American software biz CEO arrested for allegedly storing election data in China

Eugene Yu, CEO of Michigan-based software firm Konnech, has been arrested at the request of the Los Angeles County District Attorney George Gascón, as part of an investigation into the theft or mishandling of personal information.

Yu's company makes software called PollChief and has a five-year $2.9 million contract with the City of Los Angeles, which uses the code to manage and pay poll workers during elections.

According to the Los Angeles County District Attorney’s Office (LACDAO), Yu was arrested after investigations allegedly determined that personal information submitted to PollChief was stored on servers in the People's Republic of China, in contravention of contractual requirements.

The Register asked the LACDAO whether it is alleging that any of the data stored in China was actually accessed by third-parties or made available to them and whether any poll workers have reported abuse of their personal information. We received acknowledgement of our inquiry but have yet to hear back.

Gascón suggests the alleged contractual violation amounts to a data security breach.

"Data breaches are an ongoing threat to our digital way of life," he said in a statement. "When we entrust a company to hold our confidential data, they must be willing and able to protect our personal identifying information from theft. Otherwise, we are all victims."

According to Gascón, the investigation is only concerned with election workers' personal identifying information and not election fraud.

"In this case, the alleged conduct had no impact on the tabulation of votes and did not alter election results," he said. "But security in all aspects of any election is essential so that we all have full faith in the integrity of the election process."

Konnech did not immediately respond to a request for comment.

Not the only legal problems for Konnech

Konnech last month sued [PDF] True the Vote, a Texas-based nonprofit and supporter of 2020 election denial, its founder Catherine Engelbrecht, and group member Gregg Phillips, for allegedly defamatory racist and xenophobic attacks on Konnech and Yu that erroneously characterize the company, its founder, and its employees as Chinese government operatives.

"The truth is that Konnech is a US company founded and operated by a US citizen who has no affiliation with the Chinese Communist Party whatsoever," the complaint says. "Konnech obtains its contracts through transparent public government bidding processes, and has never engaged in bribery or any other criminal activity of any sort. All of Konnech’s US customer data is secured and stored exclusively on protected computers located within the United States."

The Michigan-based company described True the Vote as conspiracy profiteers who are in the business of capitalizing on claims that the 2020 Presidential election was fraudulent. At an invitation-only event in August, the complaint says, True the Vote made false accusations about Konnech and claimed "that they have obtained financial and other sensitive personal data of 1.8 million US poll workers – including social security numbers, phone numbers, email addresses, and banking information – from Konnech’s protected computers."

The developer points out that it makes poll worker management software and does not have anything to do with the counting of votes. It further says it has never managed poll worker data for even a small percentage of that supposed worker total and that the only way True the Vote could have obtained any of its data would be if the organization had illegally hacked its computers – also one of the charges in the lawsuit against the group.

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The company's complaint cites a podcast in which Phillips describes hacking Konnech's servers and downloading company data. That account ended up supporting the Temporary Restraining Order (TRO) [PDF] against the defendants from the Texas court hearing the defamation and hacking claim.

In a court filing [PDF] last week, Konnech accused the defendants of flouting the TRO by failing to identify who hacked its systems, how its systems were accessed, and who has been given company data. The defendants have evidently provided some sort of information under seal to the judge but have not shared it with Konnech, per the TRO.

The filing accuses the defendants of justifying their TRO non-compliance with the claim that "revealing the identity of the person that allegedly stole Konnech’s data has 'significant national security and law enforcement implications…'"

Konnech argues there's no basis for that assertion since no one has ever demonstrated that the names of those involved in hacking the company or the information obtained have been classified by the US government.

True the Vote has also been sued twice, one at the federal level and once at the state level, by Republican donor Frederic Eshelman, who sought to recover his $2.5 million donation to the group to investigate election fraud.

The federal suit was subsequently withdrawn and the state suit was dismissed for lack of standing – allegations of non-profit fraud are a matter for the Texas Attorney General, said to have close ties to the group.

In a statement published to its website, True the Vote said Konnech has been trying to silence the organization through litigation, and the group's ability to speak has been constrained by the TRO.

"Today Konnech CEO Eugene Yu was arrested based on alleged evidence of the very activities he and his organization attempted to suppress," the group said. "Konnech was assisted by many reporters who unblinkingly accepted their now discredited claims as fact, and simply repeated them."

True the Vote did not identify which reporters it is referring to, nor did it clarify which claims by Konnech have been discredited. ®