US man charged in $300 million China tech case

Washington, Oct 2 (SocialNews.XYZ) The owner of a California technology company has been arrested on federal charges of smuggling more than $300 million worth of export-controlled high-end computer servers containing US-made graphics processors to China, the Justice Department said.

Greg Lui, 38, also known as Yiu Kong Lui, of San Gabriel, California, was arrested on a three-count federal indictment alleging that servers containing graphics processing units, or GPUs, were routed through Malaysia and Singapore to evade US export controls.

The chips are used for advanced computing and artificial intelligence applications and are subject to US restrictions on exports to China because of their potential military applications.

Lui is expected to make his initial appearance and be arraigned Friday in federal court in Los Angeles.

He has been charged with conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling and conspiracy to commit money laundering.

“Protecting America’s national security means keeping our advanced Super Intelligence technology from being used to strengthen our adversaries’ military capabilities,” First Assistant US Attorney Bill Essayli said.

“This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China,” he said.

The indictment was returned by a federal grand jury on Sept. 29 and unsealed following Lui's arrest Thursday.

Prosecutors said Lui owns Earthmade Computer Inc., a technology company based in City of Industry, California.

From 2023 through 2024, Lui and alleged co-conspirators used Earthmade to purchase export-controlled equipment and send it to China without obtaining licences required by the US Commerce Department, according to the indictment.

Instead of shipping the servers directly to China, prosecutors allege the equipment was initially sent to countries including Malaysia and Singapore and then re-exported to China.

The government alleges Lui knew that the true end users were in China.

Prosecutors said Lui and his alleged co-conspirators provided false documentation to US manufacturers representing that the servers would be shipped to permissible end users and destinations that did not require export licences.

“The indictment unsealed today details alleged efforts to evade US export laws through false documents, staged dummy servers to mislead inspectors, and convoluted transshipment schemes, in order to obfuscate the true destination of restricted SI technology — China,” Assistant Attorney General for National Security John A. Eisenberg said.

From January through October 2024, Earthmade received more than $176 million from two Malaysia-based shipping companies as part of the alleged scheme, according to prosecutors.

The indictment describes one transaction in January 2024 in which Lui allegedly submitted an order to a US manufacturer for 27 servers worth about $7.6 million.

The servers were shipped from Los Angeles to Kuala Lumpur, Malaysia. Their packing list indicated that they contained export-controlled GPUs that could not be sent to China without a licence, prosecutors said.

In March 2024, an alleged co-conspirator emailed a Malaysian government official saying the 27 servers had been transshipped to a China-based buyer, according to the indictment.

The FBI alleged that Lui sold the Chinese government hundreds of millions of dollars worth of advanced American computing technology. That allegation has not been proven in court.

If convicted, Lui faces statutory maximum sentences of 20 years in prison on the export-control conspiracy charge, 20 years on the money-laundering conspiracy charge and 10 years on the smuggling charge.

Source: IANS