On Wednesday, March 25 the U.S. Department of Justice announced that a Chinese citizen and two U.S. citizens have been charged with conspiring to illegally export controlled artificial intelligence (AI) technology and chip equipment to China, involving hundreds of millions of dollars. All three have now been indicted, with one arrested and the other two having surrendered to federal authorities.
According to a DOJ press release, the three defendants are Stanley Yi Zheng from Hong Kong, Matthew Kelly from New York, and Tommy Shad English from Georgia. They are accused of conspiring to smuggle and violate U.S. export control regulations.
Prosecutors allege that starting in May 2023, the three planned to procure servers equipped with controlled chips through a California-based computer hardware company and, using a Thai company as a cover, ship the equipment to China. The U.S. government considers these chips to be advanced core components for AI computing, which require export licenses to China.
The case shows that in October 2023, English placed an order in the name of a Thai company for 750 servers totaling about $170 million, 600 of which had controlled chips, signing documents claiming the equipment would not be shipped to China. However, during compliance review, the supplier discovered anomalies, including connections to Chinese companies and lack of authentic Thai end-user information, and the transaction was not completed.
In January 2024, English had already paid over $20 million as a deposit. In February, the chip manufacturer could not verify the end-user during final checks, raising further concerns.
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Despite the first transaction failing, prosecutors note that in April 2024, English attempted again through another Thai company to purchase 500 similar servers with false end-user statements, but this transaction also failed.
Investigators also obtained multiple text messages and chat records showing the three discussed falsifying company information to pass reviews, explicitly mentioning the high value of these chips in the Chinese market and how to recruit others to participate in the transport chain.
For example, in a chat group called “GPU Partnership,” Kelly suggested improving company information to pass review, while English responded that the “fake materials” were already prepared. Zheng later discussed the market price of these chips in China, indicating all three knew the equipment’s ultimate destination was China.
Kelly seeks to recruit partners
In March 2024, Kelly drafted a message to recruit partners, explicitly stating the business involved supplying GPU systems to Chinese clients and that each transaction could generate millions of dollars in profit. Zheng reminded him not to mention China in the message to avoid attracting U.S. government attention.
John A. Eisenberg, Assistant Attorney General for National Security, said the AI chips targeted for export represent the pinnacle of U.S. technological innovation, and the government will strictly punish any violations of export control laws.
FBI officials noted that as AI technology becomes a global competitive focus, some foreign actors are attempting to acquire U.S. critical technology illegally, and enforcement will continue to be strengthened.
Additionally, the U.S. Department of Defense and Homeland Security emphasized that advanced computing technologies such as GPUs play a critical role in military and defense applications, and illegal transfers pose a national security threat.
Currently, 56-year-old Zheng was arrested on March 22, 2026, and appeared in federal court in California, with prosecutors requesting he remain in custody pretrial. 49-year-old Kelly and 53-year-old English surrendered on March 25 and will appear in federal courts in New Jersey and Georgia, respectively.
Prosecutors stressed that the allegations in the indictment are only charges, and all three defendants are presumed innocent until proven guilty.
The case is being jointly investigated by the U.S. Department of Commerce’s Bureau of Industry and Security, the Defense Criminal Investigative Service, Homeland Security Investigations, and the FBI, with indictments being handled jointly by the Northern District of Georgia U.S. Attorney’s Office and the DOJ National Security Division.
By Gao Yun
