Dummy servers, uncontrolled boxes and…: FBI chargesheet details how founders of a billion-dollar US tech company smuggled banned AI GPUs into China
Yih-Shyan “Wally” Liaw, Rui-Tsang “Steven” Chang and Ting-Wei “Willie” Sun were indicted for an alleged conspiracy to subvert high-performance computer servers assembled in the United States and integrate sophisticated U.S. equipment into the United States. Artificial intelligence technology to China, violating US export control laws. Liaw, a US citizen, and Sun, a Taiwanese citizen, were arrested today and will be arraigned in the Northern District of California. Chang, a citizen of Taiwan, remains a fugitive.“The indictment unsealed today details alleged efforts to evade U.S. export laws through false documents, dummy servers to mislead inspectors, and complex transshipment schemes to obscure the true destination of restricted AI technology—China,” said Assistant Attorney General for National Security John A. Eisenberg. “These chips are the product of American ingenuity, and NSD will continue to enforce our export-control laws to protect that advantage.““The FBI’s investigation revealed that Liaw, Chang, and Sun allegedly conspired to sell billions of dollars worth of servers integrating sensitive, controlled graphic processing units to buyers in China in violation of U.S. export control laws,” said Roman Rozhavsky, assistant director of the FBI’s Counterintelligence and Espionage Division. “Controlling the export of sensitive US artificial intelligence technology is essential to our national security and homeland defense. That’s why combating export violations is one of the FBI’s highest priorities, and we will continue to work with our law enforcement, private sector, and international partners to bring to justice all those who take actions to undermine America. National security.”Jay Clayton, U.S. Attorney for the Southern District of New York, said, “As alleged in the indictment, the defendants participated in a systematic scheme to divert large quantities of servers containing American artificial intelligence technology to customers in China.” “They did this through a tangled web of lies, obfuscation and concealment – all to increase sales and generate revenue in violation of the US.” Law. Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to the U.S. National security. “Our office, along with our partners at the FBI and the Commerce Department’s Bureau of Industry and Security, will continue to vigorously investigate these illegal diversion schemes to bring to justice the bad actors who aim to profit from the illicit export of American artificial intelligence technology.”James C. Barnacle, Jr., FBI Assistant Director in Charge of the New York Field Office, said, “Yih-Shyan Liaw, Rui-Tsang Chang, and Ting-Wei Sun allegedly defrauded the United States by turning over hundreds of servers with advanced artificial intelligence capabilities to Chinese customers.” “These defendants allegedly fabricated documents, staged fraudulent instruments to pass off audit inventory, and used a pass-through company to conceal their misconduct and the listing of true customers. The FBI will hold accountable individuals who use American companies to provide export-controlled technology to our adversaries.The entire text of the indictment and the particulars of the indictment constitute only the charge, and each fact stated must be treated as an allegation. According to the charges contained in the indictment unsealed today in Manhattan federal court:To protect U.S. national security and foreign policy interests, the U.S. The Commerce Department has imposed licensing requirements for the export and re-export of artificial intelligence technologies to China and Hong Kong. Specifically, the U.S. Department of Commerce prohibits the export and re-export of items that could significantly contribute to the military capability or nuclear proliferation of other countries or that could be detrimental to the foreign policy or national security of the United States. For these reasons, among others, advanced artificial intelligence accelerator chips, and servers incorporating such chips, are subject to export license requirements for transfers to China and Hong Kong. Those rules reflect a formal determination that the computing capabilities in advanced artificial intelligence accelerator hardware are of substantial strategic importance and that their transfer to China poses an unacceptable risk to national security.Liaw is a co-founder, board member and senior vice president of business development of a publicly traded US-based manufacturer that designs and manufactures high-performance computer servers for artificial intelligence and cloud computing applications (US manufacturer), including servers integrating artificial intelligence graphics processing units (GPUs). Chang is the general manager in America Manufacturer’s Taiwan office. Sun is a third-party broker and “fixer” who worked with Liaw, Chang and others to divert US-export controlled technology to China. Together, the defendants and others conspired to systematically transfer a U.S. manufacturer’s servers with certain GPUs to China without a license to do so from the U.S. Department of Commerce.The scheme operated as follows. Liaw and Chang, who worked closely with third-party brokers with clients based in China, instructed certain executives of a company based in Southeast Asia (“Company-1”) to place purchase orders with the US. Manufacturer for servers with some GPUs, reportedly for Company-1. Those servers were often assembled in the United States and shipped to the American manufacturer’s facilities in Taiwan, then distributed to Company-1 elsewhere in Southeast Asia. Company-1, in consultation with the defendants, used a shipping and logistics company to repack the American manufacturer’s servers and place them in unmarked boxes to conceal their contents before shipping them to their final destinations in China. To ensure that these server allocations were approved internally by the U.S. manufacturer, the defendants and executives of Company-1 prepared false documents and records, and transmitted false communications, to make it appear that Company-1 was the end user of the servers.At the direction of the defendants, between 2024 and 2025, Company-1 purchased approximately $2.5 billion worth of servers from a U.S. manufacturer, many of which were assembled in the United States. The defendants’ scheme became more brazen over time and resulted in massive amounts of servers containing controlled American artificial intelligence technology being shipped to China. Between the end of April 2025 and mid-May 2025 alone, at least $510 million worth of U.S. goods will be sold. The manufacturer’s servers, assembled in the United States, were shipped to China in violation of U.S. export control laws as part of the defendants’ scheme.The defendants and their co-conspirators took extensive measures to conceal their scheme. As just one example, in order to deceive the US manufacturer’s compliance team, which is responsible for ensuring adherence to US export control laws, the defendants placed thousands of “dummy” servers – non-functioning, physical replicas of the US manufacturer’s servers – for inspection at the locations where Company-1 was allegedly storing servers purchased from the US. Producer. However, the actual servers purchased by Company 1 from a US manufacturer had already been illegally shipped to China. Some of the same dummy servers were later placed in a warehouse rented by Company-1 in an attempt to pass an inspection by the US Department of Commerce of Company-1’s purchases of servers from an American manufacturer. Prior to the inspection, SUN and one of the third-party brokers that worked closely with the defendants to divert servers to China (“Broker-1”) staged dummy servers in the warehouse by, among other things, unboxing the servers; Using a hair dryer to remove and stick labels and serial number stickers on server boxes and dummy servers; And then repackaged into dummy servers in the US Manufacturer’s boxes. Surveillance cameras recorded their work and captured them setting up the dummy server.Throughout the scheme, the defendants closely coordinated with each other, Company-1 executives, and third-party brokers with end customers in China using encrypted messaging applications. Those communications related, among other topics, to the amount of servers to be ordered for Company-1, the locations in China to which those servers were to be shipped, and efforts to conceal the nature of the plan from the United States. The manufacturer’s compliance team, US officials and others. At no point did the defendants or the US manufacturer have a license from the US Commerce Department to export or re-export US-made servers to China.Liaw, 71, of Fremont, California; Chang, 53, of Taiwan; and Sun, 44, of Taiwan, are each charged with one count of conspiring to violate the Export Control Reform Act, which carries a maximum penalty of 20 years’ imprisonment, one count of conspiring to smuggle goods out of the United States, which carries a maximum penalty of 5 years’ imprisonment, and one count of conspiring to defraud the United States, which carries a maximum penalty of 5 years’ imprisonment. The maximum possible sentences in this case are set by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. The FBI, the Commerce Department’s Bureau of Industry and Security, and the Justice Department’s National Security Division, Counterintelligence and Export Control Section investigated the case.
