Huawei on Trial & Ramped Up Investigation into Trump's Perceived Enemies

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1:51This is Bloomberg Law with June Grosso from Bloomberg Radio. President Trump raised national security concerns about Huawei during his first term and moved to counter the global expansion of the world's biggest supplier of telecommunications network equipment. Huawei is something that's very dangerous. You look at what they've done from a security standpoint, from a military standpoint, it's very dangerous. The U.S. has lobbied Western allies to avoid using the Chinese company's products in their high-speed wireless network, while U.S. prosecutors have accused Huawei of stealing technology, plotting to steal U.S.

2:32trade secrets, and committing wire and bank fraud. Eight years after charges were brought during Trump's first term, the criminal racketeering trial of Huawei has started in New York. Joining me is business law professor Eric Talley of Columbia Law School. Eric, tell us about the charges against Huawei. The government's trial against Huawei basically has three clusters of allegations. One is sort of bank and wire fraud actions that are basically related to business with sanctioned countries like Iran and North Korea. That's one cluster. A second has to do with trade secret theft, kind of industrial espionage.

3:12And the third is kind of a throw in. It's a racketeering charge that basically is a conspiracy theory that ties all three of these claims together, the first two with the third. Tell us more about the racketeering charge. Does it allow the prosecutors to bring in more or different kinds of evidence? Typically, yes and no. The thing that holds the same as the other two is that RICO basically requires what's sometimes known as a predicate offense, that there's got to be some underlying wrongdoing that is then sort of part of an overall strategy that is about a continuous organized pattern of criminal activity.

3:54So the triggers for RICO are actually still going to be the same as the first two allegations, trade secret theft and bank and wire fraud. But in addition, the government's going to actually have to bring evidence that these weren't just sort of one-off events, but that they were part of a continuous, organized, kind of orchestrated pattern of Huawei and not just, you know, spot cherry-picked examples. So the Justice Department lawyer in the openings told jurors that theft lies corruption for 20 years. That's how Huawei function. Huawei's defense was it's about competition, not conspiracy, innovation, not theft, ordinary business dealings, not criminal conduct.

4:38Which side has the tougher road? Well, one of the reasons this is going to trial is that both of these types of arguments are actually reasonably good. Huawei is 100 percent correct that this is an incredibly competitive industry in which, you know, different manufacturers are essentially trying to one up one another. And if you can sort of outflank your competition, even by a little, you can take an awful lot of market share. That's in many ways very, very healthy forms of competition. But because employees go back and forth, because there are different business dealings, because there are trade fairs, it often can give rise to claims that you got your edge through an impermissible sort of approach.

5:20But Huawei's, you know, overall claim is that this is a really, really competitive industry and it's unfair to look at specific anecdotes as a way to lay out some kind of a systematic pattern. They're just anecdotes. On the other hand, the government's got some decent anecdotes, you know, particularly on the trade secret dimension. They have got some pretty vivid examples of unauthorized stealing of source code for routers, user manuals, antenna technology. And they even have some evidence of one Huawei employee physically breaking off a piece of T-Mobile's phone testing robot to take back home and to study it.

6:00And so these are going to be pretty vivid, particularly for a jury. But they are also consistent with this being a very, very competitive industry. I think there's really going to be this sort of question about whether these specific events that the government has seemingly hard evidence about are going to be enough to convince the jury that this is really, you know, not only significant events in and of themselves that themselves constitute episodes of actionable and criminal trade secrets, but they're also part of this overarching, longstanding conspiracy. I understand that the Trump administration has moved away from criminally charging corporations.

6:39So why go through with this, which is going to be months long and what, eight years after the charges were first filed? Well, it's an interesting political setting because this case started under the first Trump administration. It was then inherited by President Biden, and now it's being tried in a broader sort of U.S.-China technology race and competition under the second Trump administration. It's relevant to note that even the Biden administration pushed the ball forward on this case. Huawei employee who was living in Vancouver was, in fact, subject to extradition orders and entered into a deferred prosecution agreement.

7:20Some of the things that she essentially put into that settlement have now evidently been accepted as statements of fact by the trial court judge that are going to be difficult for Huawei to sort of push back against because it's from one of their own former employees. But, you know, one of the bigger stages here is not just Huawei itself or the Trump administration's attitude towards businesses and whether it takes a more hands off approach or hands on approach. There's an overarching U.S. versus China theme to this as well that has played a big role in the first Trump administration, continues to play a role in this Trump administration.

8:01And, you know, in many ways, some of the allegations had already been substantially served up on a platter before the second Trump administration actually was in power. Have prosecutors in the Justice Department been successful in cases against Chinese companies? There have been some successes. This is a large company, however. This is not sort of a fly by night company that is, you know, essentially pilfering trade secrets here or there. And so, you know, in terms of the target of the size of Huawei, this is a significant move to make. And so one would expect also that Huawei would, in fact, they are putting up a pretty steep defense because, you know, the stakes are enormous.

