Businesses that ship or document high-value hardware may want to keep a close eye on both the paperwork that names an end user and the money that moves after a shipment leaves the dock. Federal prosecutors have charged Greg Lui, 38, of San Gabriel, California, with smuggling more than $300 million worth of export-controlled computer servers containing AI graphics processors to China, the Justice Department said. The indictment describes a scheme to route AI servers to China through Malaysia and Singapore, using false documentation to clear U.S. licensing rules.
Lui, also known as "Yiu Kong Lui," was arrested and was expected to make his initial appearance and be arraigned that afternoon, the Justice Department said. He owns Earthmade Computer Inc., a City of Industry-based technology company. An indictment is only an allegation, and he is presumed innocent until proven guilty beyond a reasonable doubt.
What the indictment alleges
A three-count federal indictment was returned on September 29. The charges are one count of conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, one count of outbound smuggling, and one count of conspiracy to commit money laundering, according to the Justice Department.
From 2023 to 2024, prosecutors say, Lui and co-conspirators used Earthmade Computer to buy and send export-controlled high-end servers to China without the licenses the U.S. Department of Commerce requires. The servers contained U.S.-manufactured graphics processing units used in what federal filings describe as Super Intelligence, or SI, applications, the term the current administration uses for advanced AI. The case was investigated by the Commerce Department’s Bureau of Industry and Security Office of Export Enforcement, the Defense Criminal Investigative Service, and the FBI.
Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence and Espionage Division said the bureau’s investigation revealed that Lui "allegedly sold the Chinese government hundreds of millions of dollars’ worth of American Super Intelligence technology, in clear violation of U.S. export control laws," according to the Justice Department.
How the transshipment scheme worked
The servers were first shipped to countries such as Malaysia and Singapore, where no export license is required, and then re-exported to China, prosecutors say. To get the hardware out of the United States, the defendants allegedly provided false documentation to U.S.-based manufacturers, misrepresenting the true end users and destinations so the orders cleared compliance review. Once the servers reached Southeast Asia, co-conspirators reshipped them to buyers in China.
The indictment lists specific transactions. In January 2024, Lui emailed a conspirator indicating that a Malaysian transshipment company wanted to buy 70 servers with export-restricted GPUs, and attached an export compliance form showing the Malaysian company was aware of U.S. export rules on those servers. Later that month, he submitted a purchase order to a U.S. manufacturer for 27 of those servers for approximately $7,614,000, and the shipment went from Los Angeles to Kuala Lumpur. The packing list stated that the shipment held 27 servers with GPUs that were export controlled and could not be sent to China without a license. In March 2024, a co-conspirator emailed a Malaysian government official confirming that those 27 servers had been transshipped to a China-based buyer.
Following the money
From January 2024 to October 2024, Earthmade Computer received more than $176 million from two Malaysia-based shipment companies as part of the scheme, according to the indictment. The Justice Department said an assistant U.S. attorney is handling the civil and criminal forfeitures of the seized property.
Penalties and where the case stands
If convicted of all charges, Lui could face a maximum of 20 years in prison on the export-control conspiracy count, 20 years on the money laundering count, and 10 years on the smuggling count. First Assistant U.S. Attorney Bill Essayli for the Central District of California said, "We will aggressively prosecute those who put our national security at risk for profit." The indictment states that the high-end GPUs could make significant contributions to the military potential of other nations, and that U.S. regulations bar their export to China to protect national security and foreign policy interests.
A wider crackdown on chip smuggling
The U.S. has long blocked China from buying top-end AI chips, such as those made by Nvidia, and smuggling has become a growing concern for chipmakers and governments. The Justice Department did not name the maker of the chips in this case. Enforcement is running on more than one front: Taiwan has indicted an Nvidia manager over chips shipped to China.
What this means for you
The points below apply to any business that handles controlled hardware or the records tied to it.
- In this case, the packing list for a shipment indicated that it contained 27 servers with GPUs that were export controlled and could not be sent to China without a license, and an export compliance form indicated that a Malaysian company was aware of U.S. export laws that restricted those servers, according to the Justice Department.
- Malaysia and Singapore required no license, and the items were then illegally re-exported to China, prosecutors say.
- End-user claims get tested. The indictment alleges the manufacturers were told the hardware was going to permissible end users and destinations that did not match where it actually went.
- Payments are traced alongside shipments. From January 2024 to October 2024, Earthmade Computer received more than $176 million from two Malaysia-based shipment companies as part of the scheme, according to the indictment.
FAQ
Who was charged in the AI server smuggling case?
Greg Lui, 38, of San Gabriel, California, also known as Yiu Kong Lui, who owns Earthmade Computer Inc., a City of Industry-based technology company. He was arrested on a three-count federal indictment returned on September 29, the Justice Department said.
How much were the smuggled AI servers worth?
Prosecutors say the export-controlled servers containing high-end U.S.-made GPUs were worth more than $300 million. Earthmade Computer received more than $176 million from two Malaysia-based shipment companies between January 2024 and October 2024.
How did the smuggling scheme allegedly work?
The defendants allegedly used false paperwork to ship the servers from the United States to Malaysia and Singapore, where no export license is required, then re-exported the hardware to buyers in China. One order cited in the indictment was for 27 servers at about $7,614,000, shipped from Los Angeles to Kuala Lumpur in January 2024.