Federal prosecutors say they have broken up a large China-linked network that moved advanced artificial intelligence technology out of the United States in violation of export laws.
Prosecutors describe a smuggling ring that used falsified paperwork, shell companies, and intermediaries to disguise shipments and hide where the equipment was going.
The government says high-end AI processors were sent to China, Hong Kong, and other restricted destinations.
According to court filings, the hardware can support powerful AI systems with military as well as civilian uses.
One defendant, Texas businessman Alan Hao Hsu, admitted that he and his company moved large quantities of controlled AI hardware overseas while misrepresenting the contents of shipments.
Prosecutors say Hsu and his business received more than $50 million in wire transfers that started in China to fund the purchases.
They say Hsu has pleaded guilty to smuggling and export violations and is awaiting sentencing.
Two other men with ties to Chinese companies were arrested on separate charges related to the same investigation.
Charging documents say they worked with contacts in Hong Kong and mainland China to obtain restricted hardware through intermediaries and front companies.
The complaint alleges that the group relabeled equipment, used a fake brand name, and described the goods as generic computer parts to avoid export controls.
Prosecutors say the accused also discussed what to tell inspectors and how to respond if shipments were stopped by federal agents.
The Justice Department says the case shows ongoing efforts by China-linked buyers to get around U.S. rules that limit access to advanced AI technology.
The investigation was led by the Justice Department's National Security Division, federal prosecutors in Texas, and agents from the Commerce Department, Homeland Security Investigations, and the FBI.
Hsu is not in jail and will remain free until his sentencing.
The other two defendants are jailed while their cases move forward in court.
Newsmax reported in November that prosecutors charged two U.S. citizens and two Chinese nationals in another AI chip smuggling plot tied to Beijing.
In that case, investigators said the group funneled restricted Nvidia processors through Asian front companies to dodge U.S. export controls.
Taken together, both cases highlight sustained China-linked efforts to capture U.S. AI hardware.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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