In a significant crackdown on technology smuggling, U.S. authorities have put a stop to a complex scheme that funneled advanced AI tech to China. U.S. Attorney Nicholas J. Ganjei confirmed the arrest of two businessmen for allegedly violating stringent U.S. export controls, an effort coordinated to protect the nation's technological prowess, according to the U.S. Attorney's Office.
At the center of the investigation is Alan Hao Hsu, known as Haochun Hsu, and his entity Hao Global LLC, both of which have admitted to illegal exporting and smuggling activities involving highly sensitive computing equipment. Pleading guilty on October 10th, Hsu's actions, along with his accomplices, are claimed to have involved the illicit transfer of Nvidia H100 and H200 Tensor Core graphic processing units valued at around $160 million - this technology is essential for AI applications and for processing data at unprecedented speeds, and allowed uses can range from civilian to military operations, making them a restricted commodity under U.S. law.
Per court documents unsealed and relayed by the U.S. Attorney's Office's website, the smuggling operation that spanned from October 2024 through May 2025 saw Hsu and his colleagues concealing the true nature of the exports and their end-users to bypass the legal scrutiny embedded in such high-stakes trade. Hsu's scheme was funded by over $50 million wired from interests within the People's Republic of China, directing shipments not only to mainland China but also to Hong Kong and elsewhere, directly against U.S. export policies.
Also charged are Fanyue Gong, also known as Tom Gong, a Chinese national residing in Brooklyn, and Benlin Yuan, a Canadian living in Ontario. Both are currently in custody and face serious charges related to high-tech contraband. According to the Justice Department, Gong allegedly repackaged GPUs and rebranded them under the fictitious “SANDKYAN” label to mislead authorities, while Yuan is accused of managing inspections and creating fabricated narratives to deceive U.S. law enforcement.
Hsu is scheduled for sentencing on February 18 and faces up to 10 years in prison, while his company could face substantial fines. If convicted, Yuan and Gong could face up to 20 and 10 years in prison, respectively, for conspiracy to violate the Export Control Reform Act and smuggling laws. The investigation involved multiple agencies, including the Department of Commerce’s Bureau of Industry and Security – Office of Export Enforcement, ICE Homeland Security Investigations, and FBI field offices in New York City and Washington, D.C. Assistant U.S. Attorneys John Marck and Mark McIntyre, along with DOJ National Security Division trial attorneys Fatema Merchant and Yifei Zheng, are leading the prosecution of this covert operation, which authorities say threatened U.S. technological advantages, as per the U.S. Attorney's Office.
