An indictment has been released charging Yishan “Wally” Liau, Ruizang “Steven” Zhang and Tingwei “Willy” Sun with conspiring to repurpose high-performance computer servers assembled in the United States and integrate them with sophisticated American systems. Exporting artificial intelligence technology to China, violating US export control laws. Mr. Liau, a U.S. citizen, and Mr. Sun, a Taiwanese national, were arrested today and will be released to the Northern District of California. Mr. Chan is a Taiwanese national and remains a fugitive.“The indictment unsealed today details alleged efforts to circumvent U.S. export laws through false documentation, the creation of dummy servers to deceive inspectors, and complex transshipment schemes to obfuscate the true destination of restricted AI technology: China,” said John A. Eisenberg, Assistant Attorney General for National Security. “These chips are a product of American ingenuity, and NSD will continue to enforce export control laws to protect their benefits.”“The FBI’s investigation revealed that Mr. Liau, Mr. Zhang, and Mr. Sun allegedly conspired to sell billions of dollars worth of servers containing controlled and sensitive graphics processing equipment to Chinese buyers in violation of U.S. export control laws,” said Roman Rosavsky, deputy director of the FBI’s Counterintelligence and Espionage Division. “Restricting the export of U.S. sensitive artificial intelligence technology is essential to protecting our national security and protecting our homeland. That’s why combating export violations is one of the FBI’s top priorities, and we continue to work with law enforcement, the private sector, and international partners to bring to justice anyone who takes actions that undermine the United States. National security. ”“As alleged in the indictment, the defendants participated in a coordinated scheme to divert a large number of servers equipped with U.S. artificial intelligence technology to customers in China,” said Jay Clayton, U.S. Attorney for the Southern District of New York. “They did so through a web of lies, obfuscation, and concealment, all to increase sales and increase profits in violation of U.S. law.” Law. Diversion schemes like the one currently thwarted have generated billions of dollars in ill-gotten gains and pose a direct threat to the United States. National security. Our office, along with our partners at the FBI and the Commerce Department’s Bureau of Industrial Security, will continue to persistently investigate these illegal diversion schemes to bring to justice the bad actors who seek to profit from the illegal export of U.S. artificial intelligence technology. ”“Yi Sheng Liau, Rui Tsang Zhang, and Tingwei Sun are suspected of defrauding the United States by diverting hundreds of servers equipped with advanced artificial intelligence capabilities to Chinese customers,” said James C. Barnacle, Jr., assistant director in the New York office. “These defendants allegedly fabricated documents, staged fake equipment to pass audit inventories, and used pass-through companies to conceal fraud and true customer lists. The FBI will hold accountable individuals who use U.S. companies to provide export-controlled technology to adversaries. ”The entire text of the indictment and the statements in the indictment constitute allegations only, and all facts set forth are to be treated as allegations. According to allegations contained in the indictment unsealed today in Manhattan federal court:To protect U.S. national security and foreign policy interests, the United States The Department of Commerce has introduced licensing requirements for the export and reexport of artificial intelligence technology to China and Hong Kong. In particular, the U.S. Department of Commerce imposes restrictions on the export and reexport of items that could significantly contribute to the military strength or nuclear proliferation of another country, or that could adversely affect U.S. foreign policy or national security. For these reasons, among other things, advanced artificial intelligence accelerator chips and servers incorporating such chips are subject to export licensing requirements for transfer to China and Hong Kong. These regulations reflect a formal determination that the computing power of advanced artificial intelligence accelerator hardware is sufficiently strategically important that its transfer to China poses an unacceptable risk to national security.Mr. Liaw is a co-founder, director and senior vice president of business development for a publicly traded U.S. manufacturer that designs and builds high-performance computer servers for artificial intelligence and cloud computing applications, including servers that integrate artificial intelligence graphics processing units (GPUs). Chang is the general manager of the U.S. This is the manufacturer’s Taiwan office. Sun is a third-party broker and “fixer” who has worked with Mr. Liau, Mr. Zhang and others to divert U.S. export control technology to China. Together, the defendants conspired to systematically divert U.S. manufacturer servers containing certain GPUs to China without permission from the U.S. Department of Commerce.This scheme worked as follows. Liau and Zhang, who were working closely with a third-party broker with clients based in China, instructed certain executives of a company based in Southeast Asia (“Company-1”) to place purchase orders in the United States. Manufacturer of servers with specific GPUs purported to be for Company-1. These servers are often assembled in the United States, shipped to the American manufacturer’s facility in Taiwan, and then delivered to Company-1 elsewhere in Southeast Asia. Company 1, in consultation with Defendant, used shipping and logistics companies to repack the U.S. manufacturer’s servers, place them in unmarked boxes to conceal their contents, and then ship them to their final destination in China. To ensure that these server assignments were approved internally by the U.S. manufacturer, defendants and Company-1 executives created false documents and records and sent false communications to indicate that Company-1 was the end user of the servers.At Defendant’s direction, from 2024 to 2025, Company 1 purchased approximately $2.5 billion worth of servers from U.S. manufacturers, many of which were assembled in the United States. The defendants’ scheme became more brazen over time, resulting in large numbers of servers containing controlled U.S. artificial intelligence technology being sent to China. From late April 2025 to mid-May 2025 alone, at least approximately $510 million worth of U.S. Manufacturer servers assembled in the United States were diverted to China as part of the defendants’ scheme in violation of U.S. export control laws.Defendant and his co-conspirators took extensive steps to conceal their plans. As just one example, in order to mislead a U.S. manufacturer’s compliance team responsible for ensuring compliance with U.S. export control laws, defendants installed thousands of “dummy” servers (non-working physical replicas of the U.S. manufacturer’s servers) for inspection at locations where Company 1 allegedly stored servers purchased from the United States. Manufacturer. However, the actual servers that Company-1 purchased from a U.S. manufacturer had already been illegally shipped to China. Some of these same dummy servers were then also installed in a warehouse rented by Company 1 in order to pass inspections conducted by the U.S. Department of Commerce regarding Company 1’s purchases of servers from U.S. manufacturers. Prior to the inspection, SUN and one of the third-party brokers working closely with Defendants to transfer the servers to China (“Broker-1”) installed dummy servers in the warehouse, including by unpacking the dummy servers. Use a hair dryer to remove the label and serial number sticker and apply it to the server box and the dummy server itself. Then repackage the dummy server in the US. Manufacturer’s box. Surveillance cameras recorded their work and captured them preparing the dummy servers.Throughout this scheme, the defendants used encrypted messaging applications to closely coordinate with each other, Company 1 executives, and third-party brokers with end customers in China. These communications related to, among other things, the quantity of servers that Company 1 would order, the locations in China where those servers would be shipped, and efforts to conceal the nature of this plan from the United States. Manufacturer compliance teams, US authorities, etc. At no time did Defendants or the U.S. manufacturer obtain a license from the U.S. Department of Commerce to export or reexport U.S. servers to China.Mr. Liau, 71, lives in Fremont, California. Mr. Chan (53) is from Taiwan. Son, 44, of Taiwan, is each charged with one count of conspiracy to violate the Export Control Reform Act (up to 20 years in prison), one count of conspiracy to smuggle goods from the United States (up to five years in prison), and one count of conspiracy to defraud the United States (up to five years in prison). The maximum possible sentence in this case is provided by Congress and is provided here for informational purposes only, as the defendant’s sentence will be determined by the judge. The FBI, the Department of Commerce’s Bureau of Industry and Security, and the Department of Justice’s National Security Division, Counterintelligence and Export Control Division investigated the case.