8:46A couple of things that are also kind of worth noting, however, is that, you know, this is a criminal case against a company. So success by the government isn't necessarily mean that someone's going to go to prison. There aren't individuals who are basically co-defendants along Huawei here. And Huawei is already heavily restricted in terms of its presence in the U.S. market. And typically, you know, in addition to whatever fines that might be levied against a defendant company in this position, usually the most potent form of remedy would be, you know, you basically have to leave the U.S. market.

9:22But Huawei's presence in the U.S. market is already, because of U.S. trade policy, relatively small. But, you know, the U.S. still could take a verdict in its favor in this case to try to persuade allies, suppliers and others to keep a distance from Huawei because it has been criminally convicted if the government ends up getting some sort of conviction in this case. Would it be better as far as presenting a case that appeals to a jury if the prosecutors charged some people along with this nameless, faceless, giant tech company? In some cases, it would. I think sometimes when you're dealing with these sort of corporate alleged misconduct cases, the jury might actually push back against that sort of saying, look, these are large, multi-person organizations.

10:14organizations, you're trying to throw one individual under the bus when really it was the organization that was at fault. And a jury, particularly if an individual defendant is looking at potential for prison time, that could actually induce them to be less anxious to vote to convict. On the other hand, you know, I think there is a sense in which, you know, the measure of success for the government is going to be a little bit less concrete than it would be in the context of an individual criminal defendant who's a natural person. So the government clearly has sort of decided for jurisdictional and possibly strategic reasons.

10:51They want to sort of keep this about Huawei. Hopefully, from their perspective, seize on a sentiment amongst the jurors that Huawei is an example of an unfair form of competition that is essentially skirting the rules, both of intellectual property and international sanctions, and visiting a penalty on the company itself is the best way to move. You know, one thing that's going to be pretty interesting from the jury's perspective, and this particularly relates to the RICO charge, is how likely is it that the jury is going to be able to take this set of examples, some of which are quite vivid, like the breaking off of a piece of the robot, and say, oh, wait, no, that's part of an entire pattern and practice as opposed to some cherry-picked anecdotes, which, you know, quite frankly, all prosecutors can usually find one or two examples of something that looks a little bit sketchy and then try to weave a story of a longstanding criminal enterprise.

11:47And that's going to be one thing to really watch here about whether the government is going to be able to stitch together these anecdotes and basically say, these aren't just anecdotes, these are a pattern, while Huawei is basically going to say, look, you just cherry picked some of the worst possible situations involving individual isolated employees, former employees, contractors of Huawei. But that was never part of our corporate strategy. How do you keep a jury's interest if this trial is going until December? It's going to be a longstanding trial is one of the other reasons why, you know, going against a large company like Huawei that's well capitalized and can can afford pretty good legal teams is going to almost certainly result in a protracted form of litigation.

12:31The government has some nice cards to play here, right? They've got these very, very vivid evidentiary examples that they will no doubt do a lot with. I think the harder ones are keeping a jury's attention when you are basically trying to go through the accounting forensics of bank and wire fraud associated with who is and who isn't on the sanctions list, and what companies was Huawei doing business with that in turn was doing business with Iran and North Korea, and how much did they know about it. That's a highly detailed, technical, and heavily kind of number-laden form of claim. I could imagine not just a jury, but even if I had to teach that to a set of my own students, they might start to have the eyes glaze over effect halfway through.

13:19So the government's going to have some bigger challenges when it comes to the financial aspects of its claim. I think the trade secret and IP claims, they're just a little bit more vivid and are likely going to catch people's attentions because they actually involve, you know, actions that you can observe and see, and in some cases, quite tangible alleged acts of theft. Are there any star witnesses expected? The person that you were referring to who was in Canada, her statements are going to be used, but she's not going to testify. Yeah, we'll see. Clearly, Meng Wanzhou's statement is a significant piece of evidence.

13:57But as I understand it, she is not planning to be brought to the U.S. to testify. Some of the actual participant actors may emerge as star witnesses. My sense is that her statement in the deferred prosecution agreement is very much kind of a partial centerpiece, particularly on some of the underlying allegations in the case that she had concrete knowledge about and then put in a legally binding settlement, statements of fact that are definitely going to be things that Huawei is going to have to contend with. Are they going to try to claim that she was misstating those facts? Might they put up other people that had more direct knowledge of some of those asserted facts and to try to correct the record on that?

14:42That'll be kind of an interesting thing to see it play out. The government hasn't specified what kind of penalties or the scope of the penalties it might be looking for. So as you mentioned, Huawei is already on a blacklist. I guess that leaves financial penalties. Would any financial penalty that could be obtained really hurt this company? You know, most Huawei's, you know, margin is generated outside the United States and most of those assets are held outside the United States as well. That doesn't mean they don't have assets that could be part of something that the government could directly recover.

