product line that they didn't actually manufacture, a typical end user isn't going to know that nor recognize it just by the body style. If they later find out about the truth due to an exploit that has no immediate patch, that doesn't go over too well. At that point the end user would feel a little bit deceived. I guess we have come to a point where this happens so often that we often don't see it from the customer's point of view even when we don't like the practice ourselves. I know I've always tried to explain the origin of the product and be upfront with my customers.
So basically we are saying that there will be no more OEM in the industry? This is ilegal now? As I understand OEM has been very common practice in our industry and many others, china/india/taiwan/vietnam,etc.. produce and put you're brand in everything you want it, of course is you're choice to disclose where is the product made, you can figure it out if you know the industry, but almost nobody disclose the real factory, is against the OEM concept. The problem as I see it is when you lie and stands that a product made in china is made in the USA with a label on it, this is unethical and should be penalized, worst if you do that to the US goverment when an explicit ban to China made products to US government facilities are in place. Any beginner in our industry could tell you that Aventura is an OEM, not a manufacturer!! and by the way I would like to know where are the made in USA CCTV manufacturers ( Hardware not software ) I Like to buy them and promote them!, I only know one manufacturer that make cameras to capture videos in hunting areas (very good by the way).
This is not going to impact OEM strategy to legal sellers. It will to illegal sellers.
It may also invoke some sourcing changes as some of these companies even though they are selling legally China sourced product may wish to distance themselves from China now. I could see players in Taiwan and Korea enjoying this.
So basically we are saying that there will be no more OEM in the industry? This is ilegal now?
No one is claiming that OEMing is illegal. The issue is lack of disclosure which has been brought to the fore by the US government ban of Dahua and Hikvision. If ABCDEF security OEMs Dahua but says they are a manufacturer, how do customers find out? Yes, they can check firmware or try to see if the user manual matches up or if the OUI is from Dahua, but that's hard for the average buyer to do. As such, one way or another, it looks to be reasonable that enforcement on disclosure increases.
I would like to know where are the made in USA CCTV manufacturers ( Hardware not software ) I Like to buy them and promote them!
Avigilon is the most notable, see Avigilon USA Factory Visit Report and Arecont says they still make the Mega series in the US (though the newer Contera is from China).
I think the point here is lying about having your products made somewhere- to the government.
I added a new section upfront with a key section from the complaint:
Conspired with PRC Manufacturers
The complaint alleges that Aventura 'conspired' with PRC manufacturers to falsely claim Aventura made its own products:
Dozens of video surveillance companies regularly and falsely claim to manufacturer their own products, backed by the US Security Industry Association, and this raises concerns for much of the industry.
If you are a China manufacturer or a US OEM right now, I would be very, very concerned as this practice is rampant and wrong.
|Standing ovation happening| (you just can't hear it!)
Amazing we are now prosecuting such things. I couldn’t be happier, ethics weren’t working let’s try handcuffs.
Totally agree John, I can’t help but think they went after the small fish here. They will never go after Honeywell, their attorney’s and lobbyists are too connected. Plus it would highly impact too many government projects.
They will never go after Honeywell, their attorney’s and lobbyists are too connected. Plus it would highly impact too many government projects.
isn't that the whole point? i.e. govt installations with white label Chinese spy cameras?
how can they possibly go after Aventura/Hik without eventually also going after Honeywell/Hik?
I don't know what's next. This investigation has been going on for a long time - a year, 2 years, not clear. That begs the question of what other investigations are ongoing that are not public yet.
It depends on where the government look and what they find. Are there emails from Honeywell or UTC or Tyco that say similar things to what Aventura did? There could be. We all know in the industry that hiding who your OEMs are is standard procedure when it comes to marketing and public representation (even if you personally have a friend on the inside who will tell you the truth).
From the US attorney's presentation, the government clearly is concerned about knowing the true source of the products that are being deployed. And, if that is the case, whether it is arrests or not, something needs to be done to deal with dozens of companies who have for a decade passed off Dahua, Hikvision and other China products as their own.
I don’t think the concept of hiding an OEM is the issue, look at appliances. Even US brands that were eventually sold to Chinese companies. GE/Kenmore?
I think the issue of branding “Made in America” when it’s not made in USA is an issue.
Certainly knowingly selling falsely listed products to US Agencies is a problem. How many solicitations did they directly respond to that stated “BAA Compliant Only”?
How do BOSCH alarm products, made in their own China based factory end up in US Government secure location projects?
How many discussions have been created here just trying to see what meets the Buy America Act?
GE/Kenmore?
Well, washing machines and refrigerators are generally not networked. To the extent that those devices become networked, it becomes an issue. You can read the complaint or our original article above but the government clearly is concerned about cybersecurity issues.
How do BOSCH alarm products
To the best of my knowledge, Bosch alarm products are designed and developed in upstate NY and just contract manufacturered in China. To the extent that is correct, Bosch alarm products would be like iPhones.
I do agree that false 'Made in the USA' and false BAA compliance are issues beyond that but the complaint calls out all of above.
