Election Firm Knew Data Had Been Sent to China, Prosecutors Say

When Eugene Yu’s small election software company signed a contract to help Los Angeles County organize poll workers for the 2020 election, he agreed to keep the workers’ personal data in the United States.

But the company, Konnech, transferred personal data on thousands of the election workers to developers in China who were writing and troubleshooting software, according to a court filing that Los Angeles County prosecutors made on Thursday.

The filing adds new details about the arrest last week of Mr. Yu, whose company has been the focus of groups challenging the validity of the 2020 presidential election. Some of those groups have accused the company of storing information about poll workers on servers in China. Before the arrest, the company repeatedly denied keeping data outside the United States, including in statements to The New York Times.

Los Angeles prosecutors initially accused Mr. Yu of embezzling public money by knowingly violating the terms of the company’s contract. Since searching Konnech’s offices and Mr. Yu’s home, the prosecutors have also accused him of conspiring with others to commit a crime, according to the new legal filing. It is rare for an executive to face criminal charges for potentially mishandling data. He is scheduled to be arraigned on Friday.

In the filing, prosecutors said a project manager at Konnech had sent an internal email early this month saying the company would no longer send personal data to Chinese contractors. “We need to ensure the security privacy and confidentially,” the email said.

In a separate message, sent in August, the project manager noted that the contractors had high-level access to all of the poll worker software used by its customers. He called it a “huge security issue.”

The documents did not specify whether others were being investigated or would be charged, and the district attorney’s office declined to comment.

Los Angeles prosecutors said last week that none of Mr. Yu’s or Konnech’s actions had altered election results and that they had seen no evidence of identity theft. They have not indicated any motive in their public statements.

The prosecutors said that the charges focused on the handling of personal information about poll workers, such as their names and phone numbers, and that the data did not relate to ballots or the voting process. Still, with the midterm elections just weeks away, several counties that use Konnech software said they were rushing to reassure voters that their elections were secure.

Mr. Yu’s lawyer did not immediately respond to a request for comment.

Konnech, which is based in Michigan, has about 20 employees in the United States and about 20 customers. It plays no role in the tabulation or counting of votes in American elections.

Nevertheless, some election deniers have targeted the company, saying they discovered the company’s data in China and suggesting that Konnech gave the Chinese government a back door to manipulate America’s election process. The New York Times published an article about those claims early last week, as a part of its coverage of misinformation and elections.

Los Angeles prosecutors arrested Mr. Yu the day after the article was published, raising questions about the truthfulness of statements that Mr. Yu made to The Times just days earlier, when he denied the accusations and said poll worker data had never been stored in China.

If convicted, Mr. Yu faces a maximum sentence of three years in prison for the charges of grand theft by embezzlement of public funds and conspiracy to commit a crime. He also faces an additional five years because the contract was valued at more than $500,000.

The district attorney’s office said it was sifting through a trove of documents seized in its search of Konnech’s offices and Mr. Yu’s home last week. If those files reveal similar crimes in other counties, prosecutors could hand off the case to federal investigators.

More than 20 attorneys general, district attorneys and election officials have contacted the district attorney’s office over the past week, they said.

Mark Kriger, one of Mr. Yu’s lawyers, said in a bond hearing last week that Mr. Yu had participated in two voluntary interviews several weeks ago with the Federal Bureau of Investigation. Mr. Yu told the agency that he was not aware of any data from Konnech being stored in China, the lawyer said at the hearing.

The F.B.I. agents were surprised to learn about Mr. Yu’s arrest, Mr. Kriger said at the hearing. A spokeswoman for the F.B.I. said she “wouldn’t be in the position to confirm or deny comments made by the attorney.”

Mr. Yu, 64 and a Chinese-born American citizen, co-founded Konnech in 2002 as a phone technology company. He turned it into an elections software company in the late 2000s.

In statements made to The New York Times before his arrest, Mr. Yu said that he had shuttered Konnech’s Chinese subsidiary in 2021 and that he no longer had employees there. Two people with knowledge of the company, who would speak only anonymously because of the legal proceedings, said it was known within Konnech that employees should avoid bringing up the use of Chinese contractors when talking to customers.

Attention on the company surged in August and September after a conference hosted by Catherine Engelbrecht, the founder of True the Vote, a nonprofit that claims to be searching for evidence of voter fraud, and Gregg Phillips, an election denier and longtime associate of the group.

The group claimed that their team had discovered and downloaded Konnech’s data from servers located in China.

Mr. Yu later sued the group for defamation, hacking and other charges, and hired a crisis management company. That case, based in Texas, is continuing.

The Los Angeles County district attorney’s office said its investigation began after Mr. Phillips had sent a tip to its public integrity division. When it announced the charges last week, the district attorney’s office told The New York Times in a statement that the group’s investigation had no input on the county’s investigation.

After Mr. Yu’s arrest, Konnech sent an identical letter to several customers claiming that they had “never hosted your data or system in servers outside of the United States.”

Fairfax County, Va., the City of Detroit, and Prince William County, Va., terminated their contracts with Konnech after Mr. Yu’s arrest.

Los Angeles County said it would continue using Konnech software to manage data on about 12,000 to 14,000 poll workers for the midterm elections.

Dekalb County in Georgia voted to keep its contract with Konnech, adding an amendment that the data would be stored on servers owned by Dekalb County instead of by Konnech.

“We’re one week out from early voting starting in Georgia and run the risk of our election operations going awry from a company that is going down in flames,” Marci McCarthy, the chairwoman for the county’s Republican Party, said in an interview after the vote.

“It’s not over,” she added.