U.S. judge disqualifies Huawei lawyer from fraud, sanctions case

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By Karen Freifeld

Dec 3 (Reuters) - A U.S. judge on Tuesday disqualified James
Cole, a Washington lawyer for China's Huawei, from defending the
telecommunications equipment maker against charges of bank fraud
and sanctions violations.

Judge Ann Donnelly of U.S. District Court in Brooklyn, New
York, issued her order after federal prosecutors argued Cole's
prior work at the Department of Justice created conflicts of
interest.

Cole served as the No. 2 official at the Justice Department
between 2011 and 2015.

"There is a ‘substantial risk’ that Cole could use
‘confidential factual information’ obtained while serving as DAG
to ‘materially advance’ Huawei’s current defense strategy,” the
U.S. prosecutors said in a May court filing.

Cole, a partner at the law firm Sidley Austin, claimed he
had no recollection of matters referenced as the basis for his
disqualification. He did not immediately respond to a request
for comment on the judge's decision.

Huawei also did not immediately respond to a request for
comment. It had argued that the Justice Department sought to
strip the company of its choice of counsel without fully
explaining why.

In the May court filing, the government argued that, as
deputy attorney general, Cole "personally supervised and
participated in aspects of" a related investigation, but said
the details were classified.

A redacted version of Donnelly's decision to disqualify
Cole will be made public by Jan. 10, 2020, the judge said in her
order.

The criminal case against Huawei accuses the company of
conspiring to defraud HSBC Holdings Plc and other banks
by misrepresenting its relationship with a company that operated
in Iran.

Prosecutors said Huawei put the banks at risk of penalties
for processing transactions that violated U.S. sanctions.

Cole entered a not guilty plea on behalf of Huawei and its
U.S. subsidiary in March.

The company's chief financial officer, Meng Wanzhou,
daughter of Huawei's founder, is fighting extradition from
Canada, where she was arrested last December for her role in the
alleged fraud. Meng has said she is innocent.

Michael Levy, another lawyer for the company, argued in
court in September that the effort to stop Cole from
representing Huawei was another tactical step in a broader U.S.
government campaign against the Chinese company.

(Additional reporting by Jonathan Stempel)