Federal agents arrested the owner of a California technology company on charges that he helped smuggle more than $300 million in export-controlled GPU servers to China through third countries, the Justice Department said.
Greg Lui, 38, of San Gabriel, owns Earthmade Computer, based in the City of Industry. The September 29 indictment charges him with conspiracy to violate US export-control law, outbound smuggling and conspiracy to commit money laundering. He was arrested October 1.
Prosecutors allege that Lui and others used Earthmade in 2023 and 2024 to purchase servers containing US-manufactured graphics processors and send them to China without the required Commerce Department licenses. Shipments first went to Malaysia and Singapore before being redirected to Chinese buyers.
The alleged scheme included documents falsely identifying permissible end users and destinations. Prosecutors say Lui knew that the actual customers were in China. Freight-forwarding companies moved the equipment to the intermediate destinations, where others arranged the onward shipments.
Earthmade received more than $176 million from two Malaysia-based shipment companies between January and October 2024 as part of the alleged operation, according to prosecutors. That payment figure is separate from the more than $300 million in servers described in the overall charges.
One transaction involved a January 2024 purchase order for 27 servers costing approximately $7.6 million. Prosecutors say Lui and another participant arranged shipment from Los Angeles to Kuala Lumpur. The packing list identified export-controlled GPUs that could not be sent to China without a license.
In March 2024, a participant allegedly emailed a Malaysian government official saying the 27 servers had been transshipped to a China-based buyer. The Justice Department cites the correspondence as part of its account of how the equipment reached its final destination.
The indictment contains allegations, and Lui is presumed innocent unless proved guilty. Reuters reported that it could not reach him for comment and that Earthmade had not immediately responded to its request. Later October 1 reporting placed his expected initial appearance and arraignment on October 2 in federal court in downtown Los Angeles.
The case is separate from the March charges against a Supermicro co-founder and two others over an alleged $2.5 billion diversion scheme. Taiwanese prosecutors have also indicted nine people over other AI-server shipments, involving different defendants and transactions.
The Commerce Department’s Bureau of Industry and Security, the FBI and the Defense Criminal Investigative Service are investigating the Earthmade case. The statutory maximums are 20 years on the export-control conspiracy count, 20 years on the money-laundering conspiracy count and 10 years on the smuggling count.
Sources: Justice Department, Reuters, MyNewsLA
–
By the Control Plane Editorial Team