Three Charged With Conspiring To Unlawfully Divert U.S. Artificial Intelligence Technology To China

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director of the Counterintelligence and Espionage Division of the Federal Bureau of Investigation ("FBI"), Roman Rozhavsky, and Assistant Director in Charge of the New York Field Office of the FBI, James C. Barnacle, Jr., announced today the unsealing of an Indictment charging YIH-SHYAN "Wally" LIAW, RUEI-TSANG "Steven" CHANG, and TING-WEI "Willy" SUN, for conspiring to divert high-performance computer servers assembled in the United States and integrating sophisticated U.S. artificial intelligence technology to China, in violation of U.S. export controls laws. LIAW, a U.S. citizen, and SUN, a citizen of Taiwan, were arrested today and presented in the Northern District of California. CHANG, a citizen of Taiwan, remains a fugitive. The case has been assigned to U.S. District Judge Edgardo Ramos.

"As alleged in the Indictment, the defendants participated in a systematic scheme to divert massive quantities of U.S. artificial intelligence technology to customers in China," said U.S. Attorney Jay Clayton. "They did so through a tangled web of lies, obfuscation, and concealment-all to drive sales and generate revenues in violation of U.S. law. Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to U.S. national security. Crimes involving sensitive technology must be met with swift action otherwise the law is meaningless. I commend the women and men of our Office, the FBI, and the Department of Commerce for their swift action in identifying, charging, and stopping this brazen evasion of our laws that protect national security and U.S. competitiveness. We will continue to doggedly investigate and prosecute these illegal diversion schemes."

"The FBI's investigation revealed that Liaw, Chang, and Sun allegedly conspired to sell billions of dollars' worth of servers integrating sensitive, controlled graphic processing units to buyers in China, in violation of U.S. export control laws," said Assistant Director Roman Rozhavsky of the FBI's Counterintelligence and Espionage Division. "Controlling the export of sensitive U.S. artificial intelligence technology is essential to safeguarding our national security and defending the homeland. That's why combating export violations is among the FBI's highest priorities, and we will continue working with our law enforcement, private sector, and international partners to bring to justice all who take action to undermine U.S. national security."

"Yih-Shyan Liaw, Ruei-Tsang Chang, and Ting-Wei Sun allegedly defrauded the United States by conspiring to divert significant quantities of servers with advanced artificial intelligence capabilities to Chinese customers," said FBI Assistant Director in Charge James C. Barnacle, Jr. "These defendants allegedly fabricated documents, staged bogus equipment to pass audit inventories, and used a pass-through company to conceal their misconduct and true clientele list. The FBI will hold accountable individuals who use American companies to provide export-controlled technology to our adversaries."

According to the allegations contained in the Indictment unsealed today in Manhattan federal court:[1]

To protect U.S. national security and foreign policy interests, the U.S. Department of Commerce has implemented license requirements for the export and reexport of artificial intelligence technologies to China and Hong Kong. In particular, the U.S. Department of Commerce has placed restrictions on the export and reexport of items that could make a significant contribution to the military potential or nuclear proliferation of other nations or that could be detrimental to the foreign policy or national security of the United States. For these reasons, among others, advanced artificial intelligence accelerator chips, and servers incorporating such chips, are subject to export license requirements for transfers to China and Hong Kong. Those regulations reflect a formal determination that the computing capabilities in advanced artificial intelligence accelerator hardware are of sufficient strategic significance that their transfer to China poses an unacceptable risk to national security.

LIAW is a co-founder, board member, and Senior Vice President of Business Development of a publicly traded U.S.-based manufacturer that designs and builds high-performance computer servers for artificial intelligence and cloud computing applications (the "U.S. Manufacturer"), including servers that integrate artificial intelligence graphics processing units ("GPUs"). CHANG is a general manager in the U.S. Manufacturer's Taiwan office. SUN is a third-party broker and "fixer" who has worked with LIAW, CHANG, and others to divert U.S.-export controlled technology to China. Together, the defendants and others conspired to systematically divert the U.S. Manufacturer's servers with certain GPUs to China without a license to do so from the U.S. Department of Commerce.

