Texas District Court Finds ZTE Committed Visa Fraud, Still Decides Not to Revoke Probation
A Texas U.S. district court found that Chinese telecommunications company ZTE Corp. committed visa fraud to get employees in the U.S. Making the determination during a hearing on whether to revoke ZTE's probation for violating sanctions on Iran, Judge Ed Kinkeade of the Northern District of Texas said that the court decided not to revoke it and to resentence ZTE after looking at the evidence (United States v. ZTE Corporation, N.D. Tex. #3:17-00120).
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The case alleged that Jianjun Yu, director of a ZTE laboratory in New Jersey, worked with a professor at the Georgia Institute of Technology to get J-1 visas for six individuals. Yu would identify individuals that the university would then sponsor for the visas, the purpose of which was supposed to be for teaching, studying or conducting research. Instead, according to evidence submitted by the FBI, the six individuals worked at the New Jersey lab.
Nevertheless, Kinkeade found there to be other circumstances cutting against revoking ZTE's probation. The judge considered three issues before making his decision: ZTE's mitigation offer, the progress of ZTE's compliance and the question over the tools left to punish the company. On mitigation, the court said ZTE has "made strides in its export control and compliance programs," and that it is under new management, with the old guard of executives having been fired in 2018. While these executives were fired, they did pick their successors and are still involved in the company. "ZTEC’s record of compliance can be summarized in one word -- 'sometimes,'" the judge said.
The judge lauded the work of the government's monitor team, appointed to assess ZTE's compliance programs. Kinkeade said that the work to hammer out weaknesses at ZTE and its subsidiaries "will be left to the Department of Justice's investigations." Finally, looking at other punishment options, the judge said it seems "counterproductive and against public policy" to have ZTE be left with no incentive to comply after the maximum fine is imposed.
"This Court finds the allegations of conspiracy to commit visa fraud as contained in the Georgia indictment against the company to be TRUE," the judge said. "But the Court does not revoke and resentence ZTEC at this time after balancing the prior mitigation evidence, the work of the Monitor Team, and the open question about legal tools left for the Court." Kinkeade encouraged the government to pursue other, reasonable charges against ZTE, including failure to implement compliance programs, failure to correct illegal exports of controlled items and untested compliance regulating computer systems.