15:16I think the financial penalty, though, given the fact that a lot of these assets are offshore, is going to be a harder one to pursue, at least in some circumstances. And as you noted, Huawei is not going to be in a position where suddenly it's going to lose a bunch of customers in the U.S. since it currently doesn't have many customers in the U.S. since it's been blacklisted. So my sense is the real grab that a successful outcome for the Department of Justice would have is in effectively, you know, trying to throttle back Huawei's market share outside of the U.S. amongst trading partners who basically are told, look, if you continue to trade with what would then be a criminally convicted enterprise, that's going to have implications for your own dealings with U.S.

16:03markets. You know, the Trump administration has wielded that club many times thus far with tariffs and other contexts. So I could imagine that having a little bit of mileage, but there really is kind of a question given how global this market is about and how, you know, several of our historical allies seem to be getting a little bit closer to China as the U.S. levies tariffs on them. whether that's going to convince them to, you know, keep a healthy distance from Huawei or possibly, you know, embrace some of their products. And what's Huawei's position in China? What's its importance to that country?

16:42Significantly important company in China. One of the leading companies in China. I don't imagine that a conviction in the United States, again, with the overarching sort of political angle here, is going to cause Xi Jinping's government to say we're going to have to throttle back Huawei because it's been so effective at competing with U.S. manufacturing interests. That's a huge market, not just externally, but also internally in China. Huawei has been, you know, very much aggressively trying to expand its market footprint in just about every country but the United States. I would expect that they're going to continue to get support, either implicit or possibly explicit from the Chinese government, particularly if a conviction is accompanied by kind of expanded rhetoric about the China versus U.S.

17:31competition in technology. We'll be following this trial for quite a while, so we'll talk again. It's always great to have you on, Eric. Thanks so much. That's Columbia Law School Professor Eric Talley. Coming up, the Justice Department is ramping up an investigation into Trump's perceived enemies. This is Bloomberg. On the campaign trail, President Trump loved to regale audiences with his list of grievances over what he saw as a years-long conspiracy to get him, whether it was the investigation into Russian interference in the 2016 election or the investigation into his mishandling of classified documents.

18:13From the beginning, the Democrats spied on my campaign. Remember that? They attacked me with an onslaught of fraudulent investigations. Russia, Russia, Russia. Ukraine, Ukraine, Ukraine. impeachment hoax number one, impeachment hoax number two, the illegal and unconstitutional raid on Mar-a-Lago right here. Well, now that he's president, Trump is turning the tables on those who investigated him, all in service of his theory of a grand conspiracy by Democrats to sabotage him over the course of a decade. And the Justice Department is ramping up its extensive criminal investigation into whether former government officials conspired to undermine Trump.

19:06Joining me is Chris Strom, Bloomberg legal and national security reporter who's been looking into this investigation. Chris, tell us about this Justice Department investigation that's been referred to as the grand conspiracy investigation. Well, the investigation is an extremely broad probe into multiple actions that were taken at the end of the Obama administration during the Biden administration, ranging from the investigation into Russia's interference in the 2016 election and whether the Trump campaign had any involvement in that, ranging all the way through to the investigation that was done under the Biden administration into Trump's activities, including his efforts to overturn the 2020 election and his taking of classified documents down to Mar-a-Lago after he left office.

20:03I mean, it sounds like especially the facts or allegations involving Russia have been investigated over and over again, including by John Durham, who was appointed by Trump, right? One of the things that's so bizarre about what the Justice Department is doing is that they're retreading ground that has already been well plowed by other investigations. There's been multiple investigations into what happened in 2016 with regard to the Trump-Russia investigation. There was an inspector general investigation into all of the activity that took place. And then there was a special counsel appointed during the first Trump administration, John Durham, and he took a deep dive look into whether there were any crimes committed during the Trump-Russia investigation.

20:54And he was only able to find one low-level FBI lawyer who lied on a document and that individual pled guilty, no other individuals were ever charged with any crimes based on the previous investigations. And so a lot of people are questioning now what the Justice Department is currently doing by going back 10 years and looking at activity that has already been well investigated without any findings of wrongdoing. I mean, there were pictures of boxes and boxes of classified documents piled up at Mar-a-Lago, so I'm not sure where the conspiracy would be there. And investigations go awry all the time.

21:42What kind of charges could they bring against these former officials for investigations? What's happening here is that Trump has demanded that the Justice Department investigate and potentially prosecute his perceived political enemies. And some of the major figures that Trump wants to be investigated were people who were involved in the Trump-Russia investigation of 2016 and putting together an intelligence assessment during that time, as well as government officials who were involved in the investigation into Trump's retention of classified documents. And so the Justice Department, during the second Trump administration, has set out to conduct a sweeping investigation to look for any potential wrongdoing or criminal activity that was done over the last 10 years that they can find any potential crime where they could bring a charge.

