A senior executive at a major American server manufacturer, a Taiwan-based manager, and a self-described “fixer” allegedly used dummy servers, fake documents, and a shell company in Southeast Asia to evade U.S. export controls. Two have been arrested; a third remains at large.

In one of the largest alleged diversions of cutting-edge American technology to China, federal prosecutors have unsealed an indictment charging three men with orchestrating a scheme to funnel billions of dollars worth of advanced artificial intelligence servers to Chinese buyers—bypassing U.S. export laws designed to protect national security.

Yih-Shyan “Wally” Liaw, 71, a U.S. citizen and senior executive at a publicly traded American server manufacturer, and Ting-Wei “Willy” Sun, 44, a Taiwanese citizen described as a broker and “fixer,” were arrested Thursday and are expected to appear in federal court in the Northern District of California. A third defendant, Ruei-Tsang “Steven” Chang, 53, a Taiwanese citizen who served as a general manager in the manufacturer’s Taiwan office, remains a fugitive.

The indictment, unsealed Thursday in Manhattan federal court, alleges that between 2024 and 2025, the defendants directed a company based in Southeast Asia to purchase approximately $2.5 billion worth of high-performance servers—many assembled in the United States—on the pretense that the company was the end user. In reality, prosecutors say, the servers were repackaged, placed in unmarked boxes, and shipped to customers in China, all without the export licenses required by U.S. law.

Dummy Servers and Staged Inspections

The alleged scheme was not merely ambitious; it was brazen.

According to the indictment, the defendants took extraordinary steps to conceal their operation from both the manufacturer’s internal compliance team and U.S. authorities. When the manufacturer’s auditors arrived to inspect inventory, the defendants staged thousands of “dummy” servers—non‑working physical replicas—at a warehouse in Southeast Asia to create the illusion that the purchased servers remained in storage.

The ruse did not stop there. In advance of a later inspection by the U.S. Department of Commerce, prosecutors allege, Sun and an unnamed broker worked meticulously to prepare the dummy servers for scrutiny. Surveillance cameras captured them unboxing the replicas, using a hair dryer to remove and re‑affix labels and serial number stickers, and repackaging them in the manufacturer’s original boxes.

Photographs included in the indictment show Sun and the broker handling the dummy servers in what prosecutors describe as a deliberate effort to deceive federal inspectors.

A Tangled Web of Lies

The alleged conspiracy exploited a simple but critical vulnerability: the internal allocation system at the U.S. manufacturer. Liaw, a co‑founder and board member, and Chang, a general manager in Taiwan, worked with third‑party brokers who had direct connections to Chinese customers. Together, they directed executives at the Southeast Asian shell company—referred to in court documents as “Company‑1”—to place purchase orders that would pass internal scrutiny.

False documents and communications were generated to make it appear that Company‑1 was the actual end user. Once the servers cleared internal approvals, they were shipped to Company‑1’s facilities in Southeast Asia, where they were quickly repackaged and rerouted to China.

The pace of the alleged diversion accelerated sharply over time. According to the indictment, between late April and mid‑May 2025 alone, approximately $510 million worth of U.S.-assembled servers were diverted to China as part of the scheme.

Throughout the operation, the defendants communicated using encrypted messaging applications, prosecutors said. Their messages covered everything from the quantities of servers to order, to the specific locations in China where shipments were destined, to strategies for evading detection by the manufacturer’s compliance team and U.S. authorities.

“The defendants participated in a systematic scheme to divert massive quantities of servers housing U.S. artificial intelligence technology to customers in China,” said Jay Clayton, U.S. Attorney for the Southern District of New York. “They did so through a tangled web of lies, obfuscation, and concealment—all to drive sales and generate revenues in violation of U.S. law.”

The Stakes: National Security and American Innovation

The technology at the center of the alleged scheme—advanced artificial intelligence accelerator chips and the servers that house them—is subject to strict export controls. The U.S. Department of Commerce has determined that such hardware poses an unacceptable risk to national security if transferred to China, given its potential applications in military modernization, surveillance, and nuclear proliferation.

“These chips are the product of American ingenuity,” said John A. Eisenberg, Assistant Attorney General for National Security. “NSD will continue to enforce our export-control laws to protect that advantage.”

The FBI, which led the investigation alongside the Department of Commerce’s Bureau of Industry and Security, described combating export violations as among its highest priorities.

“Controlling the export of sensitive U.S. artificial intelligence technology is essential to safeguarding our national security and defending the homeland,” said Roman Rozhavsky, Assistant Director of the FBI’s Counterintelligence and Espionage Division. “That’s why combating export violations is among the FBI’s highest priorities.”

The Charges

All three defendants face three federal charges:

Conspiracy to violate the Export Control Reform Act (maximum 20 years in prison)
Conspiracy to smuggle goods from the United States (maximum 5 years)
Conspiracy to defraud the United States (maximum 5 years)

Liaw, a resident of Fremont, California, and Sun were arrested Thursday. Chang remains at large. The case is being prosecuted by the Southern District of New York’s National Security and International Narcotics Unit and the Justice Department’s Counterintelligence and Export Control Section.

The indictment is a charging document containing allegations. All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.