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Malden firm suing computer giant HP over China deal gone wrong

Three salespeople ended up in a Beijing prison over a counterfeiting complaint

Alex Styller (left), president and CEO of ICT Asset Recovery, posed for a portrait with ICT employee Jade Cheng outside of the Lowell warehouse where they store some of their computer equipment.Erin Clark/Globe Staff

As he recounted his seven-month ordeal in a Chinese prison, Jade Cheng’s voice quivered and his eyes burned with anger.

At the Haidian District Detention Center, a rough prison outside Beijing, the electronics sales executive was held in a 300-square-foot cell with dozens of other people, standing or squatting for hours a day and sleeping on the grimy tile floor next to a toilet.

Cheng was not allowed to have contact with anyone outside the detention center beyond his lawyer, not even his wife.

“It was a hell for you to suffer,” he said in an interview with the Globe, his first with local media.


Cheng, 40, now lives in Manchester, N.H. He said he still has nightmares and his health suffers from his time spent locked up from December 2012 through July 2013 after an international business deal gone bad. He and two of his colleagues, Jason Yuyi and Cathy Yu, were ultimately released and no charges were ever brought against them.

Now the story of how and why they ended up in detention is at the center of a lawsuit Cheng, his two co-workers, their families, and his Malden-based employer, Integrated Communications & Technologies, have filed in federal court in Boston against Hewlett-Packard, the sprawling electronics giant headquartered in California.

In the suit, initiated in 2015 and moving forward this summer, they allege that HP defrauded them by selling them damaged and counterfeit networking gear, that the company was responsible for their subsequent detentions, and that it caused them substantial pain and suffering. They’re seeking unspecified monetary damages.

The origins of the case go back 10 years, to when ICT agreed to buy used networking equipment from an HP subsidiary in order to resell it. A different HP subsidiary, based in China, then complained to authorities that ICT was selling gear with counterfeit labels, and ICT’s three salespeople were detained as part of the investigation.


Alex Styller (left) and Jade Cheng inside the warehouse where they store some of their computer equipment in Lowell. Erin Clark/Globe Staff

The Chinese police “took it very, very seriously,” said Alex Styller, a Russian emigre who started ICT in 1993 and is also a party to the lawsuit. “They started investigating everything. ... Seven months later, they released Jade, Jason, and Cathy and gave them no-crime letters. They found nothing.”

HP, for its part, denies it is responsible for any legal wrongdoing.

“We categorically reject these allegations and will vigorously defend ourselves in court,” Hewlett Packard Enterprise Co., the half of the company that was involved with ICT, said in a statement to the Globe. The company’s lawyers have made a host of arguments, including that ICT was selling counterfeit gear obtained from other sources and that Chinese authorities, not anyone at HP, were responsible for the lengthy detentions.

Styller and Cheng said all of the equipment in question was from the HP deal and that HP could have acted quickly and decisively to shut down the investigation by revealing it was the seller. “What they say is completely debunked,” Styller said.

Yet all sides agree that in 2011, HP’s financing unit in Andover offered to sell ICT some networking gear that had been leased originally for the Commonwealth Games in India. The routers and other hardware had been made by H3C, at the time a wholly owned Chinese subsidiary of HP that the company had acquired when it bought 3Com in 2010.

Styller had Cheng, ICT’s Asia Pacific director, and his team check with potential Chinese customers about how much the gear might be worth and agreed to pay HP $1 million plus a share of any proceeds over that amount. After an initial payment of $250,000, a portion of the equipment was shipped from India to China.


That’s when the trouble began. ICT said HP represented that the gear was lightly used and in good condition. But what Cheng found when he inspected the hardware after it arrived in China was damaged, dirty, and covered with strange labels. As Styller complained to his HP contacts, Cheng still tried to move the merchandise, though at heavily discounted prices.

The sales came to the attention of H3C in China, which regularly policed the market for counterfeit goods. After inspecting a few of the items ICT was selling, H3C filed a complaint with the Ministry of Public Security alleging that labels and stickers on the equipment were fakes and that the sale of counterfeit equipment could pose a security threat to China.