The scheme operated as follows. LIAW and CHANG, who worked closely with third-party brokers with customers based in China, directed certain executives of a company based in Southeast Asia ("Company-1") to place purchase orders with the U.S. Manufacturer for servers with certain GPUs, purportedly for Company-1. Those servers were often assembled in the United States and shipped to the U.S. Manufacturer's facilities in Taiwan, then delivered to Company-1 elsewhere in Southeast Asia. Company-1, in consultation with the defendants, then used a shipping and logistics company to repackage the U.S. Manufacturer's servers and place them in unmarked boxes to conceal their content prior to shipping them to their final destinations in China. To ensure that these server allocations were approved internally at the U.S. Manufacturer, the defendants and executives at Company-1 prepared false documents and records, and transmitted false communications, purporting to show that Company-1 was the end user of the servers.

At the defendants' direction, between 2024 and 2025, Company-1 purchased approximately $2.5 billion worth of servers from the U.S. Manufacturer, many of which were assembled in the United States. The defendants' scheme became more brazen over time and resulted in massive quantities of servers with controlled U.S. artificial intelligence technology being sent to China. Between late April 2025 and mid-May 2025 alone, at least approximately $510 million worth of the U.S. Manufacturer's servers, assembled in the United States, were diverted to China in violation of U.S. export control laws as part of the defendants' scheme.

The defendants and their co-conspirators took extensive measures to conceal their scheme. As just one example, to deceive the U.S. Manufacturer's compliance team, responsible for ensuring adherence to U.S. export control laws, the defendants staged thousands of "dummy" servers-non-working, physical replicas of the U.S. Manufacturer's servers-for inspection at the locations where Company-1 was purportedly storing the servers it had purchased from the U.S. Manufacturer. However, the actual servers purchased by Company-1 from the U.S. Manufacturer had already been unlawfully shipped to China. Photographs of some of the dummy servers that were staged at a warehouse rented by Company-1 in connection with an August 2025 audit conducted by the U.S. Manufacturer are below:

Some of those same dummy servers were also later staged at a warehouse rented by Company-1 in an attempt to pass an inspection being conducted by the U.S. Department of Commerce of Company-1's purchases of the U.S. Manufacturer's servers. In advance of the inspection, SUN and one of the third-party brokers who works closely with the defendants to divert servers to China ("Broker-1") staged dummy servers at the warehouse by, among other things, unboxing the dummy servers; using a hair dryer to remove and affix labels and serial number stickers to the server boxes and to the dummy servers themselves; and then re-packaging the dummy servers in the U.S. Manufacturer's boxes. Surveillance cameras recorded their work and captured them preparing the dummy servers, including as shown in the images below, in which SUN (left) and Broker-1 (right) are circled in white:

Throughout the scheme, the defendants coordinated closely with each other, executives of Company-1, and third-party brokers with end customers in China using encrypted messaging applications. Those communications related to, among other topics, the quantities of servers for Company-1 to order, the locations in China where those servers were to be shipped, and efforts to conceal the nature of the scheme from the U.S. Manufacturer's compliance team, U.S. authorities, and others. At no point did the defendants or the U.S. Manufacturer have a license from the U.S. Department of Commerce to export or reexport U.S.-manufactured servers to China.

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LIAW, 71, of Fremont, California; CHANG, 53, of Taiwan; and SUN, 44, of Taiwan, are each charged with one count of conspiring to violate the Export Controls Reform Act, which carries a maximum sentence of 20 years in prison; one count of conspiring to smuggle goods from the United States, which carries a maximum sentence of five years in prison; and one count of conspiring to defraud the United States, which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Clayton praised the outstanding work of the FBI and its New York Field Office's Counterintelligence and Cyber Division, the Department of Commerce's Bureau of Industry and Security, and the Department of Justice's National Security Division, Counterintelligence and Export Control Section. Mr. Clayton also thanked the FBI's San Francisco Field Office and the Department of Justice's Office of International Affairs for their assistance.

This case is being handled by the Office's National Security and International Narcotics Unit and Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Juliana N. Murray, David J. Robles, and Kevin T. Sullivan are in charge of the prosecution, with assistance from Trial Attorneys Maria Fedor and Mark Murphy of the National Security Division's Counterintelligence and Export Control Section.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.