California Tech Company Owner Charged in $300 Million AI-Server Smuggling Case
Federal prosecutors have charged Greg Lui, 38, also known as Yiu Kong Lui, with smuggling more than $300 million worth of export-controlled computer servers containing advanced U.S.-made graphics processors to China.
Lui, a San Gabriel, California, resident and owner of Earthmade Computer Inc. in City of Industry, was arrested October 1. A federal grand jury returned a three-count indictment on September 29 charging him with conspiracy to violate U.S. export controls, outbound smuggling and conspiracy to commit money laundering.
Prosecutors allege that between 2023 and 2024 Lui and others used Earthmade to buy restricted high-end servers, gave manufacturers false information about buyers and destinations, and routed shipments through countries including Malaysia and Singapore before sending the equipment to China without required U.S. licenses.
The Justice Department said Earthmade received more than $176 million from two Malaysia-based shipment companies between January and October 2024. In one transaction, prosecutors allege, 27 restricted servers costing about $7.6 million were shipped to Malaysia. Prosecutors say a co-conspirator told a Malaysian government official in March 2024 that the servers had been sent to a China-based buyer.
The case comes amid U.S. efforts to restrict China’s access to advanced computing technology. The Commerce Department’s Bureau of Industry and Security has said advanced AI could strengthen military and intelligence capabilities and be used for facial and voice recognition to repress and surveil minorities and political dissidents.
From 2019 through 2024, U.S. federal authorities repeatedly restricted Chinese government bodies and technology companies over surveillance and other abuses targeting Uyghurs and other minorities. The Commerce Department added entities to its trade blacklist in multiple rounds, beginning with 28 entities in October 2019, followed by nine in May 2020, eleven more in July 2020 and fourteen entities tied to abuses against Uyghurs and other Muslim minorities in July 2021, with further human-rights-related additions through 2024.
U.S. authorities and researchers have said some of the technology could identify Uyghurs. A 2018 Huawei-Megvii “interoperability test report,” marked confidential and discovered on Huawei’s website by IPVM, described a facial-recognition system capable of triggering what the document called a “Uyghur alarm.” IPVM, an independent research and reporting organization focused on physical-security and surveillance technology, shared the document with The Washington Post, which reported on it in 2020. Huawei said the report concerned a test that had not been put into real-world use, while Megvii said its technology was not designed to target ethnic groups.
In December 2021, the U.S. Treasury said a SenseTime subsidiary had developed facial-recognition programs capable of determining ethnicity, with a particular focus on identifying Uyghurs. Treasury placed SenseTime on a U.S. investment blacklist. SenseTime rejected the accusations as unfounded.
Treasury separately identified eight other Chinese technology firms later that month, including Megvii, saying they supported biometric surveillance and tracking of ethnic and religious minorities, particularly Uyghurs.
There is no public evidence that the servers in Lui’s case were supplied to those companies or used to monitor Uyghurs.
Roman Rozhavsky, assistant director of the FBI’s Counterintelligence and Espionage Division, said the investigation found that Lui allegedly sold hundreds of millions of dollars’ worth of the technology to the Chinese government. The Justice Department’s public account of the transactions refers to China-based end users and, in one instance, a China-based buyer, but does not identify them.
Lui faces a statutory maximum of 50 years in prison if convicted on all three counts. The Justice Department said the indictment contains allegations and that he is presumed innocent unless proven guilty beyond a reasonable doubt.