Cheng, who worked from the city of Rushan, China, had no idea the complaint had been filed when, on a December morning in 2012, he suddenly was unable to contact his two junior salespeople who were based in Beijing.

It wasn’t until the next day that the police called to say that they had detained the two at the Haidian center.

“I said I don’t believe it,” Cheng recalled. “There must be a mistake, we got the goods from HP, the mother company of H3C.”


Believing he could quickly clear up the situation, Cheng gathered documents about the deal and traveled by bus for nine hours to speak with the authorities in Beijing. His wife, who is Brazilian and speaks English and Portuguese, stayed with his parents, who speak only Chinese. His wife worried for his safety, but he reassured her that he would free his two colleagues. “I will come back to you very soon,” he told them as he departed.

“If I didn’t go, who would get our people out?” Cheng recounted. “I didn’t believe I would be arrested. I didn’t prepare myself. I trusted HP made a mistake. I trusted my documents were enough.”

But when the police reached out to HP’s China headquarters in Beijing to check Cheng’s story, the HP subsidiary denied the validity of the sales contract, Cheng said. A police officer screamed that he was a liar, and he was taken into custody.

Cheng was stripped naked for a search, X-rayed and fingerprinted, and shoved into a freezing shower. After midnight, he was placed in a crowded cell with about 45 other men, where he would remain for most of the next few weeks.

As the newest entrant, he was assigned to sleep on the floor next to the toilet. A typical breakfast was a few grains of rice and pieces of radish in foul-smelling water. Much of the day was spent squatting in place on wooden boards in the cell. Sometimes a window was opened, letting in icy blasts of winter air. Nightly inspections by the guards were followed by a freezing shower.


Cheng was reassigned to several other cells during his detention, but the conditions never improved. Aside from a few meetings with his lawyer, he was allowed no visitors and received only a handful of letters from his family.

Back in the United States, Styller was distraught that his employees had been locked up and befuddled at how the HP deal had been subject to attack by another unit of HP.

“I have no idea how China operates,” Styller said. “I have no connections there, I have no friends. I don’t know what to do.”

Reaching out to his contacts in Andover, Styller was eventually put in touch with an HP lawyer in Australia who promised to straighten out the situation.

What happened next is the subject of significant disagreement. According to Styller’s suit, HP’s lawyer promised to help free ICT’s people and explain that HP had sold the hardware in question. But in a letter to the Chinese authorities, HP did not take responsibility for supplying the gear.

In HP’s version of events, its financial services division and even its US headquarters did not have control over the complaint made by H3C. And its letter to the police reflected the company’s honest lack of knowledge about the gear in ICT’s possession, its lawyers said.

Chinese prosecutors eventually dug into the documents sent by ICT while Cheng was imprisoned. Cheng, Yuyi, and Yu, who weren’t allowed to see each other in the detention center, were interviewed by the prosecutors separately in July 2013. After lunch on July 18, the three learned that the prosecutors’ office was allowing them out on bail.

“There were no words to describe how happy I felt when I stepped out from the gate of the detention center,” Cheng wrote in a 2017 affidavit.

A year later, the bail expired with no charges brought. In 2016, Cheng and his wife moved to New Hampshire and he rejoined ICT.

The company is a fraction of its former size, with just three employees and one warehouse, down from 50 employees and three warehouses before the HP mess, Styller said.

The legal case has been grinding forward for several years before federal district judge Leo Sorokin. In July, HP filed a motion to have the case dismissed, arguing there is no proof it supplied any counterfeit gear to ICT and that it could not control the Chinese police.

But before deciding that motion, Sorokin on Aug. 18 ordered the parties to try mediation. An alternative dispute resolution hearing, which will be closed to the public, is scheduled for Oct. 22. There’s no guarantee the mediation will succeed. If it does not and Sorokin does not dismiss the charges, the case is expected to go to trial in February 2022.

Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.