22:45There's a lot of skepticism that the Justice Department is going to be able to find anything new, given that a lot is already known about these investigations. But they've convened a grand jury and they've sent a bunch of prosecutors down to Florida. And they're looking under as many rocks as they possibly can and bringing people in before the grand jury to testify with the hopes of finding something that they can pin to somebody who Trump once investigated. And as of now, to this point, there's no indication that they found any criminal wrongdoing or have any justification to bring charges against anybody.

23:37But the investigation is ongoing. They do have an active grand jury. They are taking testimony. They have been receiving documents. And they've put a bunch of people under investigation. And they are moving forward with an undefined scope of investigation that doesn't have any clear ending in sight. Are they targeting anyone in particular? Individuals that we know who are under investigation include John Brennan, the former CIA director, James Clapper, the former director of national intelligence, and other senior officials who were either in the Obama administration or the Biden administration and worked for either the FBI or intelligence agencies.

24:24It's pretty clear that Trump wants certain individuals who are well known, such as John Brennan, James Clapper, and James Comey to be under investigation and ideally, from Trump's point of view, face criminal charges. But at this point, there's not been any indication that evidence exists to actually bring charges against any of these individuals. So what might happen is that prosecutors will eventually write up a report and talk about activity that they believe was not justified and was done in the spirit of trying to make Trump look bad. But in the end, they just issue a report without any criminal charges.

25:08I mean, sometimes it seems like the point is the investigation itself, the news about the investigation and just bringing charges like the Comey charges over the seashells on the beach. So that entails hiring lawyers and court appearances and general agita. So maybe it's the prosecution itself that's one of the goals. Yeah, part of what the Justice Department seems to be doing at this point is making the prosecution the punishment that by prosecuting individuals and putting them under investigation, they have to spend a lot of money and they have to spend a lot of time. They have to hire lawyers.

25:46They have to go into court. They have to file documentation. And so part of what the Justice Department appears to be doing right now is putting people under investigation just for the sake of putting them under investigation as a punishment. Has this ramped up since Blanche became attorney general? Yes. By all accounts, the investigation has entered a new phase. Previously, the investigation has been going in fits and starts. When the Trump administration first began, it was being done under former Attorney General Pam Bondi. It is based in the Southern District of Florida, and investigators were spending a lot of time cooking up the theories of the case and then started sending out subpoenas for documentation.

26:37And so last year, there was a lot of subpoenas for documentation, and then the investigative pace seemed to stall. And of course, Bondi was removed in April and Todd Blanche came in as the acting attorney general. And then in August, Blanche was confirmed as attorney general. And since then, we've seen an uptick in the activity. And the most significant thing is that prosecutors in Florida are now sending out subpoenas for individuals to come in and testify in person before the grand jury. And so this marks kind of a new and aggressive phase for the investigation. Why is it in Florida? Is it because Mar-a-Lago is there?

27:19The reason why the Justice Department based the investigation in Florida has always been a mystery. There is plenty of activity that is under investigation that doesn't seem to have any connection to Florida. Now, part of the theory of the case that prosecutors are pursuing is that there was a conspiracy against Trump ranging over the last 10 years from the Trump-Russia investigation that was done in 2016 to the Mar-a-Lago classified documents investigation that was done in 2023. And prosecutors are trying to stitch together kind of a Frankenstein of a case that says that there is a grand conspiracy against Trump ranging over 10 years.

27:59And therefore, if any of the activity took place in Florida, they can claim jurisdiction to carry out the investigation for all of the activity in Florida. And obviously, the Mar-a-Lago documents case has a connection to Florida because that's where the Mar-a-Lago resort is. And that's where the raid was done by the FBI to retrieve the classified documents. And so prosecutors are making the case that they are able to base their investigation in Florida because they have activity that occurred in Florida that is connected to a 10-year grand conspiracy against Trump. But what really appears to be going on is that the Justice Department did not want to bring any of the case in any other jurisdiction where they might not have a favorable jury or they might not have a favorable judge.

28:53And in Florida, they based their grand jury in Fort Pierce. Fort Pierce just happens to be where Judge Eileen Cannon is located. And Judge Eileen Cannon oversaw the classified documents case against Trump. And as she oversaw that case, she made a lot of rulings that were favorable to Trump and ultimately dismissed the case against Trump. And so it appears what the Justice Department is now trying to do is engineer a way to get any kind of charges that they bring in front of Judge Cannon. Yes, she really seemed to favor Trump in her rulings, and she was reversed twice by the 11th Circuit. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done.