Chinese Gear Theft Won’t Be History Soon

By now, you may have heard about the ORP News program that aired today in multiple markets throughout the nation. As it turns out, the program reported on several recent reports that could be…

Chinese Gear Theft Won’t Be History Soon

By now, you may have heard about the ORP News program that aired today in multiple markets throughout the nation. As it turns out, the program reported on several recent reports that could be making fans of organized crime nervous.

To recap, in November 2017, the Department of Justice disclosed that 13 cases involving Chinese nationals who had targeted world-famous children’s electronic brand brands could amount to hundreds of millions of dollars in criminal damages.

An iHeartRadio investigation discovered a rumor in China that American companies such as Apple, Kia, and LG were robbed at gunpoint. The United States did not release details on this bizarre incident but it is far from unique. Lax regulations in an otherwise highly effective criminal-policing effort may have contributed to the huge haul: Credit card skimmers, bank card skimmers, and walk-through machines were all uncovered as part of the investigation. The investigation also uncovered thousands of U.S. credit card numbers. (The fact that the DOJ announced it would not pursue a case after a year of investigation indicates this isn’t a unique event.)

Those were the lucky ones.

In China, owners of a popular internet café knew the first thing to do when they heard of the investigation would be to change the people who took their customers’ money and phones. Rather than closing the business, they posted flyers advertising new furniture and restaurants.

Several major companies reported similar incidents. At LG Electronics, which also faces the prospect of tens of millions of dollars in damages, customers’ phones were stolen by way of door handles that some styluses were reportedly inserted into. The company reported that a total of 60 “unfortunate acts” occurred.

In December 2017, at least 23 Apple iPhones went missing. Apple alerted customers that they believed a hacked network of ATM machines may have been used to intercept the mobile devices. The U.S. Department of Justice announced a probe into the apparent crime spree in the United States. In the case of Kia, an employee allegedly stole two iPhones and four iPads. As for LG, authorities suspect financial fraud may have played a role in an alleged theft of 1,000 manila envelopes containing iTunes gift cards.

Such incidents could actually constitute organized crime, which is illegal in the United States. While Chinese citizens were not found in the IHear investigation, individuals from other countries are known to hail from places like Iran, the Philippines, Vietnam, and the United Arab Emirates. When people are arrested for these crimes, they typically plead guilty, confess to various other crimes as well, and are later sentenced to prison.

Some of the upcoming charges against Chinese citizens involve theft of intellectual property and bank fraud, but today’s report suggests a more disturbing pattern. Chinese nationals target some of the world’s most valuable children’s electronic brands, even when their own nations are battling with them over questions of stealing trade secrets. Perhaps less surprising, the Chinese seem to have some sort of collusion with these companies. If they found it feasible to infiltrate world-class companies in the United States and steal millions of dollars in intellectual property, how can we expect them to respect intellectual property in their own country?

Certainly, Chinese companies are famous for their engineering prowess. However, following the ORP News report, the CEO of a major American family electronics brand said, “I don’t know how they can say that these items were stolen in any way, shape, or form.”

Or maybe they do and we just haven’t figured it out yet.

David Crundwell is a deputy legal director with the Federalist Society and a former deputy assistant attorney general for the Justice Department’s National Security Division.

David Crundwell joined the Federalist Society in 2015. He is a former deputy assistant attorney general for the Justice Department’s National Security Division.

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