US Charges California Business Owner over Alleged $300m China AI Server Smuggling Scheme
Updated: 54 minutes ago
LOS ANGELES/WASHINGTON, 3 October 2026
United States federal prosecutors have charged and arrested a California technology business owner over an alleged scheme to route more than $300 million in export-controlled artificial-intelligence servers to China through Malaysia and Singapore. A 22-page indictment filed on 29 September charges Greg Lui, also known as Yiu Kong Lui, with conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering. He was arrested on 1 October. The allegations, reported afresh by several outlets on 2 and 3 October, have not been proved at trial.US Department of Justice; federal indictment; South China Morning Post
The Justice Department identifies the 38-year-old Lui as the owner of Earthmade Computer Inc., based in the City of Industry, California. The indictment alleges that the arrangement began no later than October 2023 and continued until at least 12 August 2026. Prosecutors say Lui and several unindicted co-conspirators obtained servers containing Nvidia graphics processing units from US manufacturers, declared compliant end users in Malaysia or Singapore, and then had the equipment re-exported to China. Lui is presumed innocent, and the government must prove every element of each offence beyond reasonable doubt.Federal indictment; US Department of Justice
Companies and routing described in the indictment
The indictment describes Earthmade as a closely held company established in November 2023 and says Coindigger did business as Earthmade. A further company, Topmost Corp, was formed in February 2024. It does not publicly name the US manufacturers, freight forwarders, two Malaysian transshipment companies or ultimate Chinese purchaser, referring to them instead by numbers or descriptions. The purchaser is identified only as a “Chinese industrial company” based in Hangzhou.Federal indictment, pp. 2–3
Prosecutors say the servers contained Nvidia A100, H100, PNY GeForce RTX 4090 or GeForce RTX 5090 GPUs, listed in the indictment under export-control classification number 4A090.a; some other relevant items were classified under 5A002.z or 5A992.z. The document says a US Commerce Department licence was required to export or re-export those items to China during the relevant period, and that neither Lui nor Earthmade applied for or obtained one. It also notes that Hong Kong is generally treated as part of China for the purposes of the US Export Administration Regulations.Federal indictment, pp. 4–8
This does not mean that every Nvidia chip, every server or every sale to China is prohibited. US controls depend on technical specifications, destination, end user and end use, and the rules change over time. The questions in this case are whether the particular goods and transactions identified by prosecutors required licences at the relevant dates, and whether the defendant knowingly joined an effort to evade those requirements. The Trump administration’s earlier relaxation of some chip sales to China does not by itself alter the classifications and licensing requirements alleged in the indictment.US Commerce Department rule summary; Los Angeles Times
Transactions, flights and financial records
The indictment says Earthmade received more than $80 million and $96 million respectively from two Malaysian companies between January and October 2024, a total exceeding $176 million. In return, prosecutors allege, Lui introduced those companies to US manufacturers and brokered sales of nearly $300 million in controlled servers. These figures come from the prosecution’s account of banking, purchasing and shipping records. They have not yet been tested by the defence and are not judicial findings of criminal proceeds.Federal indictment, pp. 8–9; US Department of Justice
One transaction involved 27 servers containing H100 GPUs. Prosecutors say Lui submitted an order worth approximately $7.614 million to a US manufacturer on 30 January 2024 and arranged for the goods to travel from Los Angeles County to Kuala Lumpur the following day. On 12 March, an alleged co-conspirator emailed a Malaysian government official to say that the 27 servers had been transshipped to the Chinese purchaser. The Justice Department treats that email as central evidence of the equipment’s ultimate destination.Federal indictment, pp. 8–9; US Department of Justice
Prosecutors also allege that 92 controlled servers left San Francisco for Kuala Lumpur on 15 June 2024 and were then sent to Hong Kong, with the Hangzhou purchaser listed as consignee. In July, an entity described as a US front company placed an order worth more than $22 million for 100 H100 servers. The indictment alleges that Lui supplied documents falsely identifying “Jackie Lui” as Topmost’s chief executive and used another person’s identity documents, which he had purchased in 2021. Each assertion remains an allegation, and the indictment does not append all the underlying emails, invoices or identity records for independent public examination.Federal indictment, pp. 9–11
The “Chinese government” purchaser claim remains unproved
