The U.S. federal government’s criminal case against Huawei Technologies entered its seventh week on Oct. 20. In a Brooklyn federal court, prosecutors called FBI forensic accountant Boram “Jennifer” Moon to the stand. Using a series of charts, Moon traced the flow of funds involving Huawei’s Iran-based affiliate Skycom and U.S. dollar transactions cleared through New York correspondent banks, according to courtroom reporting by Jonathan S. Landreth for Strategic Narratives. Prosecutors allege that the transactions violated U.S. sanctions against Iran.
Huawei faces 12 charges at trial, including racketeering, theft of trade secrets, bank fraud, money laundering and sanctions-related offenses. The company has pleaded not guilty. The charges are prosecution allegations and have not been proven in court, as Reuters reported when the trial opened.
Court admits two key pieces of evidence
Presiding Judge Ann M. Donnelly opened the morning session, where lead prosecutor Alexander Solomon sought to introduce two documents: an internal Huawei presentation detailing U.S. sanctions against Iran and fund-transfer methods, and a memorandum of understanding involving Skycom, Iranian intermediary Arya Hamrah Samanah (AHS), Chinese trading company CMEC International Trading and Panda International Information Technology. The prosecution alleges that AHS paid Skycom in rials while corresponding U.S. dollar payments were routed through Dubai to CMEC and Panda in China, according to Landreth’s account.
Defense attorney David Bitkower objected to the documents as hearsay, noting that the identity of an intermediary remained unconfirmed. He also argued that transactions dated to 2009 and 2010, before Washington tightened sanctions against Iran. Solomon did not dispute the dates but said prosecutors would show that the earlier payments matched later transactions in both amounts and contract numbers. At 10:34 a.m., Donnelly overruled the objection, indicating that the defense’s concern involved possible prejudice rather than hearsay.
During a separate exchange about how to handle additional exhibits, Donnelly joked, “So, in other words, we will drive off that bridge when we come to it,” drawing laughter in the courtroom.
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The testimony followed an earlier decision to close the courtroom for several days because of security concerns involving three Iranian witnesses. In an opinion signed Oct. 1 and made public Oct. 21, Donnelly said that their knowledge of Huawei’s activities in Iran could expose them and their families to reprisals. “The witnesses’ proffered testimony is sufficiently unique such that each of the witnesses could be identified based solely on their testimony,” she wrote, according to The Bureau’s report on the ruling. Prosecutors also warned of possible Chinese retaliation, but the judge did not make a separate finding on that issue.
FBI accountant explains fund tracking with pancake and dye analogies
The prosecution next called Moon, an FBI forensic accountant with nine and a half years of experience investigating financial matters. She described how correspondent banks clear dollar payments through the United States. Operating in Iran is not inherently illegal for Chinese companies, but transactions that pass through U.S. banks must comply with applicable American sanctions restrictions.
To explain complex financial tracking to the jury, Moon used the analogy of stacking pancakes to illustrate the “last-in, first-out” accounting principle. She described accounts under the same name as a “big common pool of funds controlled by a single account holder” and likened a few drops of dye turning a bucket of clear water red to the way “dirty money” can affect pooled funds in a tracing analysis. Moon acknowledged that incomplete bank records required some assumptions, Landreth reported.
Documents presented by the prosecution showed that Huawei Chief Financial Officer Meng Wanzhou served on Skycom’s board from February 2008 to April 2009, a period also described in the Justice Department’s 2021 statement of facts. Moon outlined what she called “circular transactions” among Skycom, Hua Ying, Canicula Holdings and Huawei Technologies Investment. Asked about a discrepancy of approximately $312,000 between two much larger transfers, she called it “insignificant.”
Detailing the flow of funds, Moon testified that approximately $12 million was transferred from Skycom to Huawei Technologies Investment through a New York correspondent bank. Other charts traced payments to Huawei’s U.S. subsidiary, Futurewei, through American banks. Some payments carried the designation “A2,” which the federal indictment identifies as an internal designation for Iran. Banks appearing in the records included JPMorgan Chase, HSBC, Standard Chartered and Citibank. Additional charts showed about $170 million in Skycom dollar-clearing flows in 2009 and 2010 and roughly $100 million across 61 transactions involving correspondent banks and the CHIPS clearing system; those figures come from separate analyses and should not be added together.
Explaining the complexity of the transfers, Moon told the jury, “A single transfer can pass through several banks,” according to the courtroom report. Solomon had prepared 170 slides of exhibits, although he had presented only a fraction of them by midday.
Internal presentation outlines sanctions workaround
A July 2013 Huawei presentation introduced by prosecutors proposed ways to move funds out of Iran despite foreign exchange restrictions, including letters of credit settled in Dubai under a strategy called “the Irancell model.” One slide stated, “There is currently no legal channel to exchange local currency.” Other proposals involved selling Persian carpets to China. Moon also identified Bank Tejarat, a bank used by Skycom that the U.S. Treasury sanctioned in January 2012.
The defense pushed back on several points during this testimony. Bitkower objected when Solomon described “A2” as a “secret code,” and again when Moon offered interpretations of documents beyond her expertise. Donnelly sustained both objections. The Justice Department’s 2020 superseding indictment alleged that Huawei used “A2” to refer to Iran and “A9” to refer to North Korea; those remain allegations in the case.
The case also draws on statements Meng made in an August 2013 presentation to a banking executive. Meng said Huawei “operates in Iran in strict compliance with applicable laws, regulations and sanctions,” an assertion she later acknowledged was false in her 2021 deferred prosecution agreement, according to the Justice Department. Her admission does not amount to a verdict against Huawei in the current trial.
Other documents showed that a May 2017 purchase order was issued by Huawei Technologies Services (Iran), not Skycom. Prosecutors presented the record after introducing evidence that Skycom was being wound down in Iran. The order alone does not establish that later operations violated sanctions.
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