The AI Heist You Never Heard Of
Federal Charges Rang Out as Chinese Nationals Arrested for Illicit AI Chip Exports
Two Chinese nationals—one of them present in the U.S. without legal authorization—have been indicted on federal charges for allegedly smuggling sensitive microchips used in artificial intelligence abroad, the U.S. Department of Justice announced Tuesday.
The defendants are Chuan Geng, 28, of Pasadena, and Shiwei Yang, 28, of El Monte. They are accused of breaching the Export Control Reform Act, a serious felony that carries a maximum prison term of 20 years. Geng surrendered to federal authorities voluntarily on Saturday; Yang was arrested the same day.
According to court documents, Geng and Yang purportedly operated through their company, ALX Solutions Inc., to export advanced U.S.-made technology—specifically high‑performance graphics processing units (GPUs)—to China without the required licensing from the U.S. Department of Commerce.
The Nature of the Alleged Scheme
The complaint claims ALX Solutions was set up shortly after the Commerce Department had placed stricter licensing requirements on certain advanced microchips, particularly those capable of supporting AI functions.
Investigators found that as early as December 2024, a shipment purportedly bound for foreign entities was, in fact, routed through freight‑forwarding companies in Singapore and Malaysia. Prosecutors allege this shipment was one among at least 20 prior exports, many of which similarly used those countries as intermediaries—often employed to mask the true final destination of sensitive goods.
While ALX Solutions submitted paperwork claiming the shipments were intended for specific overseas recipients, the documents show they never actually got paid by those entities. Instead, payments flowed in from businesses based in China and Hong Kong. One such transaction: in January 2024, ALX Solutions received $1 million from a China‑based firm, according to the affidavit.
Unlicensed Export & False Documentation
Prosecutors singled out one December 2024 export where ALX Solutions declared in export documents that the GPUs in question required a license to be shipped to China—a requirement the law enforces for sensitive AI‑capable technology. Yet neither Geng, Yang, nor ALX applied for or obtained that license. The omission, the DOJ contends, was deliberate.
The GPU type has been described in the complaint as “the most powerful chip on the market” for AI tasks—used for developing self‑driving vehicles, medical diagnostics platforms, and other high‑computational systems. Although the manufacturer was not named in the public documents, the chip was characterized as a high‑performance model with export restrictions.
Digital Footprints & The Investigation
Last week, federal agents searched ALX Solutions’ office in El Monte. They seized phones belonging to both Geng and Yang. Within those devices, law enforcement identified communications allegedly outlining a plan to dodge U.S. export restrictions. In particular, the two discussed routing shipments through Malaysia to make detection more difficult.
Legal Consequences and Penalties
Both individuals are now facing serious federal charges: exporting controlled technology without proper authorization is a felony under the Export Control Reform Act. If convicted, Geng and Yang could each receive up to 20 years in prison. The case underscores the U.S. government’s intensifying efforts to police technology flows that might strengthen foreign AI capabilities—particularly in rival nations.
Context & Broader Implications
Though this case focuses on two individuals and one company, it reflects broader national security concerns. The export of AI‑capable hardware—especially chips that can perform intensive computations—is tightly regulated. Unauthorized export can potentially aid foreign adversaries in accelerating advanced computing, military, or intelligence developments.
Using transshipment hubs like Singapore and Malaysia to obscure final destinations is a known tactic in export‑control evasion. The DOJ’s indictment reportedly details how Geng and Yang allegedly used such avenues, falsely listing recipients while collecting payments from end users in restricted nations.
What Comes Next Legally
Federal prosecutors will seek to prove that Geng and Yang knowingly violated export laws—not simply through administrative oversight, but by intentionally subverting licensing requirements. Key evidence includes shipping records, financial transactions, internal communications from devices seized, and documents filed with false or misleading export declarations.
Both men currently await further court proceedings. ALX Solutions may also face civil or criminal penalties beyond the individuals, depending on how deeply the company was implicated.
Related Developments
Separately, the DOJ is reported to be looking into a criminal conspiracy allegation connected to the 2016 “Russia‑collusion” narrative, following referrals from intelligence officials. While distinct from the ALX case, both investigations similarly highlight the increasing scrutiny from U.S. authorities on national security, technology transfers, and political accountability.
Takeaway
This case marks a sharp reminder: in the era of AI, export controls matter not only for trade policy but for broader security. The alleged behavior of Geng and Yang represents precisely the sort of activity U.S. regulators are moving hard to prevent. Whether for commercial gain or strategic positioning, the export of advanced GPUs without oversight threatens both the integrity of U.S. laws and the nation’s ability to control how cutting‑edge technologies circulate globally.