A half dozen senior executives from a New York-based technology company were busted on Thursday for selling more than $20 million worth of security equipment to the United States government while falsely claiming the Chinese-exported products were made in the U.S., officials said.
Aventura Technologies Inc. has sold at least $88 million in technology — such as walk-through metal detectors and network-linked surveillance cameras and turnstiles — to customers including to the United States military, since November 2010. And it was all under the guise that the company’s equipment was made in America.
Aventura’s largest customer base was the U.S. government. The company made approximately $20.7 million in sales to the U.S. since last year’s end. The company had acquired more than 60 contracts between government agencies including the Navy, the Army, the Air Force and the Department of Energy, court papers show. Aventura allegedly promised in the contracts it would provide only U.S.-made products.
The company and its arrested employees were “padding their pockets with money from lucrative contracts without regard for the risk to our country’s national security posted by secretly peddling made-in-China electronics with known cyber vulnerabilities,” U.S. Attorney Richard Donahue said in a statement. 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 on.”
The Federal Bureau of Investigation arrested six people Thursday – including one person who posed as the company’s CEO to allegedly gain better access to government contracts – on charges of fraud, money laundering and unlawful importation, according to a press release. A seventh person is due to turn himself in tomorrow.
"Greed is at the heart of this scheme"
A spokesperson for Aventura did not immediately respond to FOX Business' request for comment.
“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,” the release further states. “In fact, Aventura does not manufacture anything in the United States.”
Since 2006, the tech company has outsourced – instead opting to import products from China and re-sell them under false pretenses.
The scam was discovered by military personnel, said at a press conference on the investigation.
Though there was no allegation of breaches involving the Chinese government, emails and other evidence from the investigation showed "individuals in China were well aware of what was going on," Donoghue said. Authorities do not believe the government's cybersecurity is a risk as a result of the crimes.
"Greed is at the head of this scheme, a reprehensible motive when the subjects in this case allegedly put into question the security of men and women who don uniforms each day to protect the nation," William F. Sweeney, assistant director-in-charge of the FBI's New York office said in a statement. "There is no mistaking the cyber vulnerabilities created when this company sold electronic surveillance products made in the [People's Republic of China], and then using those items in our government agencies and the branches of our armed forces."
The Associated Press and Fox News reporter Marta Dhanis contributed to this report.