On October 14, the Los Angeles County District Attorney’s office prosecutors accused the CEO of a Michigan-based election software company of being involved in a “massive data breach affecting at least 1,000 victims, some minors.”
Eugune Yu, 64, who heads Konnech, a software provider to electoral districts for the management of poll workers, was charged with embezzlement of public funds, which is a felony. Yu was accused of stealing personal identifying information of poll workers and storing the data on servers in China, a violation of Kommech’s contract with L.A. County.
Superior Court of Los Angeles County Judge Victoria Wilson ruled that Yu be released on a $500,000 bond and remain in house arrest until his next hearing, which is set for November 17. Yu was ordered to remain in L.A. County and wear an ankle monitor.
Dressed in a gray suit and wearing metal-rimmed glasses and a white N95 mask, Yu seemed to be in good spirits inthe courtroom where he appeared with his four lawyers.
Los Angeles Deputy District Attorney Eric Neff alleged in court that the amount of data involved in the breach was “astounding,” adding, “This is probably the largest data breach in United States history.”
“In Los Angeles alone, there were probably thousands of victims. They have contracts all over the country,” Neff alleged.
Yu’s lawyer, Janet Levine, rejected the allegations, saying, “There was no evidence of personal identifiable information being distributed. There’s no breach in this case.”
Neff argued against bail for Yu, a naturalized American who was born in China, for fear that he may be able to go back to China, where he lived for 33 years and had business operations. Neff said, “Yu’s alleged crimes pose abroad danger to the community.”
The prosecutor said, “He has extensive friends and family contacts out there. The company is still operating, still using Chinese contractors to conduct its business.”
Levine rebuffed allegations that Yu had extensive ties in China saying, “It’s disingenuous. It’s all shenanigans.” She noted that Yu doesn’t have a Chinese passport and has lived in the United States for most of his adult life.
Neff confirmed that Yu’s U.S. passport is in their possession.
Konnech first began supplying poll worker management software to Los Angeles County in 2019. In October of 2020, Yu’s company entered into a $2.9 million, five-year contract with the county. The contract required Konnech to keep the county’s data in the United States and allow access only to U.S.-based staff who are citizens or lawful permanent residents, according to the Los Angeles County District Attorney’s Office.
Despite these obligations, Konnech employees were sending personal identifying information of Los Angeles election workers to third-party software developers in China “who assisted in creating and fixing” Konnech’s software known as PollChief, according to a complaint California prosecutors filed on October 14.
In August, Luis Nabergoi, a Konnech project manager overseeing the Los Angeles contract, wrote in a Chinese-owned messaging app that any employees for Chinese contractors working on PollChief software would have “super administration” access to the client data, the complaint alleges.
The message also described the situation as a huge security issue, according to the complaint.
On October 4, the day of Yu’s arrest in Michigan, Nabergoi allegedly told employees in an internal email that the company was “moving to a new stage in the company maturity and we need to ensure the security, privacy and confidentiality,” according to the court filing. Nabergoi added, “To accomplish this, personal data would no longer be included in the fixing of Konnech’s PollChief software,” the complaint said.
Investigators have searched Yu’s Michigan home and two other locations, and are still examining evidence, aspokesperson for the county district attorney’s office told The Epoch Times.
The company before and after Yu’s arrest has repeatedly denied it has stored data in China and any ties to the Chinese Communist Party. It also brought a lawsuit against True the Vote, a Texas nonprofit that first alleged that they had evidence of Konnech’s data on Chinese servers.
Konnech has acknowledged that it had a subsidiary in China, which it said it closed last year. After Yu’s arrest, Konnech assured its customers that its data are in a data center in Lansing, Michigan.
“We have never hosted your data or system in servers outside of the U.S.,” it said in an October email to customers.
The company said in an earlier statement that the detention of Yu was wrongful.
“Any L.A. County poll worker data that Konnech may have possessed was provided to it by L.A. County, and therefore could not have been stolen as suggested,” Konnech said in a statement.
Fairfax County in Virginia and Detroit city in Michigan say they have severed ties with Konnech in light of the arrest. Virginia’s Prince William County said they have suspended their use of the PollChief software and erased data from Konnech’s server. Dekalb County in Georgia voted earlier this week to keep the contract, but said they will store data on a government-controlled server rather than Konnech’s, and monitor access control and logging 24/7 to protect poll worker data.
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