Indictment claims dummy servers and bogus docs used to slip past US export controls
A co-founder of Supermicro is among three people charged with diverting servers fitted with Nvidia GPUs worth $2.5 billion to Chinese customers in violation of US export controls.
The Department of Justice (DOJ) unsealed an indictment on Thursday naming Yih-Shyan "Wally" Liaw, along with two others connected with Supermicro, as defendants.
It accuses them of conspiring to sell billions' worth of high-performance servers with GPUs to China, evading export controls through the use of false documents, dummy servers to mislead inspectors, and convoluted shipment schemes to disguise the true destination of the kit.
Liaw is a co-founder and Senior Vice President of Business Development at the server maker, based in San Jose, California.
The other two defendants are Ruei-Tsang "Steven" Chang, whom the DOJ says is a general manager in Supermicro's Taiwan office, and Ting-Wei "Willy" Sun, identified by the Feds as a third-party broker alleged to have worked with the others on the scheme.
Liaw, a US citizen, and Sun, a Taiwanese national, are understood to be in custody, while Chang, also from Taiwan, remains at large. The DoJ said Liaw and Chang were both arrested yesterday.
All three are charged with conspiring to violate the Export Controls Reform Act, conspiring to smuggle goods from the United States, and conspiring to defraud the United States.
According to the DOJ, Liaw and Chang engaged key executives at a company based in Southeast Asia to place purchase orders with Supermicro for high-spec servers fitted with GPUs. Those servers were shipped to Supermicro's facilities in Taiwan, before being delivered to the Asian buyer.
The filing goes on to allege that, after delivery, the defendants then arranged with the Asian intermediary for the systems to be repackaged in unmarked boxes, before they were shipped onward to their final destinations in China.
The defendants along with executives at the Asian firm were said to have created false documents and records to ensure that the server purchase allocations were approved internally by Supermicro staff. The DOJ claims that those involved in the scheme even went as far as mocking up thousands of non-working "dummy" servers for inspection at the warehouse where the buyer claimed it was storing the kit bought from Supermicro.
FBI Assistant Director in Charge James C. Barnacle Jr said in a statement that the defendants were accused of diverting hundreds of servers with advanced AI capabilities to Chinese customers.
"These defendants allegedly fabricated documents, staged bogus equipment to pass audit inventories, and used a pass-through company to conceal their misconduct and true clientele list. The FBI will hold accountable individuals who use American companies to provide export-controlled technology to our adversaries."
Supermicro issued a statement saying it is cooperating fully with the government's investigation, and making it clear that the company itself is not named as a defendant in the indictment.
"Supermicro was informed today that the United States Attorney's Office for the Southern District of New York has unsealed an indictment of three individuals associated with the company in connection with an alleged conspiracy to commit export-control violations," it says.
"The conduct by these individuals alleged in the indictment is a contravention of the company's policies and compliance controls, including efforts to circumvent applicable export control laws and regulations. Supermicro maintains a robust compliance program and is committed to full adherence to all applicable US export and re-export control laws and regulations."
The server provider to the hyperscalers recently revealed $12.7 billion revenue in its most recent quarterly earnings after nearly being delisted from the NASDAQ stock exchange last year due to accounting issues causing a delay in filing its annual 10-K form with the SEC. ®