U.S. Department of Justice States California Company Representative Charged With Smuggling More Than $300 Million in Servers Equipped With Nvidia GPUs to China

Photo: The Frontier supercomputer at Oak Ridge National Laboratory (ORNL). This is not a photo of the servers alleged in this case to have been smuggled. Photo source: ORNL official Flickr, Oak Ridge National Laboratory, CC BY 2.0.

The representative of a California computer company was arrested on charges alleging that he diverted to China, via Malaysia and Singapore, more than $300 million worth of high-performance servers containing U.S.-made graphics processing units (GPU). According to the U.S. Department of Justice, he submitted to a manufacturer documents falsely stating the end user.

The Department of Justice stated in a press release on October 1, 2026, Eastern Time in the United States (October 2, Korea time), that Greg Lui (38, Hong Kong-style name Yiu Kong Lui), who lives in San Gabriel, was arrested on a federal grand jury indictment of 3 counts. Lui is the owner of 'Earthmade Computer Inc. (Earthmade Computer Inc.)' in City of Industry. The grand jury indictment is dated September 29.

Bill Essayli, First Assistant U.S. Attorney for the Central District of California, stated on his own X account that Lui was "arrested on charges alleging that he smuggled to China more than $300 million worth of export-controlled computer servers containing U.S.-made GPUs."

https://x.com/USAttyEssayli/status/2105757882994352171

What Changes

This case is significant because the Department of Justice released, as a criminal case in which the amount and route were specified, charges alleging that the U.S. Department of Commerce's advanced semiconductor export controls were breached through a 'third-country detour.' The core of these charges is not the export itself but re-export without a license. According to the Department of Justice, a Department of Commerce license is not needed to send to Malaysia and Singapore, but a license is needed to send the same equipment to China.

The Department of Justice press release rendered artificial intelligence (AI) as 'SI (Super Intelligence).' First Assistant U.S.

The Route Drawn by the Indictment

The detailed model names of the GPUs and the purchase and transport scenes are content read from a copy of the indictment posted by the press. Because the original indictment posted on the court electronic access system (PACER) could not be directly accessed, core matters such as the case number, the defendant, the offense names, and the amount of $300 million are checked against the Department of Justice press release, and details appearing only in the copy are stated only as the prosecution's indictment allegations. This is in order not to mix and write parts not directly seen in the original with facts confirmed by the press release.

According to the Department of Justice press release and the indictment, Lui and co-conspirators bought export-controlled items through Earthmade from 2023 to 2024.

• Purchase: The indictment stated that Lui ordered from 3 U.S. manufacturers (in the indictment, 'U.S. Manufacturers 1, 2, 3') servers containing Nvidia (Nvidia) A100 and H100 GPUs, and GeForce RTX 4090 and 5090 GPUs. The prosecution's allegation is that at that time he falsely stated that the end user was in a country that does not require an export license.
• Transport: The Department of Justice stated that Lui used freight forwarding companies to send the servers to Malaysia and Singapore, and after arrival there, together with co-conspirators, loaded and sent them again to China.
• Funds: The Department of Justice stated that from January to October 2024, Earthmade received more than $176 million from 2 Malaysia-based transport companies.

There is also a specific scene released by the Department of Justice. In January 2024, Lui sent an email to a co-conspirator stating that a Malaysian transshipment company wanted to buy 70 servers containing export-restricted GPUs. An export compliance document attached to this email contained content stating that this Malaysian company knew the U.S. laws restricting the sale, transshipment, and export of the servers concerned. In the same month, Lui ordered 27 of these from a U.S. manufacturer for about $7.614 million, and the servers were transported from Los Angeles to Kuala Lumpur. The Department of Justice stated that in March 2024, 1 co-conspirator sent an email to a Malaysian government official stating that "the 27 units were transshipped to a Chinese buyer."

The FBI Los Angeles Field Office also announced the fact of the arrest and indictment on its X account.

https://x.com/FBILosAngeles/status/2105776686016925849

What the Authorities Said

John Eisenberg, Assistant Attorney General for National Security at the Department of Justice, said, "SI (AI) is the technology that defines this era," and that "the National Security Division will protect America's advantage in the chips that power this technology from unlawful diversion by economic and military adversaries." The Department of Justice National Security Division also posted this statement on its X account.

https://x.com/DOJNatSec/status/2105776178816594363

Roman Rozhavsky, Assistant Director of the FBI's Counterintelligence and Espionage Division, said, "the FBI investigation revealed charges alleging that Lui sold hundreds of millions of dollars worth of U.S. SI technology to the Chinese government." The expression of the purchasing subject as the 'Chinese government' is a statement by the FBI Assistant Director, and the main text of the Department of Justice press release stated the end users as those "in China."

