DOJ, BIS Unveil Case Involving Illegal Nvidia Chip Exports as Trump Plans Looser Controls

DOJ said Alan Hao Hsu of Texas, and his company, Hao Global LLC, pleaded guilty as part of a scheme to export at least $160 million worth of export-controlled Nvidia H100 and H200 Tensor Core graphic processing units to China. DOJ charged two others for their role in the exports: Benlin Yuan, a Chinese native and CEO of a Virginia-based IT services company owned by a Chinese firm, and Fanyue Gong, a Chinese citizen and owner of a New York technology company.

Yuan, a Canadian citizen and resident, was charged with conspiring to violate the Export Control Reform Act, and Gong, a Brooklyn resident, was charged with conspiring to smuggle goods out of the United States.

Hsu pleaded guilty to smuggling and illegal export activities after DOJ said he and others knowingly tried to ship the Nvidia chips to China from October 2024 and May 2025. Hsu and others also falsified shipping paperwork, “misclassifying the true nature of the goods and their recipients to conceal the ultimate destination of the GPUs,” DOJ said.

Hsu and Hao Global received more than $50 million in Chinese wire transfers to help fund the exports. DOJ said the chips were ultimately shipped to mainland China, Hong Kong and “other destinations in violation of U.S. export laws.”

The agency called the H100 and H200 “high-speed GPUs used for AI applications and high-performance computing,” adding that they can be used by militaries and process “massive amounts of data, advancing generative AI and large language models and accelerating scientific computing.”

The indictment was released the same day Trump announced that he had decided to allow the sale of Nvidia’s H200 AI chips to certain “approved customers” in China in exchange for the U.S. government receiving a cut of the sales revenue (see 2512080059). He said the Commerce Department was “finalizing the details.”

In announcing the DOJ charges, Nicholas Ganjei, U.S. attorney for the Southern District of Texas, said the Nvidia chips are the “building blocks of AI superiority and are integral to modern military applications. The country that controls these chips will control AI technology; the country that controls AI technology will control the future.” He added that his office will “aggressively prosecute anyone who attempts to compromise America’s technological edge.”

DOJ said the business owners worked with others to buy the Nvidia chips through “straw purchasers and intermediaries,” falsely saying the goods were meant for American customers or customers in countries that weren’t subject to as strict export license requirements, such as Thailand or Taiwan, according to an unsealed sworn affidavit from the Bureau of Industry and Security. The chips were then sent to several U.S. warehouses where people who worked for Gong removed the Nvidia labels and re-labeled them with the name “SANDKYAN,” which the affidavit said was "believed to be a fake company."

The BIS affidavit said the agency discovered the warehouses in May 2025 after receiving information about pallets of Nvidia chips, destined for China, being stored in a U.S. logistics company’s leased New Jersey warehouse. An undercover agent visited the warehouse two days later and “observed” people relabeling the Nvidia chips with the name of the fake company. When the undercover agent asked in Mandarin about what they were doing, the people said they were working to cover up all the Nvidia labels for “export purposes.”

The people also classified the advanced chips as “generic computer parts” before exporting them to China. Those documents, filed in the Automated Export System, wrongly labeled the chips as “adapters,” “adapter modules,” or “contactor controllers,” BIS said. Some shipments were filed in AES as “no license required” with an ultimate destination of an air freight facility near the Toronto International Airport, and the Export Control Classification field was left blank.

DOJ said Yuan helped recruit people to inspect the mislabeled chips on behalf of a Hong Kong logistics company, and he directed inspectors, which he called “engineers,” to omit that the goods were destined for China. One of the engineers, a Chinese national that the BIS agent said illegally entered the U.S. from Mexico, told U.S. agents that Gong had ordered the engineer to relabel the boxes of Nvidia chips “on four or five occasions.” The engineer also said they received the addresses and phone numbers of the warehouses from Gong through an encrypted messaging app that had 20 to 30 other people, including some that appeared to be based in China.

The engineer added that Gong never said why they were relabeling the boxes, but the engineer suspected that “it was not a good thing,” according to the BIS affidavit. The engineer said they knew the chips were “new technology” and were subject to export restrictions.

The BIS agent said the warehouses contained little paperwork showing where the Nvidia chips came from, but officers did find one invoice from a single pallet showing an Australian company was the purchaser of the H100 and H200 chips from a Massachusetts-based supplier, and that Australia was the ultimate destination.

Yuan also “directed discussions regarding crafting a story his company could use to get GPUs and other equipment released after federal law authorities detained it,” DOJ said. “Yuan allegedly engaged in several conversations about providing false information to U.S. authorities regarding the ultimate customer of the goods.”

Yuan faces up to 20 years in prison for conspiring to violate ECRA and up to a $1 million fine, while Gong faces up to 10 years in prison for conspiring to smuggle goods out of the U.S. Both remain in custody. Hsu was released on bond pending sentencing.