Chinese, U.S. citizens accused of smuggling AI tech to China

Federal prosecutors on Wednesday accused a Chinese national and two U.S. citizens of smuggling artificial intelligence technology to China. The Department of Justice alleged that the trio conspired to sell millions of dollars’ worth of American-made AI computer chips to Chinese buyers. Stanley Yi Zheng, of Hong Kong, was arrested Sunday. Matthew Kelly, of Hopewell Junction, N.Y., and Tommy Shad English, of Atlanta, Ga., surrendered to federal authorities Wednesday. The three are charged with conspiring to commit smuggling and export control violations. They are presumed legally innocent of all charges until proven guilty in court.

China has employed brazen schemes to illegally get ahold of American technology, FBI agent Roman Rozhavsky said in a news release. Enforcing export controls in cases like this can safeguard national security, he said.

How did the trio allegedly commit their crimes? Starting in 2023, they bought computer chips from a California-based computer hardware company while pretending to be buyers from Thailand. The men allegedly shipped the technology to Thailand while planning to later divert it to China, according to the DOJ. The shipments violated U.S. embargoes against China. Two such plots, in 2023 and 2024, ultimately failed, federal prosecutors said.

The three used a group chat to discuss their plans to scam, the DOJ said. In one text message since published by authorities, Kelly allegedly said selling the technology in China was a lucrative business with millions of dollars of profit per order. In another text, Zheng urged the three to refrain from mentioning anything about China in their texts, as this could draw the attention of the U.S. government.

What else did federal prosecutors announce Wednesday? A federal grand jury in Dayton, Ohio, indicted six Chinese nationals and two pharmaceutical companies on drug trafficking, money laundering, and terrorism charges. The indictment accused the nationals of selling the materials and chemicals needed to make fentanyl. They allegedly sold to the Gulf Cartel in Mexico.

Dig deeper: Read Carolina Lumetta’s report on China’s efforts to curb fentanyl exports.