The $300 Million Suitcase: Feds Arrest Earthmade CEO for Smuggling Nvidia GPU Servers to China

On Thursday, October 2, 2026, federal agents arrested a California technology executive at the center of one of the largest AI hardware smuggling cases ever prosecuted. Greg Lui, 38 — also known as Yiu Kong Lui, of San Gabriel, California — was taken into custody on a three-count federal indictment alleging that he smuggled more than $300 million worth of export-controlled computer servers, packed with U.S.-manufactured GPUs built for AI and what the government now calls Super Intelligence (SI) workloads, to the Chinese government and Chinese buyers.

The arrest, led by the FBI and the Commerce Department’s Bureau of Industry and Security, ends a scheme that prosecutors say ran from 2023 through 2024 and generated at least $176 million in payments from just two Malaysia-based shipment companies. It also lands at a moment when Washington’s entire export-control regime for AI chips is under strain — the same week Bloomberg published evidence that Chinese state-backed financing is quietly bankrolling purchases of restricted Nvidia Blackwell hardware inside China itself.

Inside the indictment

The indictment, returned under seal on September 29 and unsealed with Lui’s arrest, lays out a textbook transshipment operation. Lui owns Earthmade Computer Inc., a closely held company based in City of Industry, in the San Gabriel Valley — the heart of Southern California’s electronics distribution corridor.

According to the charging documents, Lui and unnamed co-conspirators bought high-end servers containing GPUs from U.S. manufacturers knowing the true end users were in China. Because exporting such hardware to China requires a license from the Department of Commerce — one that would never be granted for the buyers in question — the group routed the hardware through countries where no license was needed: Malaysia and Singapore. False end-user paperwork told the U.S. manufacturers the servers were headed to permissible destinations. Freight forwarders moved the crates from Los Angeles to Kuala Lumpur and Singapore; once there, co-conspirators re-shipped them to China.

The money flow was lavish for a company of Earthmade’s profile. From January 2024 to October 2024 alone, Earthmade received more than $176 million from two Malaysia-based shipment companies, according to the indictment.

One episode is documented in unusual detail. In January 2024, Lui emailed a conspirator about a Malaysian transshipment company seeking to buy 70 servers with export-restricted GPUs. He attached an export compliance form acknowledging that the Malaysian company knew U.S. law barred reselling those specific servers to China. Later that month, he placed a purchase order with a U.S. manufacturer for 27 servers at approximately $7,614,000 — roughly $282,000 per machine — and had them flown from Los Angeles to Kuala Lumpur. The packing list explicitly stated the GPUs were export-controlled and could not go to China without a license. In March 2024, a co-conspirator emailed a Malaysian government official confirming that all 27 servers had in fact been transshipped to a China-based buyer.

The charges and the stakes

Lui faces three counts: conspiracy to violate the Export Control Reform Act and Export Administration Regulations (up to 20 years), outbound smuggling (up to 10 years), and conspiracy to commit money laundering (up to 20 years) — a combined maximum of roughly 50 years behind bars if convicted on everything.

The rhetorical framing from DOJ officials is itself a signal of how much the stakes have escalated. Assistant Attorney General for National Security John A. Eisenberg called SI “the defining technology of the era” and vowed to “protect the American advantage in the chips that power this technology… from illegal diversion by our economic and military adversaries.” The FBI’s Assistant Director Roman Rozhavsky went further, saying the investigation revealed Lui “allegedly sold the Chinese government hundreds of millions of dollars’ worth of American Super Intelligence technology.”

Notably, the DOJ press release now uses “Super Intelligence” — not “Artificial Intelligence” — throughout, following last week’s executive order directing federal agencies to adopt the new terminology in official communications.

The second story: state money behind the restricted chips

Lui’s arrest did not come in a vacuum. One day earlier, Bloomberg reported that a Chinese state-backed financier, Semi-Tech Leasing Group Co., funded purchases of more than 700 servers over the past year for AI infrastructure developer Glory View Technology — including at least one contract covering 32 Asustek servers equipped with Nvidia’s restricted B300 Blackwell chips, disclosed in filings with Beijing regulators.

Semi-Tech was originally seeded by China’s national semiconductor fund and is now primarily controlled by municipal government entities in Shenzhen and Beijing, according to the report. Filings tied to the deal were later resubmitted in forms that stripped out the hardware details. Bloomberg’s accompanying analysis argued the pattern points to systemic gaps in Nvidia’s due diligence on its distribution chain — not merely isolated bad actors.

The two stories bracket the same problem from opposite shores. On the U.S. side, a domestic distributor allegedly falsified end-user documents and laundered the hardware through Southeast Asian transshipment points. On the China side, state-linked capital appears to be financing the demand side — quietly bankrolling the acquisition of the very hardware Washington is trying to keep out. Enforcement can arrest the Greg Luis of the world; it cannot easily reach leasing companies in Shenzhen.

Why this matters beyond one arrest

Export controls on AI chips have always rested on an uncomfortable assumption: that the choke points — U.S. manufacturers, U.S. distributors, U.S. freight lanes — can be policed, and that the volume of leakage stays small. Cases like Earthmade test both halves of that assumption. A single mid-sized distributor in City of Industry allegedly moved $300 million in restricted hardware, and did so for roughly two years before the indictment came down. Nobody knows how many similar pipelines remain undiscovered; the Justice Department itself declines to estimate.

The case also sharpens a question now moving to the center of the chip-war debate: where does responsibility sit when restricted silicon reaches a banned destination? Nvidia, whose chips were in the servers, has insisted it complies with all export laws and investigates diversion. But buyers lie, distributors falsify paperwork, and transshipment hubs in Malaysia, Singapore, and the Gulf sit outside U.S. jurisdiction. Prosecuting smugglers after the fact is the enforcement model of the drug war, applied to FLOPs — and it carries the same asymmetry: the hardware, once delivered, does its training run whether or not the courier eventually goes to prison.

For China, the calculus is equally stark. Domestic accelerators like Huawei’s Ascend line are improving but still trail Nvidia’s frontier parts in aggregate compute. Every B300 and H100 that slips through narrows the gap at the margin — which is precisely why state-adjacent capital shows up in filings around these deals.

What happens next

Lui was expected to make his initial appearance and be arraigned in the Central District of California on Thursday afternoon. The case is being prosecuted by the U.S. Attorney’s office for the Central District of California and the National Security Division’s Counterintelligence and Export Control Section, with the FBI, Commerce’s Office of Export Enforcement, and the Defense Criminal Investigative Service investigating.

Watch for three signals in the coming weeks: whether co-conspirators named in the indictment’s “known and unknown” language get charged; whether the Treasury and Commerce Departments respond to the Semi-Tech revelations with new entity-list designations targeting Chinese leasing companies; and whether Nvidia — which has stayed largely silent — faces congressional pressure to tighten distribution-side compliance of the kind Bloomberg’s reporting implies is overdue.

One thing is already clear: the era of treating chip smuggling as a niche customs problem is over. When a single indictment alleges $300 million in diverted AI hardware, and state-backed financiers appear on the other side of the trade, the trafficking of compute has become a first-order national security file — and a defining stress test for the export-control architecture the U.S. has built around it.