Sure, let me give that a whirl. Here it goes:
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So, picture this: a nondescript little office in some run-of-the-mill strip mall over in El Monte, California. Not exactly where you’d imagine a gigantic smuggling operation to unfold, right? But, surprise! That’s exactly where federal agents say they found a whole web of intrigue — a couple of twenty-somethings allegedly moving millions in high-tech graphics processors to China, skating right past those pesky export controls. Wild, huh?
It’s like something out of a John le Carré novel. ALX Solutions Inc. — ever heard of them? Didn’t think so. They popped up not long after the U.S. tightened the screws on chip exports in late 2022. And fast forward twenty months, these folks somehow managed to send out 21 shipments. Usually through places like Singapore or Malaysia. They called it “commodity video cards.” But a routine check by customs? Yep, you guessed it: boxes stuffed with the hottest GPU tech on the market. Called ‘em “computer parts” to keep it sneaky, because, of course, they did.
And get this — bank transfers were like something out of a crime drama. A cool million wired upfront from some buyer in Hong Kong, with other random deposits trickling in from connections with defense contractors back in mainland China. Juicy, right? Investigators even intercepted some cryptic Signal chats between the co-founders, Chuan Geng and Shiwei Yang, plotting their sneaky orders. “Slice orders, never repeat a forwarder…” Seriously, like something from a spy film.
They’re playing on this 2022 Bureau of Industry regulation. I mean, chips that can handle massive neural-network workloads? Yeah, you need a Commerce license for that, unless you fancy breaking the law. And what’s the threshold? About 600 gigabytes per second. Anyway, that’s the kind of hardware that gets AI humming for military use.
Reading this affidavit is like binging a thriller on a Saturday night. A mislabeled pallet spotted by Long Beach customs, a trail leading to Nvidia’s database, and a stakeout that followed a delivery van straight to ALX’s doors. Inside? Empty trays for a thousand of those slick GPUs, worth about $25 million. That’s no pocket change! Everything pointed to a budding AI firm over in Shenzhen.
Geng, who’s living in the U.S. legally, turned himself in without a fuss. But Yang? Caught at LAX with a one-way ticket to Taipei. The drama! Geng got sprung on a $250,000 bond, poor Yang’s still cooling his heels behind bars, waiting for an August 12 hearing. The charges? Export Control Reform Act violations — up to 20 years in the clink.
The case is in the hands of the Justice Department’s Counterintelligence and Export Control Section, along with the U.S. Attorney’s Office in Los Angeles. The FBI had a field day calling it “classic transshipment with 21st-century polish.” BIS isn’t pulling punches either, talking civil penalties and lifetime export bans.
Turns out, Geng was a finance chief at some e-commerce site that folded due to unpaid taxes — figures, right? Yang? Co-owned a parcel-forwarding shop that mostly catered to sneaker flippers overseas. Hardly tech wizards. Prosecutors are saying ALX was just a front to feed China’s insatiable appetite for accelerators.
They still need a grand jury indictment. But the defense has plans — they’re gonna argue these chips didn’t cross that performance line when they bought them. Get ready for expert testimony on bandwidth and firmware. A trial might roll around by spring 2026. Could turn out to be a groundbreaking case on how the U.S. plans to tackle silicon smuggling in the AI age.
Source: Justice Department. Yeah, they’re not messing around with this one.
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