California Tech Executive Charged in $300 Million Scheme to Smuggle Nvidia Chips to China

Federal prosecutors in Los Angeles have charged a Southern California technology executive with running a $300 million scheme to illegally ship export-controlled computer servers containing Nvidia artificial-intelligence chips to China, the latest in a string of Justice Department prosecutions targeting the underground supply routes that have persisted despite years of U.S. chip-export restrictions.

Greg Lui, 38, of San Gabriel, also known as Yiu Kong Lui, was arrested Oct. 1 following a three-count federal indictment returned Sept. 29 in the Central District of California, according to a Justice Department announcement. Lui owns Earthmade Computer Inc., a closely held server reseller based in City of Industry.

The numbers behind the indictment

Prosecutors allege that between 2023 and 2024, Lui and unidentified co-conspirators used Earthmade to buy high-end servers built around U.S.-manufactured GPUs subject to federal export controls, then falsely told manufacturers and shippers the equipment was headed to permissible buyers outside China. In one cited transaction from January 2024, Earthmade purchased 27 such servers for $7.614 million. Over a ten-month stretch from January to October 2024, the indictment alleges, Earthmade received more than $176 million in payments from two Malaysia-based shipping companies — part of a broader scheme prosecutors value at upwards of $300 million. Lui is charged with conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering, exposing him to a statutory maximum of 50 years in federal prison if convicted on all counts. He is presumed innocent unless and until proven guilty.

Dummy servers and a well-worn smuggling route

According to the indictment, the equipment was routed through freight forwarders in Malaysia and Singapore — destinations that did not require an export license — before being re-exported to China, where no such license existed. Assistant Attorney General for National Security John A. Eisenberg said the case involved false documents, staged "dummy" servers meant to mislead compliance inspectors, and layered transshipment arrangements designed to obscure where the hardware actually ended up. The investigation drew on the Commerce Department's Bureau of Industry and Security, the Defense Criminal Investigative Service, and the FBI's Counterintelligence and Espionage Division — a lineup that underscores how Washington now treats chip diversion as a national-security matter rather than an ordinary trade violation.

"Controlling the export of advanced [AI] technology is critical to safeguarding our national security," FBI Assistant Director Roman Rozhavsky said in the Justice Department's announcement of the charges.

Part of a bigger crackdown

The Lui case lands roughly six months after prosecutors in Washington charged three men, including a co-founder of a publicly traded U.S. server manufacturer, in a scheme that diverted roughly $510 million in servers to China out of $2.5 billion purchased in 2024 and 2025 — allegedly using thousands of non-functional "dummy" units to pass compliance checks, the same playbook now alleged against Lui. U.S. Attorney Jay Clayton described that case at the time as "a tangled web of lies, obfuscation, and concealment." Together, the cases illustrate a pattern Commerce and Justice officials have flagged repeatedly since 2023, when the government first imposed sweeping restrictions on advanced computing exports to China: that export controls have pushed the trade in restricted Nvidia hardware into resellers, freight forwarders and shell transactions far removed from the chipmaker's own sales channel.

Nvidia's compliance practices under fresh scrutiny

Nvidia is not accused of wrongdoing in the Lui case or the earlier one, but the steady drumbeat of prosecutions has put the chipmaker's own compliance oversight in the spotlight. In a June 1 letter to Nvidia, Sen. Elizabeth Warren pressed the company on whether its board was adequately overseeing export-control compliance, writing that "recent criminal cases involving chip smuggling allege troubling facts that raise serious questions about NVIDIA's compliance practices," and challenging CEO Jensen Huang's public statements that there was "no evidence of any AI chip diversion." Nvidia's own annual report filed with securities regulators acknowledges the company has been effectively shut out of China's data-center market by licensing requirements, even as it discloses that export rules on its products "have already and may in the future" impose shifting conditions on their use.

What happens next

Lui has not yet entered a plea, and prosecutors are separately pursuing civil and criminal forfeiture of property tied to the alleged scheme, according to the Justice Department.

That two-track approach is standard in federal export-control cases: criminal forfeiture requires a conviction, after which a court can order forfeiture — as part of the defendant's sentence — of property tied to the specific counts of conviction, including any proceeds of the illegal activity, while civil forfeiture proceeds against the property itself, independent of any criminal case, and requires the government to prove in court, by a preponderance of the evidence, that the assets were linked to the alleged scheme, according to the Justice Department's own description of its forfeiture program. Pursuing both tracks at once gives prosecutors a route to recovering proceeds even if a conviction takes years to secure or reaches only some of the alleged participants in a multi-party scheme.

For the freight-forwarding and server-resale middlemen scattered across Southern California's electronics trade, the case is a reminder that the Commerce Department and FBI are now treating third-country transshipment — not just direct exports — as a prosecutable smuggling route. Local coverage of the arrest noted Lui was taken into custody at his home, and trade-press reporting on the case framed it as a test of how aggressively the government will pursue smaller resellers rather than only the largest server makers. Officials have signaled more such cases are likely as the administration leans further into its national-security framing of advanced-computing exports.