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Reuters
Reuters
Business
Bruce Tomaso and Karen Freifeld

ZTE awaits judge's ruling after U.S. probation hearing

FILE PHOTO: People walk past a building of China's ZTE Corp in Beijing, China, August 29, 2018. REUTERS/Thomas Peter/File Photo

An FBI agent testified on Monday that Chinese nationals brought to the United States under research visas went to work for ZTE Corp in New Jersey - a possible sign the Chinese tech company violated its probation from a 2017 U.S. plea deal.

At a hearing in federal court in Dallas, FBI special agent Marcus Wondergem said Chinese nationals came to the United States under the guise they would be doing research at the lab of Georgia Tech professor Gee-Kung Chang, but spent little time there and moved to apartments near ZTE in Morristown, New Jersey.

"Is it true that some of these individuals spent months without entering the lab?" Assistant U.S. Attorney John de la Garza asked Wondergem.

"Yes, it is," Wondergem replied.

U.S. District Judge Ed Kinkeade said he hoped to issue a written ruling in a matter of days.

ZTE is on probation from its guilty plea in a case tied to illegally shipping American technology to Iran. Kinkeade summoned the company to his courtroom over the possible violation involving an alleged conspiracy to commit visa fraud.

ZTE's shares declined after word of the hearing surfaced about a week ago, falling more than 12% last week in Hong Kong and then slipping 7% further on Monday.

Chang and Jianjun Yu, a former ZTE research director in New Jersey, are accused of conspiring to bring Chinese nationals to the United States to conduct research at ZTE between at least 2014 and 2018, according to an indictment unsealed in March 2021.

The Chinese nationals were in the United States on J-1 visas, which are intended for work and study at sponsoring institutions like Georgia Tech.

During his testimony, the FBI's Wondergem said he checked the door logs for the Georgia Tech lab and produced leases for apartments in Morristown.

On cross-examination by Dallas lawyer Scott Barnard, who represents ZTE, Wondergem acknowledged that the sponsor of the J-1 visas - Georgia Tech, not ZTE - was responsible for the accuracy of the visa applications and that "research scholars" are permitted to work at more than one location.

Wondergem also said that, despite years of investigation in the Georgia Tech case, neither ZTE nor a U.S. subsidiary was indicted.

No other witnesses were called at the hearing.

In closing arguments, Robert Buehler, a lawyer for ZTE, said Yu was a professor at Shanghai's Fudan University and, in many cases, recommended former students to Georgia Tech. He described their work at ZTE as an "informal internship."

Buehler also argued that Georgia Tech was responsible for the visas and for the conduct of scientists and engineers in the United States.

"If anyone here should have done more, it was Georgia Tech," Buehler said.

De la Garza argued that Yu and Chang conspired to use J-1 visas for people to work at ZTE because it was a "cheaper, faster, easier way" to get foreign nationals into the United States.

"It's a sham," de la Garza said.

Chang has pleaded not guilty. A lawyer for Chang, Robert Fisher, declined to comment. Yu's status is unclear. ZTE said he left the company in 2019.

(Reporting by Karen Freifeld in Washington and Bruce Tomaso in Dallas; Editing by Chris Sanders and Stephen Coates)

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