Sure, here it goes:
So, get this — a couple of young folks, not far from my age, got busted for allegedly running this sneaky operation out of a bland strip-mall office in El Monte. The federal agents in Los Angeles? Yeah, they claim they’ve unraveled a whole smuggling network, moving millions — and I mean millions — of fancy graphics processors over to China, even though there’s supposed to be these strict export rules clamping down on that kind of thing.
Here’s the wild part: Court docs opened up this week show how this ALX Solutions Inc. just popped up right after Washington laid down those chip-export laws late in 2022. Fast-forward a bit, and they’d managed to get 21 shipments out the door. But they weren’t doing this in some straightforward way. Nah, they were doing this zigzag route, sending stuff through places like Singapore and Malaysia, calling the goods “commodity video cards” because, you know, those don’t need a special license.
But then, bam — customs does this routine check, and they find these crates loaded up with the hot stuff — top-shelf accelerators — but labeled as just “computer parts.” It’s like, seriously? Did they really think no one would catch on?
Follow the money, and you see a bunch of cash transfers popping up. There’s one biggie from a buyer in Hong Kong sending a million bucks upfront, with smaller ones trickling in from mainland companies linked to, wait for it, defense contractors. Investigators even found Signal app chats where one guy, Chuan Geng, was coaching the other, Shiwei Yang, on how not to get caught: chop up orders, change labels, the whole shebang.
This whole saga leans hard on a rule from back in October 2022 that pretty much cut off China’s access to these super-powerful chips unless you get a special license. They say these chips can turbocharge AI for military stuff because they’ve got this crazy high interconnect bandwidth.
Now this affidavit reads like something out of a spy movie — mislabelled pallet spotted at Long Beach customs, tracebacks to Nvidia’s database, late-night surveillance following vans. When they finally swooped into ALX’s rented place, they found empty trays for like a thousand premium GPUs. Street value? Over $25 million. But wait, packing slips were headed off to a new AI gig in Shenzhen.
Geng gave himself up pretty smoothly. But Yang was a different story — they caught him at LAX with a one-way ticket to Taipei in his hand. Geng? The judge let him out on a $250,000 bond, but Yang’s still locked up, waiting for a hearing on August 12. The charges? Serious stuff under the Export Control Reform Act, looking at up to 20 years behind bars.
You got the Justice Department’s Counterintelligence folks working with the U.S. Attorney’s Office on this. The FBI’s saying it’s like old-school smuggling meets tech-savvy tricks. BIS, on their end, is talking about civil penalties and maybe even banning these folks from exporting anything for life.
Now, something about their backgrounds — Geng was once a finance guy for some e-commerce thing that went under over taxes, and Yang co-owned a forwarding shop that dealt with sneaker sellers. No tech experience to speak of there, which backs up the idea that ALX was just a front for sneaking chips into China’s hungry-for-tech market.
The court’s not quite done, though. They need a grand jury to push an indictment, and the defense? They’re saying the chips didn’t quite hit the performance mark when bought. Expect lots of back-and-forth at trial — experts arguing about bandwidth and firmware. Might kick off by spring 2026. It’ll be a look at how on earth Washington’s gonna tackle silicon smuggling in this AI-crazy world.
News source? Justice Department.
