DOJ Arrests California Tech Firm Owner Over Alleged $300M AI Server Smuggling to China

What Happened

On October 1, the Justice Department announced the arrest of Greg Lui, 38, also known as Yiu Kong Lui, owner of Earthmade Computer Inc. in the City of Industry, California. He is accused of selling export-controlled computer servers to China between 2023 and 2024 in a scheme worth more than $300 million. The indictment, returned by a federal grand jury on September 29, carries three counts: conspiracy to violate the Export Control Reform Act and the Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering.

The alleged method: buy first — Earthmade purchased controlled servers from U.S. manufacturers using paperwork claiming the end users and destinations required no export license; reroute next — the equipment went to Malaysia and Singapore, where the same restrictions do not apply, before reaching buyers in China; get paid — between January and October 2024, Earthmade received more than $176 million from two Malaysia-based shipping companies. The indictment cites one concrete example: a January 2024 order for 27 servers worth about $7.6 million shipped from Los Angeles to Kuala Lumpur, with the packing list explicitly warning the equipment could not go to China without a license. A March email confirmed those servers had been forwarded to a buyer in China.

First Assistant U.S. Attorney Bill Essayli for the Central District of California said: "This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China." The investigation is a joint effort by the FBI, the Commerce Department's Bureau of Industry and Security Office of Export Enforcement, and the Defense Criminal Investigative Service. Lui made his initial court appearance on October 1. These are charges, not findings of guilt — he is presumed innocent unless proven otherwise.

Key Facts

1. The charges: Arrest announced Oct 1; federal grand jury indictment returned Sept 29; three counts: conspiracy to violate export controls, outbound smuggling, conspiracy to commit money laundering. Statutory maximums: 20 years on each conspiracy count, 10 years on the smuggling count.
2. The person and the company: Greg Lui, 38, aka Yiu Kong Lui; owner of Earthmade Computer Inc. (City of Industry, California); initial court appearance on Oct 1.
3. The method: Rerouted through Malaysia and Singapore before reaching China; falsified end-user and destination paperwork; told U.S. manufacturers the equipment would not end up in China.
4. The money flow: From Jan to Oct 2024, two Malaysia-based shipping companies paid Earthmade more than $176 million; a January 2024 order for 27 servers at about $7.6 million came with a packing-list warning that the equipment could not go to China without a license.
5. The hardware: Export-controlled AI servers carrying U.S.-made GPUs — reportedly Nvidia AI chips, including H100-class hardware, per Bloomberg Law. The DOJ release does not name the manufacturer.
6. The enforcement team: FBI, Commerce BIS Office of Export Enforcement, and the Defense Criminal Investigative Service jointly investigated; announced by First Assistant U.S. Attorney Bill Essayli. Charges are allegations; Lui is presumed innocent unless proven guilty.

Context

U.S. export controls on high-end AI chips to China have tightened over recent years. Bloomberg reported on Oct 1 that U.S. officials are asking why Nvidia failed to spot warning signs across multiple schemes; the company itself is not accused of wrongdoing.

The arrest came in the same week Trump signed a voluntary "self-policing" AI accord with the labs.