Greg Lui arrested over alleged $300 million server smuggling scheme to China

Greg Lui, a 38-year-old technology company owner from San Gabriel, California, was arrested on October 1 after federal prosecutors in Los Angeles charged him over an alleged scheme to send more than $300 million in export-controlled computer servers to China. Prosecutors say the shipments went through other countries to evade US licensing requirements. The charges concern equipment used for advanced computing; the allegations have not been proved in court.

A federal grand jury returned a three-count indictment on September 29, according to the Justice Department. Lui is charged with conspiracy to violate the Export Control Reform Act and Export Administration Regulations, outbound smuggling, and conspiracy to commit money laundering. The indictment sets out the government’s accusations; Lui is presumed innocent unless prosecutors prove the charges beyond a reasonable doubt.

How prosecutors say the servers reached China

Prosecutors allege that Lui used Earthmade Computer Inc., his technology company in City of Industry, east of Los Angeles, to buy servers from US manufacturers during 2023 and 2024. They say paperwork supplied to the manufacturers falsely identified destinations and end users for which the shipments could proceed without the Commerce Department licenses required for China. The servers were then sent through countries including Malaysia and Singapore before being forwarded to buyers in China, according to the indictment.

The Justice Department says the servers contained US-made graphics processing units, or GPUs, used in advanced computing. Its public announcement does not identify a GPU manufacturer. Courthouse News Service reported that the servers contained Nvidia GPUs. That identification comes from the courthouse report, while the allegation that the shipments violated export controls comes from the federal case.

The indictment further alleges that dummy servers were staged to mislead inspectors. Those claims, like the allegations about false paperwork and the shipment route, have not been tested at trial. The reported value of more than $300 million describes the servers prosecutors say were smuggled; it is not a court finding about the amount involved.

Why the servers were subject to export controls

The Commerce Department’s Bureau of Industry and Security announced controls in October 2022 on certain advanced computing chips and computers containing them. The measures included licensing requirements for specified China-bound supercomputer and semiconductor uses, with the advanced computing and supercomputer controls taking effect on October 21 of that year. That framework explains why the servers’ destination matters to the case, although the specific violations alleged against Lui remain for prosecutors to prove.

The US has also sought to address shipments that pass through other countries. In its account of changes made in 2023, the bureau said it retained China-wide licensing requirements and added measures aimed at circumvention. Those included worldwide licensing requirements for certain controlled chips shipped to companies headquartered in China or owned by a parent headquartered there. Prosecutors allege the route through Malaysia and Singapore concealed the China-bound destination in Lui’s case.

First Assistant US Attorney Bill Essayli said the government was trying to prevent advanced computing technology from strengthening adversaries’ military capabilities. Courthouse News reported that prosecutors brought a separate Los Angeles case the previous year against two Southern California residents accused of sending Nvidia chips to China through Malaysia and Singapore. That earlier case provides context for enforcement concerns; the report does not connect Lui to its defendants.

What happens next in Greg Lui’s case

The Justice Department said Lui was expected to make an initial appearance and be arraigned in federal court in downtown Los Angeles on Friday, October 2. The reviewed accounts do not establish whether that hearing took place or what happened there. Courthouse News said the federal docket did not yet list a lawyer for Lui when it reported the arrest, and the reviewed accounts contain no response from Lui or counsel.

If convicted on all counts, Lui faces statutory maximum penalties of 20 years for the export-control conspiracy, 10 years for smuggling and 20 years for the money-laundering conspiracy, according to the Justice Department. Those maximums do not predict a sentence. The department says the Bureau of Industry and Security’s Office of Export Enforcement, the Defense Criminal Investigative Service and the FBI’s Counterintelligence and Espionage Division are investigating the case.