John E. Helsing (John E. Helsing), Special Agent in Charge of the Western Field Office of the Defense Criminal Investigative Service (DCIS), Office of Inspector General, Department of Defense, said, "these technologies provide a core advantage to the U.S. military." David A. Peters (David A. Peters), Assistant Secretary for Export Enforcement at the Department of Commerce's Bureau of Industry and Security (BIS), said, "we will use all lawful means to protect national security and hold violators accountable."

The FBI headquarters official account also shared the Los Angeles Field Office press release.

https://x.com/FBI/status/2105810106289893651

Legal Character and Sentences

This case is a criminal indictment for violation of the Department of Commerce's Export Administration Regulations (EAR). It is a Department of Justice indictment (charges), and is a different measure from a Treasury Department sanctions designation or listing on the Department of Commerce Entity List (export control list). The Department of Justice stated that if convicted on all counts, Lui could face up to 20 years in prison for the conspiracy charge, up to 20 years for the money laundering conspiracy charge, and up to 10 years for the smuggling charge. All are statutory maximums, and the actual sentence is determined by a judge. The Department of Justice stated that prosecutors of the U.S. Attorney's Office for the Central District of California are in charge of civil and criminal forfeiture of seized property.

The 'U.S. Manufacturers 1, 2, 3' and freight forwarding companies appearing in the indictment have not had their real names released, and the Department of Justice did not specify them as defendants. Nvidia appears by name in the indictment as a chip manufacturer, but is not a target of the charges.

The Course by Which the Export Controls Were Created: The 2022 Rule and the 2023 Supplement

The period of the charges in the Lui case, from 2023 to 2024, overlaps with the immediate aftermath of when the Department of Commerce's Bureau of Industry and Security (BIS) newly laid down advanced computing export controls targeting China. BIS announced on October 7, 2022, controls on advanced computing semiconductor chips, supercomputer end uses, and semiconductor manufacturing items. BIS stated that these controls were to restrict China's ability to purchase and manufacture high-end chips, and cited as grounds concerns that China could use the items concerned for production of advanced military systems including weapons of mass destruction, improvement of the speed and accuracy of military decision-making, planning, and logistics, and autonomous military systems and human rights abuses. BIS stated that the rule was implemented in stages, with the semiconductor manufacturing item restrictions taking effect at the time of announcement on October 7, 2022, the restrictions on support by U.S. persons for specific semiconductor manufacturing facilities in China on October 12, and the advanced computing and supercomputer controls on October 21, respectively. As legal authority, the Export Control Reform Act of 2018 (ECRA) and its implementing regulations, the Export Administration Regulations (EAR), were specified.

In public briefing materials held by BIS to explain the 2022 rule, there remains a question-and-answer stating that Nvidia and AMD received notification regarding advanced integrated circuits and issued public statements that A100, H100, MI250, and MI250X were affected. BIS maintains a guidance page bundling the October 7, 2022 rule and the October 17, 2023 supplementary rule. However, which Export Control Classification Number (ECCN) of BIS the Lui indictment applied is not stated in the main text of the Department of Justice press release. The confirmable scope is up to the distinction stated by the Department of Justice, that is, that a Department of Commerce license was needed to send to China and that that license was not needed for shipments to Malaysia and Singapore.

That the design of the controls did not block only 'direct shipments to China' is also revealed in the BIS explanation. The 2022 rule added advanced computing chips themselves and computer products containing those chips to the Commerce Control List (CCL), newly established license requirements for supercomputer or semiconductor development and production end uses in China, and broadened the scope of EAR application to some advanced computing items produced abroad. The structure the prosecution takes issue with in the Lui case is that, under this system, the end user and final destination were falsely stated to make it appear to be a transaction not requiring a license, and then in a third country it was diverted again to China. Arrival in a transit country itself does not immediately mean illegality, and the Department of Justice also places the axis of illegality on 'unlicensed re-export to China' and false documents.

BIS, in the October 17, 2023 supplementary rule, made anti-circumvention devices more specific. According to BIS guidance, the new rule, while maintaining the license requirements the 2022 rule imposed on China, Hong Kong, and Macau, removed 'interconnect bandwidth' from the indicators dividing restricted chips and introduced a new 'performance density' criterion in addition to the existing performance criteria. For some lower-performance chips, it also newly created a 'Notified Advanced Computing (NAC)' license exception under which, after notification, the U.S. government determines within 25 days whether a license is needed. On the anti-circumvention side, it was stated to require a license for exports anywhere in the world for companies whose headquarters are in Macau or a U.S. arms-embargoed destination, that is, China, or whose ultimate parent company is there, and license requirements were also added for exports to more than 40 countries deemed to have a high risk of diversion to China. BIS explains that this is a design to block routes to secure controlled chips through foreign subsidiaries or third-country resale.

