DOJ's $300 million GPU case casts a California reseller's suppliers as the deceived party

The route depends on the first leg being legal. According to the Justice Department, Lui and his co-conspirators shipped the servers to countries such as Malaysia and Singapore, where no Commerce Department license is required, and then re-exported them to China ^[3]. As prosecutors describe it, the rest of the scheme was paperwork. US manufacturers selling to EarthMade received documents naming permissible end users and destinations ^[8]. Assistant Attorney General John A. Eisenberg said the indictment also describes "staged dummy servers to mislead inspectors" ^[10].

The one order CRN details, 27 servers for about $7.6 million ^[9], comes to roughly $281,000 a machine ^[16]. If every order ran at that price, the $300 million total would be about 1,070 servers ^[17]. The $176 million from the two Malaysian shipping companies averages about $17.6 million a month ^[14] and is roughly three-fifths of the alleged total ^[13]. Those receipts landed in EarthMade's own accounts. By the DOJ's account, the manufacturers saw the end-user documents ^[8].

For distributors, the filings point to a witness role. Lui is the only defendant in the release ^[1]. The indictment casts the manufacturers as the parties handed false documents ^[8]. In my view this record shows a supplier's end-user file working as prosecution evidence against the reseller who filled it with false statements. Roman Rozhavsky of the FBI's Counterintelligence and Espionage Division said, "We're grateful to our partners across the U.S. government and private sector for their assistance" ^[11].

Prosecutors had already charged people inside the server supply chain. About six months ago a Supermicro co-founder, an employee and a contractor were indicted over $2.5 billion of servers with Nvidia GPUs routed through Taiwan ^[18]. That case is about eight times the size of this one ^[19]. The DOJ did not say who made EarthMade's servers ^[6]. SCMP's headline called them Nvidia AI servers ^[7], and EarthMade's website lists Supermicro-based servers, a single Dell PowerEdge and several Nvidia products ^[6].

The case could widen in three ways. First, a superseding indictment could name the co-conspirators ^[3], and one of them could work inside a supplier. Second, the Commerce Department's export enforcement office could go after others. David A. Peters, Assistant Secretary of Commerce for Export Enforcement, said, "The Bureau of Industry and Security is committed to using all lawful means to protect national security and hold violators accountable" ^[12]. Or it stays a case against one reseller owner facing combined maximums of 50 years ^[15], with suppliers as witnesses. I think the current record supports the third outcome. A charge or penalty against any manufacturer or distributor that sold to EarthMade would prove that wrong.