The Justice Department release quotes an FBI official as saying the investigation showed that Lui allegedly sold hundreds of millions of dollars of American AI technology to the “Chinese government”. The public indictment, however, describes the purchaser only as a Hangzhou-based Chinese industrial company. It does not identify the company as a government agency or state-owned enterprise, nor does it disclose ownership records. That is an important evidential gap: a law-enforcement assertion in a press release is not an independent finding, and the public record does not yet allow outsiders to verify the purchaser’s legal or practical relationship with the Chinese government.US Department of Justice; federal indictment, p. 3
Similarly, the indictment says controlled GPUs may make significant contributions to another country’s military potential, while US officials describe the prosecution as protecting national security and advanced defence capabilities. It does not allege that the servers were delivered to a named Chinese military unit, and it gives no deployment location or specific operational use. The verifiable position is that the United States classified the products under particular export controls and has alleged an evasion scheme; the filing does not establish that the servers were used for military, surveillance or any other defined activity.Federal indictment, pp. 4–5; US Department of Justice
Public-interest and human-rights policy context
Advanced-chip controls sit at the intersection of US–China technology competition and national-security policy. In 2023, the Commerce Department said expanded controls were intended to restrict China’s access to computing capabilities that could support advanced military systems, intelligence and surveillance applications. When the Justice and Commerce Departments created a Disruptive Technology Strike Force, they also identified the potential transfer of technology that could support military capabilities or “mass surveillance that enables human rights abuses” as a policy concern. These are US government explanations for the controls, not proved consequences of the conduct alleged here.US Commerce Department rule summary; Justice and Commerce Departments’ announcement
Nothing in the public case material shows that the servers were used for surveillance in Xinjiang, Tibet or Hong Kong, or against dissidents abroad, and no human-rights victim is identified. Treating a general policy risk as a demonstrated abuse would go beyond the evidence. The immediate public-interest significance is narrower: an alleged third-country diversion of sensitive technology on a scale of hundreds of millions of dollars; possible weaknesses in end-user due diligence by transit companies, manufacturers and freight forwarders; and the need for national-security enforcement to remain subject to judicial scrutiny, disclosure and the defendant’s procedural rights.Federal indictment; US Department of Justice
The defendant’s rights and potential penalties
The statutory maximum sentences are 20 years for the export-control conspiracy, 20 years for the money-laundering conspiracy and 10 years for outbound smuggling. Some coverage adds those maxima together as “up to 50 years”, but any sentence after a conviction would be determined by the judge according to the counts proved, federal sentencing rules and other factors. A statutory ceiling is not a prediction. The indictment also gives notice that prosecutors will seek forfeiture of property involved in, or traceable to proceeds of, the alleged offences; forfeiture is likewise contingent on conviction and a court order.US Department of Justice; federal indictment, pp. 17–21
As of public reporting on 2 October, court records did not show that Lui had entered a plea, and it was unclear whether he had legal representation. The Los Angeles Times said no defence lawyer was listed in the available court papers and that it could not reach Lui for comment. The Justice Department had expected him to make an initial appearance and be arraigned on 2 October, but the latest accessible reporting did not provide a complete hearing record; this report therefore does not assume the outcome of that proceeding.Business Insider; Los Angeles Times
Responses from the parties
Nvidia told Business Insider that smuggling was untenable legally, economically and technically and said it would continue working with law enforcement. Nvidia is not named as a defendant, and the public filing does not allege that it knowingly assisted the diversion. The Register said it had sought comment from Earthmade and Nvidia, while CRN said it had contacted the Justice Department, Earthmade, Lui and relevant manufacturers. No substantive public response from Earthmade or Lui was reported by their publication deadlines.Business Insider; The Register; CRN
A review of English-language public material from China’s Foreign Ministry and its embassy in Washington found no response by 3 October to the Lui case or the Justice Department’s reference to a Chinese government purchaser. The ministry’s published questions and answers on 3 October addressed China–Russia relations, UN human-rights governance, drone exports and Starbucks’ Xinjiang business, but not this case. The absence of a public response does not mean that Beijing declined to comment, and it neither proves nor disproves the prosecution’s allegations. Statements from the Chinese authorities, the unnamed Hangzhou purchaser, and relevant Malaysian and Singaporean bodies remain to be sought.Chinese Embassy in the United States: Foreign Ministry remarks, 3 October
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