$300 million smuggling ring sent computer chips to China, DOJ alleges

A California man faces federal charges for his role in a smuggling scheme that the Justice Department alleges moved nearly a third of a billion dollars’ worth of goods. The operation, though, was not suspected of moving drugs or counterfeit goods. Instead, the plot allegedly involved high-end computer parts, particularly ones used for artificial intelligence. 

Big picture view:

The investigation into the high-dollar operation led to the arrest of Greg Lui, the owner of a San Gabriel Valley-based technology company, the Justice Department announced this week. He is accused of smuggling to China more than $300 million worth of high-end computer servers that held U.S.-manufactured graphics processing units (GPUs) and are subject to export controls. 

The backstory:

The Justice Department alleges that Lui’s company, Earthmade Computers Inc., would buy the items, which required U.S. Department of Commerce licenses to export to China, and ship them to countries such as Malaysia and Singapore, where no licenses are needed. From there, Lui and his co-conspirators would send them on to China without obtaining the licenses.

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The indictment alleges that two Malaysia-based shipping companies paid Earthmade $176 million in the first 10 months of 2024 alone. Federal prosecutors stated that Lui, 38, knew the technology was not allowed to be shipped to China and that the federal government considers the restrictions a matter of U.S. national security. 

Why you should care:

Lui has been charged with one count each of conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, conspiracy to commit money laundering, and outbound smuggling. If convicted, he could serve up to 20 years in prison on each of the first two counts and up to 10 years in prison for the smuggling charge.

 

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