Posted on: November 07, 2019 10:00 AM

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Aventura Technologies Inc and its senior management charged with fraud money laundering and illegal importation of equipment manufactured in China

The Long Island Company Supplied Chinese-Made Surveillance Equipment to U.S. Government and Private Customers While Falsely Claiming its Products Were ?Made in U.S.A.?

A criminal complaint was unsealed today in federal court in Brooklyn charging surveillance and security equipment company Aventura Technologies, Inc. (Aventura), located in Commack, New York, and seven current and former employees with 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). Aventura has generated more than $88 million in sales revenue since November 2010, and the charged scheme has been ongoing since 2006.

In addition to Aventura, the individual defendants charged in the complaint are Jack Cabasso, Aventura?s Managing Director and de facto owner and operator; Frances Cabasso, his wife and Aventura?s purported owner and Chief Executive Officer; senior executives Jonathan Lasker, Christine Lavonne Lazarus and Eduard Matulik; current employee Wayne Marino; and recently retired employee Alan Schwartz.

Four of the individual defendants are also charged with 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. The Cabassos are also charged with laundering the monetary proceeds of these fraudulent schemes.

Six of the defendants were arrested this morning and are scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr. Law enforcement agents executed search warrants at Aventura?s headquarters in Commack, New York, and at the home of Jack and Frances Cabasso in Northport, New York. The government has also seized the Cabassos? 70-foot luxury yacht, and has frozen approximately $3 million in 12 financial accounts that contain proceeds from the defendants? unlawful conduct.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Joseph P. Dattoria, Special Agent-in-Charge, U.S. General Services Administration, Office of Inspector General (GSA-OIG); Leigh-Alistair Barzey, Special Agent-in-Charge, Defense Criminal Investigative Service, Northeast Field Office (DCIS); J. Russell George, Treasury Inspector General for Tax Administration (TIGTA); Troy Miller, Director of Field Operations, U.S. Customs and Border Protection, New York Field Office (CBP); Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI); Jason T. Hein, Special Agent-in-Charge, U.S. Air Force Office of Special Investigations, Office of Procurement Fraud Investigations, Detachment Six (AFOSI); Leo Lamont, Special Agent-in-Charge, Naval Criminal Investigative Service (NCIS); and Teri L. Donaldson, Inspector General, U.S. Department of Energy, Office of Inspector General (DOE-OIG), announced the charges.

?As alleged, the defendants falsely claimed for years that their surveillance and security equipment was manufactured on Long Island, padding their pockets with money from lucrative contracts without regard for the risk to our country?s national security posed by secretly peddling made-in-China electronics with known cyber vulnerabilities,? stated United States Attorney Donoghue. ?With today?s arrests, the defendants? brazen deceptions and fraud schemes have been exposed, and 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 upon.? Mr. Donoghue expressed his appreciation to U.S. Army Criminal Investigation Command?s Major Procurement Fraud Unit for their work on the case.

?Greed is at the heart 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 our nation,? stated FBI Assistant Director-in-Charge Sweeney. ?There is no mistaking the cyber vulnerabilities created when this company sold electronic surveillance products made in the PRC, and then using those items in our government agencies and the branches of our armed forces. I cannot stress enough that we will do everything we can to search out and stop any other company willing to cut corners and pocket profits that endanger the lives of Americans, and make this country less safe.?

?The laws in place regulating government contracts ensure both the taxpayer and government receive quality goods and services at competitive prices. In addition, they provide a fair opportunity and level playing field for all businesses seeking government contracts. The General Services Administration?s Office of Inspector General will continue to work closely with our law enforcement partners to aggressively investigate allegations of fraud against the United States Government,? stated GSA-OIG Special Agent-in-Charge Dattoria.

?The arrests and other enforcement operations that occurred today were the direct result of a joint investigative effort,? stated DCIS Special Agent-in-Charge Barzey. ?The introduction of counterfeit parts and materials into the U.S. Defense Department?s supply chain poses a significant risk and impacts America?s military readiness and our national security. The DCIS is committed to working with its law enforcement partners and the U.S. Attorney's Office, Eastern District of New York, to ensure that individuals and companies who engage in fraudulent activity, at the expense of the U.S. military, are investigated and prosecuted.?

?TIGTA?s mission includes investigating allegations of waste, fraud or abuse involving the Internal Revenue Service (IRS),? stated TIGTA Inspector General George. ?Mr. Cabasso and his co-conspirators secured products from outside of the U.S. while purporting that these products were made in America. They then sold these products to the U.S. Government, including the IRS and other Government agencies. TIGTA is committed to investigating and working with our law enforcement partners to root out this type of fraud from the Government contracting and procurement process. I want to thank U.S. Attorney Donoghue for the steadfast support that he and his talented prosecutors gave to this investigation.?

?U.S. Customs and Border Protection provided the critical link to an ongoing investigation that resulted in the takedown of an elaborate criminal enterprise,? stated CBP Director of Field Operations Miller. ?This case serves as a great example of collaborative law enforcement efforts to uncover and dismantle criminal enterprises that seek to defraud the United States government for personal gain while jeopardizing our national defense and causing economic harm to their competitors.?

?In today?s global economy, ?Made in the USA? is too sacred of a mark to fraudulently use for one?s self interest,? stated IRS-CI Special Agent-in-Charge Larsen. ?IRS-Criminal Investigation works diligently with our law enforcement partners to uncover con artists devising elaborate schemes to become independently wealthy. These allegations have serious national security implications that go beyond shameless attempts at personal enrichment.?

?Product substitution is a serious crime that puts our men and women in uniform at greater risk,? stated NCIS Special Agent-in-Charge Lamont. ?Our Sailors, Marines, and other armed services personnel deserve to have equipment that meets the highest standards for safety and performance, which will not fail them when it matters most. Substandard and counterfeit parts simply cannot be depended upon. Investigating product substitution and mitigating risks to the Department of the Navy supply chain is a top priority for the Naval Criminal Investigative Service. NCIS has a cadre of Special Agents trained in all aspects of economic crime, tirelessly fighting fraud in the procurement process.?

?Ensuring the integrity of the US Air Force procurement process and the quality of the products provided to our warfighters is a top investigative priority of the Air Force Office of Special Investigations,? stated AFOSI Special Agent-in-Charge Hein. ?Those who seek to conduct business with the Air Force must be candid and truthful. AFOSI will aggressively investigate those who attempt to defraud the Air Force, and will work with our law enforcement partners to identify and prosecute those who would take advantage of the USAF and its interests. The victims are not just our men and women in uniform, but every American taxpayer.?

?The Department of Energy?s Office of Inspector General remains committed to ensuring the integrity and security of the Department?s vendors, especially given the serious nature of the Department?s mission,? stated DOE Inspector General Donaldson. ?We take allegations of conspiracy against the U.S. Government very seriously and will aggressively investigate these matters to protect the Department and the American taxpayers. We appreciate the collaborative efforts of the DOJ and our other law enforcement partners.?

The Country of Origin Fraud and Unlawful Importation Scheme

As charged in the criminal complaint and in court documents filed today,[1] for over a decade Aventura lied to its customers, including the U.S. military, the federal government and private customers in the United States and abroad. Under federal government procurement laws and regulations a product?s country of or