In what sounds like a half-baked movie script about corporate espionage, an FBI sting conducted in collaboration with a specialized glass maker (and watched from a gelato stand by a reporter from Bloomberg) led investigators to a meeting at a burger joint in Vegas during CES. However, despite getting enough evidence to obtain a warrant and conduct a raid on a Huawei testing facility in San Diego, it seems the FBI’s latest effort to drum up charges against the Chinese electronics giant have come up dry, at least for now.
According to a new report from Bloomberg, the whole incident started when Adam Khan, founder of Akhan Semiconductor, reached out to potential customers regarding its recently developed Miraj Diamond Glass, a new take on the protective screens used in devices like smartphones that Akhan claims is six times stronger and ten times more scratch-resistant than Corning Gorilla Glass.
Among Akhan’s potential clients was Huawei, who responded to Akhan’s inquiry via some of the company’s U.S. employees based in San Diego. So then the two companies talked shop, and eventually Akhan agreed to send Huawei a sample of its proprietary synthetic diamond-coated glass, along with industry-standard stipulations that no undue harm would come to its product, and that Huawei would return the sample within 60 days.
But after two months passed without any word from Huawei or info about its sample being returned, Khan and Carl Shurboff, the company’s president and COO started to worry. So Shurboff emailed Huawei and after getting largely ignored, the sample was finally shipped back to Akhan after five months, severely damaged and broken into multiple pieces, with a few shards of the sample missing.
In other situations, this might have been chalked up to negligence, or maybe an overzealous testing routine, but with all the recent concerns about Huawei, and the fact shipment of diamond-coated glass is regulated by ITAR (International Traffic in Arms Regulations), Akhan sought help from the government to figure out what really happened.
So with assistance from the FBI, Khan and Shurboff decided to fly out to CES 2019 in early January under the guise of normal business, don wires, and attend a meeting with Huawei representatives in order to find out and record any more information on what Huawei was up to, what happened to the sample, and if any ITAR rules had been violated in the process.
Sadly, the team, who for some reason was working with a Bloomberg reporter on site nearby, was thrown a curve ball when Huawei representatives couldn’t make the meeting, which was scheduled to take place at a fully mic’d up conference room inside the Las Vegas Convention Center. So Akhan and the FBI called an audible and shifted the meeting to a burger joint in the Venetian Hotel, in hopes of not completing wasting the opportunity.
There, Huawei representatives denied any wrongdoing but were also unable to provide an explanation on how the glass sample was damaged. There was enough info to convince a judge to let the FBI raid Huawei’s testing lab in San Diego, but Akhan didn’t quite get the answers it was hoping for and ended up releasing a statement today saying it believes Huawei destroyed its product and shipped it overseas without authorization.
That said, the government hasn’t levied any official charges at Huawei as a result of the sting yet. But as intelligence agencies and politicians continue to fear the rapid growth of Huawei, you can bet this won’t be the last far out sting the government tries to set up the next time someone whispers China. For the entire roller coaster account of the sting, check out Bloomberg’s report here.
We’ve reached out to both the FBI and the US Attorney’s office for additional information and will update when we hear back.