I just purchased a new double wall oven for home. I purchased the lowest cost model for the dimensions from whirlpool. It was a connected smart oven. Everything is becoming smart and networked... Watch out...
I think data privacy - where is your data going or being stored, it it encrypted, etc.... Is very important to consider.... A little off topic. Sorry.
That's a good point. It is only a matter of time before most appliances are IoT. Video surveillance is coming faster than ovens but trend goes for both.
Related: 'CCTV' Is the Past, Cloud Video Surveillance Is the Future
I don’t get it, way more complaining about these actions than I expected. I don’t think any of those drawing odd parallels have any experience in the DOD DOE sectors.
How do BOSCH alarm products, made in their own China based factory end up in US Government secure location projects?
Bosch answered this, saying:
Bosch has intrusion control panels and keypads that undergo substantial transformation in our facility in Lincoln, Nebraska, so that they comply with Made in USA requirements. These products include the “-USA” suffix at the end of their part number so that they can be ordered for projects that call for this. Also, as you stated, our intrusion products are designed in our Fairport, NY facility.
I wouldn’t be so quick to think that Honeywell can insulate themselves with lawyers and lobbyists. I think that the feds took down Aventura because it was salacious given the level of greed and deception that was glaringly easy to see.
What could happen next is that they use the Aventura case as a springboard to level complaints on the less salacious, yet likely equally harmful to national security, companies like Honeywell.
If I was a complicit employee at a firm like Honeywell, I would be getting first in line with my attorney trying my best to get a “get out of jail free” card. I would not want to be the last in line.
(insert MJ eating popcorn meme)
From last year: Why Do OEMs Lie? (Looking At You ENS, LTS, IC Realtime)
I forgot about that discussion - that's a good one and another good example of how common and bad the practice is.
A few members of IPVM were pretty diligent about calling this Aventura BS out. Aventura went to ridiculous lengths to cover up the source, even offering tours of their "factory". This one will be interesting to watch unfold and undoubtedly will ripple throughout the industry.
Is it me or am I seeing the trade rags leaving Hikvision out of the articles? I've read several and there is no mention of Hikvision just a PRC manufacturer.
Well, the complaint does not name Hikvision explicitly, so the easy path is just to run it as Aventura and unnamed PRC companies.
However, we and the WSJ both obviously investigated this, related WSJ: Prosecutors Charge N.Y. Firm With Selling Banned Chinese Gear to U.S. Military. One notable point the WSJ made was that the body cameras Aventura sold to the Air Force were from Hikvision. [Update: the WSJ may be wrong as #18 below points out an alternative supplier]
Indeed, the complaint says that Hikvision's logo was in the bodycameras that were going to the US Air Force in 2018:
The trade magazines will argue since the complaint does not name Hikvision that Hikvision is at best ancillary to this story. However, looking at the government's motivation here (protecting national security from PRC manufacturers), what's driving this issue is that Aventura did this with Hikvision and other China manufacturers.
Body cameras are a very small world in CCTV.
Guardian™ Body Camera by Aventura Technologies Inc.
Aventura branded Bodycamera didn't come from Hikvision.
Google image search function sometimes also useful for dedicate people knowing what to look for.
What happens when the end user calls for support? Imagine you have a techie end user who knows how to find the OEM tied to the MAC address. Was HIK knowingly listing the equipment and rerouting tech calls? I wonder how deep the deception went.
HIK goes to great lengths to verify grey label equipment during tech support calls so perhaps this is SOP for them
Here how I imagine it:
- call comes in
- verify model and serial number
- look up what to do in playbook. Ah this is “made in USA equipment”
/ customer support agent puts on midwestern accent .../
True and hilarious but no one would expect to hear an American accent on a tech support call nowadays 🙁
We have been looking for some office space in that area. Looks like we have a vacancy.
Update: the US Attorney says that Aventura equipment is in the process of 'all being removed and remediated'.
this story has exploded all over the media - with numerous alarmist headlines that may or may not represent the actual content of the words contained within the story.
but WOW! this is a really, really large deal.
American Greed episode next season for sure.
This is going on where I am, on a smaller scale. This competitor has grown over the past few years. It's pretty messed up that we can lose business to our dishonest competitors that are on GSA schedule, State Contract & selling their, Dahua, Hikvision & Geovision, saying THEY are the manufactured in the USA. I'd like to get paid damages to my company for these other companies being awarded federal or Municipal projects. Having them arrested and shutdown would be great too. Being on a State contract means they don't have to go out to bid. They can just purchase what they want from an approved vendor. They should be really nervous right now. Its not very hard to prove they have been misrepresenting themselves and being dishonest to their customers. All that they dishonestly worked for could be gone. What would be the best way to go after them? And who's gonna take action?
It's going on everywhere. They've bent to cost curve down so sharply (The race to the bottom) that the client class has come to expect surveillance systems cost next to nothing. Since I do not deal in PRC equipment at all, and never have, it becomes a real chore to justify my pricing. Calling their equipment American-Made is just twisting the knife, especially when the end user can't tell the difference.
What would be the best way to go after them? And who's gonna take action?
We can help. I emailed you directly.