US Authorities Unseal Indictment in Major AI Technology Diversion Case
An indictment has been unsealed charging three individuals—Yih-Shyan “Wally” Liaw, Ruei-Tsang “Steven” Chang, and Ting-Wei “Willy” Sun—for allegedly conspiring to divert high-performance computer servers, assembled in the United States and integrating sophisticated artificial intelligence technology, to China in violation of U.S. export control laws. Liaw, a 71-year-old U.S. citizen from Fremont, California, and Sun, a 44-year-old citizen of Taiwan, were arrested today and will be presented in the Northern District of California. Chang, a 53-year-old citizen of Taiwan, remains a fugitive.
Allegations of Systematic Evasion and Deception
According to the indictment, the defendants engaged in a complex scheme to bypass U.S. regulations designed to protect national security. John A. Eisenberg, Assistant Attorney General for National Security, stated, “The indictment unsealed today details alleged efforts to evade U.S. export laws through false documents, staged dummy servers to mislead inspectors, and convoluted transshipment schemes, in order to obfuscate the true destination of restricted AI technology—China. These chips are the product of American ingenuity, and NSD will continue to enforce our export-control laws to protect that advantage.”
Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence and Espionage Division added, “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. Controlling the export of sensitive U.S. artificial intelligence technology is essential to safeguarding our national security and defending the homeland.”
Details of the Diversion Scheme
The defendants are accused of orchestrating a multi-billion dollar operation that involved:
- Liaw, a co-founder and Senior Vice President of Business Development at a U.S.-based server manufacturer, and Chang, a general manager in the company’s Taiwan office, collaborating with Sun, a third-party broker.
- Directing a Southeast Asian company, referred to as Company-1, to place purchase orders for servers with advanced AI GPUs, purportedly for its own use.
- Shipping servers assembled in the U.S. to Taiwan, then to Company-1 in Southeast Asia, where they were repackaged in unmarked boxes and sent to final destinations in China.
- Preparing false documents to mislead the U.S. Manufacturer’s compliance team and U.S. authorities about the end users.
Between 2024 and 2025, Company-1 purchased approximately $2.5 billion worth of servers, with at least $510 million diverted to China between late April and mid-May 2025 alone. The scheme allegedly became more brazen over time, involving extensive concealment measures.
Elaborate Concealment Tactics Exposed
To deceive inspectors, the defendants staged thousands of “dummy” servers—non-working replicas—at locations where Company-1 was supposed to store the purchased servers. Surveillance footage captured Sun and a broker using tools like hair dryers to manipulate labels and serial numbers on these dummy servers. U.S. Attorney Jay Clayton for the Southern District of New York remarked, “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.”
The defendants coordinated via encrypted messaging apps to discuss server quantities, shipping locations in China, and efforts to hide the scheme from compliance teams and authorities. At no point did they obtain the required license from the U.S. Department of Commerce for exporting these controlled items to China.
Charges and Legal Implications
Liaw, Chang, and Sun each face one count of conspiring to violate the Export Controls Reform Act (maximum 20 years imprisonment), one count of conspiring to smuggle goods from the United States (maximum 5 years), and one count of conspiring to defraud the United States (maximum 5 years). The FBI, Department of Commerce’s Bureau of Industry and Security, and Department of Justice’s National Security Division are investigating the case.
It is important to note that the indictment contains only allegations, and all facts described should be treated as such until proven in court.
