Eugene Yu, the 51-year-old CEO of the Michigan-based election software company Konnech, has been criminally charged again, this time for grand theft by embezzlement. Yu is said to have "fraudulently appropriated public funds" while a contractor for Los Angeles County.
The felony complaint filed in the Superior Court of State of California for the County of Los Angeles alleged that the "funds amounted to $2,645,000 plus the as yet undetermined value of the personal identifying information," which Konnech stored on servers in China.
Although the company previously claimed that all of its data was stored on servers in the United States, Los Angeles District Attorney George Gascón indicated that Konnech had "allegedly violated its contract by storing critical information that the workers provided on servers in China," where Yu lived until 1986.
On Friday, prosecutor Eric Neff suggested the crimes allegedly committed by Konnech under Yu constituted the "largest data breach in United States history," and urged that Yu be held in custody, granted he poses an "extensive flight risk" due to his "deep ties to China."
Despite Neff's protestation, Yu was released.
Yu will reappear in court in November to enter a plea. If convicted, he will likely serve time in a state prison.
Extra to the funds tied to the contracts Konnech had with various American municipalities and counties, Just the News reported that the software company also received $247,139 in funding from the Department of Defense.
The Department of Defense has not yet responded to requests for comment from TheBlaze concerning whether the DoD, which is reportedly working in conjunction with the NSA to "protect the security of the 2022 midterm elections from foreign actors," has been made aware of or is peripherally involved in the ongoing investigation into Konnech's alleged malfeasance.
Konnech also recently received funding to the tune of $306,000 from the Michigan Economic Development Corporation.
Concerning Konnech's securement of funds, Democrat Gov. Gretchen Whitmer said in December 2021 that "Konnech's growth is great news for our state, our families, and our economy."
Data theft and exposure to the communist Chinese regime
Konnech licenses a proprietary software called PollChief. This election worker management system was used in the last California election by Los Angeles County, where it has a five-year, $2.9 million contract.
PollChief requires election workers to submit personal identifying information. Konnech retains that information.
Fairfax Republicans indicated that Konnech may have had access to a wide range of American poll workers' identifying information, including their:
- mailing addresses
- phone numbers
- email addresses
- dates of birth
- party affiliations
- active/inactive status
Whiled Fairfax County did not store sensitive data such as banking information and social security numbers, other cities and counties may have.
According to the felony complaint filed on October 13, from 2019 through to this month, Eugene and other employees at Konnech were servicing Los Angeles County "using third-party contractors based in China."
Sensitive, identifying information of American election workers was sent to these third-party Chinese actors who allegedly had "superadministration" privileges for all American PollChief clients.
Luis Nabergoi, project manager for Konnech's contract with the County of Los Angeles, described the situation as a "huge security issue."
In a statement issued after Yu's arrest, Gascón said, "Data breaches are an ongoing threat to our digital way of life. 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."
Cancellations and double-downs
Since Yu's arrest, some municipalities and counties have taken steps to protect the data of their poll workers and to bolster election security. NPR's Miles Parks noted that, with the midterms weeks away, the decision to cut ties with Konnech must come quickly.
Detroit cancelled its $320,000 contract with Konnech last week.
The city reportedly relied upon the scandalized company, not just for sending mass letters, emails, and phone calls to polling locations but for various bespoke election-related solutions, including ballot "fast scanning" software and an app for Uninformed and Overseas Citizens Absentee Voting Act (UOCAVA) returned ballots.
Fairfax County, Virginia, cancelled its contract on October 5, citing the need for "an abundance of caution."
Two days later, Virginia's Prince William County announced they had suspended using PollChief and were erasing any data contained on their server.
Not all are keen to cut ties with Konnech.
On Monday, Georgia's DeKalb Board of Registration and Elections held a special meeting and voted 3-2 in favor of maintaining their contract with Konnech. The vote was decided along party lines, with only Republicans dissenting.
DeKalb GOP Chairwoman Marci McCarthy condemned the decision, suggesting that Democrats "would rather align with alleged criminals than put its' residents' safety first."
Although Minneapolis' Elections & Voter Services issued a statement on Oct. 7 claiming they took "these accusations seriously" and were looking into the impact on data related to poll workers, NPR reported that the city still plans to utilize Konnech's software this year.
Correction: This story has been updated to reflect that Fairfax Republicans had stated social security numbers and banking information were not stored in PollChief in Fairfax County, but that such sensitive personal information may have been stored by other cities or counties.