FBI arrests California tech CEO for smuggling $300M in AI chips to China

Federal agents on Wednesday arrested a California tech CEO who’s accused of smuggling more than $300 million in restricted AI chips into China.

Greg Lui, 38, aka “Yiu Kong Lui,” of San Gabriel, faces a barrage of federal charges for allegedly selling Beijing a mountain of American-made AI graphics processors in violation of US laws, potentially threatening national security.

The California Post watched as the FBI and Department of Commerce agents arrested the high-flying tech boss in a stealth raid at the City of Industry headquarters of Earthmade Computers, a company Lui founded and runs, and which he allegedly used to conduct the profitable yet illegal scheme.

Agents tracked Lui as he drove a Tesla Cybertruck with a white wrap from his gigantic San Gabriel mansion to the Earthmade’s shiny offices in a tidy industrial park, handcuffing him at gunpoint soon after he arrived at work. Lui didn’t speak as he was placed in a vehicle to be taken in for processing.

AI is now used in nearly every aspect of modern warfare, and investigators said the advanced tech allegedly smuggled by Lui could’ve easily been put to use by the Chinese military.

 “Protecting America’s national security means keeping our advanced Super Intelligence technology from being used to strengthen our adversaries’ military capabilities,” said First Assistant United States Attorney Bill Essayli.

“This defendant allegedly used false paperwork and shipments through third countries to smuggle more than $300 million in export-controlled computer servers to China,” Essayli added. We will aggressively prosecute those who put our national security at risk for profit.”

Federal prosecutors say Lui and his co-conspirators used Earthmade to buy and send sensitive AI tech into China from 2023 to 2024, without the required licenses issued by DOC that are meant to promote US foreign policy and protect national security.

Instead, they shipped these items to countries such as Malaysia and Singapore, where no licenses are required, and then illegally re-exported them to China.

The items in question were high-end computer servers, containing processors made by Nvidia Corp, a Santa Clara tech company specializing in AI. According to federal regulations, such tech could make significant contributions to Chinese armed forces.

As part of the alleged scheme, prosecutors say, Lui and his conspirators used fake documents to show the potentially dangerous AI tech would be going to destinations that did not require an export license in orders they placed with suppliers such as Nvidia.

After making these orders, Lui hired freight forwarding companies to ship the processors to Malaysia and Singapore. Once the servers arrived in these locations, Lui worked with his conspirators to reship the items to China.

From January 2024 to October 2024, Earthmade received more than $176 million from two Malaysia-based shipment companies as part of the scheme, according to court papers.

Prosecutors say Lui executed the scam knowing what he did was illegal, and they have the evidence to prove it.

For example, prosecutors say, Lui emailed a conspirator in January 2024 saying a Malaysian transshipment company wanted to buy 70 computer servers with the controlled AI tech. In the email, he noted the laws against the sale of such tech, according to court papers.

Later that month Lui purchased 27 of the servers for roughly $7.6 million and sent the servers from LA to Kuala Lumpur, Malaysia. Two months later, one of Lui’s conspirators told a Malaysian official in an email that the servers had, in fact, been transshipped to China.

Prosecutors say Lui used a LA-based JP Morgan Chase account and Bank of America account to send and receive money to orchestrate the scheme.

Lui is charged with one count of conspiracy to violate the Export Control Reform Act, one count of smuggling and one count of conspiracy to commit money laundering. If convicted he faces up to 50 years in prison.

Before his arrest Lui lived a luxurious lifestyle, recently completing an extensive renovation of the 4,300-square foot mansion on Walnut Grove Avenue that he used to house numerous members of his extended family.

Federal agents were seen conducting a search of the massive spread Thursday, recording video and carrying evidence from the nine-bedroom, seven-bathroom home that has two stories and just got new stucco and windows, a fresh driveway and other upgrades.

The US DOC, the Defense Criminal Investigative Service and the FBI are investigating the case.

According to his LinkedIn page, Lui has an eight-year career in tech that began with a stint at Amplitude Tech Hosting Service, a Denver-based firm specializing in database colocation.

In 2021 he founded Earthmade Computer, which also handles database colocation, in addition to computer processor procurement and export, according to LinkedIn.

Before his tech run, Lui was a restauranter who specialized in ultra-spicy Sichuan Chinese food. In 2012 he co-founded of Duo-Pot in Arcadia, a Chinese hot pot and dry pot joint that sold spicy frog dishes before it closed in 2021, according to LinkedIn.

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