Executive Duped Agencies Into Buying Banned Chinese Products, U.S. Says

The owner of a technology company duped public safety and law enforcement agencies in New Jersey into spending at least $35 million, including $15 million in Covid-19 relief and other federal funding, on banned Chinese surveillance and security equipment, according to a complaint unveiled this week.

According to the complaint, the company’s owner and chief executive, Tamer Zakhary “fraudulently misrepresented” the equipment he was selling, like automatic license plate readers and surveillance cameras, telling New Jersey agencies that the products complied with U.S. regulations. Mr. Zakhary, 49, was charged with wire fraud and with giving false statements to federal agents.

Mr. Zakhary’s scheme began in about August 2019 and lasted through December 2022, according to prosecutors. Throughout that time, he sold equipment to police departments, sheriffs’ offices, prosecutors’ offices and townships through his New Jersey company, listed online as Packetalk.

In one instance, Mr. Zakhary emailed a manufacturer — whose technology the Federal Communications Commission had banned from being imported, sold or operated in the United States — to ask that it produce cameras with a different color and logo to hide the maker’s identity, according to the complaint. That exchange, federal prosecutors said, showed that Mr. Zakhary knew he was purchasing banned technology and was “attempting to conceal that fact.”

The complaint, issued by the U.S. attorney for the District of New Jersey, did not identify the company whose equipment Mr. Zakhary is accused of selling, but prosecutors said it was on a list of tech companies banned under a 2018 federal law that aimed to stem concerns that “foreign intelligence actors,” specifically Chinese companies, were trying to infiltrate the country through technology.

The charges against Mr. Zakhary, and the revelation that law enforcement agencies in New Jersey had bought technology that the federal government considered a national security risk, comes during an escalating tech war between the United States and China.

In recent years, lawmakers have called for investigations of TikTok, the Chinese-owned video app, and urged that phone and internet equipment from Chinese companies be removed from every corner of the United States. In August, President Biden signed an executive order banning new American investment in key Chinese technology industries.

China has responded with its own restrictions. In May, the Chinese government prohibited companies that handle critical information from buying microchips made by Micron, based in Boise, Idaho.

According to 404 Media, a tech publication that first reported the federal complaint against Mr. Zakhary, items sold to New Jersey agencies included cameras manufactured by Dahua Technology, which the federal government has said is implicated in human rights violations and abuses.

At one point, when employees of an agency that purchased from Mr. Zakhary became concerned that the equipment had come from a prohibited company, Mr. Zakhary reassured them, saying that Immigration and Customs Enforcement and the Bureau of Alcohol, Tobacco, Firearms and Explosives were using the same equipment, according to the complaint.

Mr. Zakhary admitted in a later interview with federal agents that no federal agencies had purchased cameras and equipment from him, prosecutors said.

Not only was Mr. Zakhary aware that he was selling banned equipment, according to the complaint, but he also tried in at least one instance to use that knowledge as leverage in price negotiations.

In March 2020, an employee of the banned tech manufacturer emailed Mr. Zakhary saying that to their knowledge, federal funds could not be used to purchase the company’s products. Mr. Zakhary brushed aside the concerns, saying that he had sold the company’s cameras “for many years.”

The next month, Mr. Zakhary asked for the company’s best pricing offer, according to the complaint.

“Something competition has over your company, is they are not blacklisted by US government,” he wrote in an email to a representative of the company.

The wire fraud charges against Mr. Zakhary each carry a maximum penalty of 20 years in prison, and the false statements charge carries a maximum of five years in prison.