The U.S. Justice Department has indicted the CEO of a New Jersey security technology provider for fraudulently selling Chinese security cameras and equipment prohibited from sale in the U.S., prosecutors said.
Tamer Zakhary, 49, of Toms River, N.J., is charged with three counts of wire fraud and one count of making false statements for allegedly telling law enforcement customers that equipment he sold was not banned by the National Defense Authorization Act.
Zakhary appeared before U.S. Magistrate Judge Edward S. Kiel in Newark federal court on Jan. 4 and was released on $100,000 unsecured bond.
A 17-page federal complaint filed by prosecutors did not identify the camera company, except to describe it as a partly state-owned technology company based in the Binjiang District of Hangzhou, China, that is the second-largest video surveillance company in the world. The complaint mentions a subsidiary based in Irvine, Calif.
The NDAA was signed into law in 2018 by federal lawmakers to address increased concerns that foreign intelligence actors were looking to infiltrate U.S. systems and exploit technologies.
It prohibits the federal government from procuring or obtaining video surveillance and telecommunications equipment from specifically identified Chinese companies and from entering into contracts with any entity that uses such video surveillance equipment from specifically identified Chinese companies.
Prosecutors said that from mid-2019 through 2022, Zakhary’s Lyndhurst, N.J. company sold millions of dollars’ worth of surveillance cameras and equipment to public safety and law enforcement agencies in New Jersey, including prosecutors’ offices, sheriffs’ offices, police departments and townships.
An FBI investigation revealed Zakhary fraudulently misrepresented to these customers that his company’s products were compliant with Section 889 of the NDDA. Prosecutors said Zakhary, in fact, obtained the cameras and equipment he sold from a Chinese company specifically identified in Section 889.
The customers purchased at least $35 million in surveillance cameras and equipment from Zakhary’s company, over $15 million of which consisted of federal funds and grants.
The FBI’s investigation described an email exchange that showed “even Prohibited Company-1 knew that Zakhary’s customers could not use federal funds to purchase its products” and that the prohibited company “expressly informed Zakhary of this limitation.”
In an interview with FBI agents summarized in the complaint, Zakhary told FBI agents that he believed the NDAA pertained to as-is camera from the Chinese company, but the cameras he sold had firmware made in different countries.
In a news release appearing on the police1.com website, a news release about Packetalk’s pending appearance at the 37th Annual Police Security Expo at the Atlantic City Convention Center states all the company’s technology “is certified fully compliant” with the NDAA.
The wire fraud charges each carry a maximum penalty of 20 years in prison; the false statements charge carries a maximum penalty of five years in prison. All counts are also punishable by a fine of $250,000, or twice the gain or loss from the offense, whichever is greatest.
U.S. Attorney Sellinger credited special agents of the FBI and U.S. Department of Homeland Security with the investigation leading to the charges.
In a statement shared with the Asbury Park Press, attorneys for Zakhary, Charles B. McKenna and Matthew E. Beck, said they were “surprised and disappointed” the feds filed charges against Zakhary.
“Today’s charges do nothing to strengthen national security, and do not accomplish the McCain Act’s intended goal of protecting U.S. infrastructure. Moreover, this prosecution will not be successful when tested in a court of law,” the statement said.
“Mr. Zakhary and his company have a 20-year record of supporting law enforcement in curtailing violent street crime and being a partner in improving the safety and security of our communities. Their industry-leading systems deliver the only fully integrated platform solution for complete situational awareness, and third-party audits of its equipment have confirmed the security of their software and hardware systems."
John Dobberstein is managing editor of SecurityInfoWatch.com and oversees all content creation for the website. Dobberstein continues a 34-year decorated journalism career that has included stops at a variety of newspapers and B2B magazines.
