Co-founder of tech company charged with diverting .5 billion in Nvidia AI chips to China in violation of export laws
In a significant legal development, the co-founder of Super Micro Computer Inc., along with two associates, has been charged with diverting $2.5 billion worth of servers equipped with Nvidia’s artificial intelligence chips to China, in violation of U.S. export laws. This incident raises serious concerns about national security and the integrity of export control regulations.
The Charges and Arrests
The individuals charged in this case include Yih-Shyan Liaw, known as Wally; Ruei-Tsang Chang, known as Steven; and Ting-Wei Sun, known as Willy. They face multiple charges, including conspiring to violate export control laws, smuggling goods from the U.S., and conspiring to defraud the United States.
Liaw, who co-founded Super Micro Computer and served on its board of directors, was arrested in California and subsequently released on bail. Sun, a contractor, is currently in custody awaiting a detention hearing, while Chang, who worked at the Taiwan office of Super Micro, remains at large.
Company Response
Super Micro Computer has not been named in the indictment but has taken immediate action in response to the charges. The company announced that it has placed Liaw and Chang on administrative leave and has terminated its relationship with Sun. In a statement, Super Micro emphasized that the actions of the individuals involved were contrary to the company’s policies and compliance controls.
The company stated, “Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations.” Furthermore, Super Micro has pledged to cooperate fully with the ongoing investigation.
Details of the Allegations
According to the indictment, the defendants employed a pass-through company based in Southeast Asia to place orders for the servers, effectively obscuring the ultimate destination of the shipments. This method was designed to circumvent U.S. export control laws, which require a license for certain exports to China.
The defendants allegedly collaborated with executives at the pass-through company to produce false documents for the server manufacturer, furthering their deceptive practices. They also utilized a shipping and logistics company to repackage the servers into unmarked boxes to hide their contents before shipping them to China.
Deceptive Practices
To mislead the manufacturer’s auditors, the defendants reportedly used “dummy” non-working copies of the servers during compliance checks, while the actual servers were en route to China. The indictment details how two of the defendants staged these dummy servers at a warehouse rented by the pass-through company.
Sun was allegedly responsible for taking photos and videos of the staged servers to present to one of the compliance auditors. However, instead of performing the audit, the auditor was reportedly “off-site enjoying entertainment paid for” by the pass-through company.
Additional Evidence of Fraud
Prosecutors outlined further fraudulent activities, including instances captured by surveillance cameras showing individuals using hair dryers to remove labels from the boxes and to add new labels and serial number stickers to the boxes and dummy servers. Such actions illustrate the lengths to which the defendants went to conceal their illegal activities.
Impact on National Security
This case has drawn attention to the broader implications of technology diversion schemes. Jay Clayton, the U.S. Attorney for the Southern District of New York, stated, “Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security.” He emphasized the need for swift action against crimes involving sensitive technology to uphold the law.
Conclusion
The charges against Liaw, Chang, and Sun highlight the ongoing challenges faced by authorities in regulating the export of advanced technologies, particularly to nations like China. As the investigation unfolds, it will be crucial to monitor the implications of this case for U.S. tech companies and the enforcement of export control laws.
Note: The information presented in this article is based on the latest available data and is subject to change as the legal proceedings continue.