In that the indictment period of the Lui case is from 2023 to 2024, this supplementary rule also touches it in time. However, the Department of Justice press release does not state which provision of this supplementary rule was applied to Lui's individual transactions, or by what figure the servers at issue exceeded the performance density criterion. That the direction of the criterion changes released by BIS and the transaction structure indicted by the Department of Justice share the same awareness of the problem of 'blocking third-country detours' can be confirmed, but the technical figures that divided the license necessity of individual transactions cannot be determined within the scope in which the original indictment could not be directly confirmed.

In the same 2023 supplementary measure, additions to the Entity List (Entity List) were also included. BIS stated that it placed on the list a total of 13 entities, including two Chinese entities involved in advanced computing chip development and their subsidiaries, and applied together restrictions on items made abroad with U.S. technology. On the semiconductor manufacturing items rule side, the scope of license requirements was broadened beyond China and Macau to 21 other countries where the United States maintains an arms embargo. These measures are administrative controls separate from a designation or indictment of Lui as an individual. A criminal indictment and an administrative list listing must not be combined and read as the same disposition.

The 'Dummy Servers' Allegation Stated Only in the Press Release of the U.S. Attorney's Office for the Central District of California

In a press release from the U.S. Attorney's Office for the Central District of California issued on the same day, there is one more sentence not in the main text of the Department of Justice Office of Public Affairs press release. Assistant Attorney General Eisenberg said in the U.S. Attorney's Office press release that the indictment details efforts to hide China, the true destination of the restricted technology, such as putting forward staged dummy servers (dummy servers staged for inspection) to deceive inspectors and devising complex transshipment schemes. Attorney's Office press release, not as a fact directly confirmed from the original indictment. This is in order not to mix and write facts confirmed by the Department of Justice Office of Public Affairs press release with allegations found only in the U.S. Attorney's Office press release.

The notation of the investigative subjects also has a slight difference between the two documents. The Department of Justice Office of Public Affairs stated that the investigation was handled by the Department of Commerce BIS Office of Export Enforcement, the Defense Criminal Investigative Service (DCIS), and the FBI. The U.S. Attorney's Office for the Central District of California specified the FBI subject as the 'FBI Counterintelligence and Espionage Division.' The prosecutors in charge are consistent in the two documents. Assistant U.S. Attorneys Colin S. Scott and Joseph S. Gershman of the U.S. Attorney's Office for the Central District of California and Trial Attorney Eli Roth of the Counterintelligence and Export Control Section of the Department of Justice National Security Division handle it, and Assistant U.S. Attorney Alexander Soo, in charge of asset forfeiture and recovery, is in charge of civil and criminal forfeiture of seized property. Supplementing by real-name standard the passage stated in the front part of the body only as 'in charge of forfeiture of seized property,' it is as follows.

The Positions of China and Lui's Side

The Department of Justice press release does not contain a reaction from the Chinese government or a position from Lui's defense counsel. That is also why an indictment does not immediately mean guilt.

Next Procedures

Regarding the first appearance schedule, the wording of the two Department of Justice documents diverges. The Department of Justice Office of Public Affairs press release stated that Lui was scheduled to make his initial appearance and undergo arraignment proceedings at the Los Angeles federal court on the afternoon of October 1, the day of his arrest, but a press release from the U.S. Attorney's Office for the Central District of California on the same date stated the initial appearance and arraignment as Friday. Because October 1, 2026 is a Thursday, if following the U.S. Attorney's Office wording, it becomes October 2, the next day. The investigation was handled together by the Department of Commerce BIS Office of Export Enforcement, the Defense Criminal Investigative Service, and the FBI, and the prosecution is handled by the U.S. Attorney's Office for the Central District of California and the Counterintelligence and Export Control Section of the Department of Justice National Security Division. The next gateway is Lui's plea of guilty or not guilty and confirmation of the trial schedule.

Sources

U.S. Department of Justice Office of Public Affairs press release, October 1, 2026: https://www.justice.gov/opa/pr/california-man-arrested-smuggling-more-300-million-export-controlled-computer-servers-china U.S. Attorney's Office for the Central District of California press release, October 1, 2026: https://www.justice.gov/usao-cdca/pr/san-gabriel-man-arrested-federal-charges-alleging-he-smuggled-china-more-300-million U.S. Department of Commerce Bureau of Industry and Security (BIS) press release, October 7, 2022 (China advanced computing and semiconductor export controls): https://www.bis.gov/press-release/commerce-implements-new-export-controls-advanced-computing-semiconductor-manufacturing-items-peoples U.S. Department of Commerce Bureau of Industry and Security (BIS), advanced computing export controls guidance page (2022 and 2023 rules): https://www.bis.gov/press-release/bis-updated-public-information-page-export-controls-imposed-advanced-computing-semiconductor