US Issues Criminal Charges For Fraudulently Selling Hikvision And Other China ProductsBy: John Honovich, Published on Nov 07, 2019
The 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:
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:
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.