Federal agents in LA cracked open this smuggling thing — it’s kinda wild if you think about it. Two young folks, barely out of diapers, allegedly ran this racket out of some nondescript strip mall in El Monte. Real Hollywood stuff.
So, court docs unsealed recently spill the beans on this company, ALX Solutions Inc. Not even in the game long before tightening rules dropped. For like 20 months, they sent out 21 shipments — sneaky ones — declaring them as just regular ol’ video cards. Nothing to see here, folks. Most went through places like Singapore or Malaysia. But oops, customs folks caught a whiff of something funky and, bam, cracked this whole thing wide open. Inside were these top-of-the-line graphics processors — just casually labeled “computer parts.”
And here’s the money trail: a Hong Kong buyer sent over a cool $1 mil upfront. Then, other mainland groups casually sprinkled in smaller amounts — kinda tied to defense contractors, they say. And check out this: Signal chats — yeah, investigators got hold of them. Co-founder Chuan Geng was all like, “Slice ’em up, don’t use the same forwarder, mix the labels if needed.”
This Bureau of Industry and Security reg from back in October 2022 played a big role, apparently. It cut off China from chips that could handle massive AI tasks unless there was some license involved. Something about 600 gigabytes per second being the magic number — sounds super sophisticated yet slightly scary if you’re me.
The whole story feels like some secret agent flick: Last December, customs in Long Beach flagged a mislabelled pallet. Then somehow, Nvidia was on the radar, serial numbers traced and all. Later, a stakeout trailed a van from the port right to ALX’s stash. Epic move. When agents showed up with a warrant, they found tons of empty trays — enough for about a thousand fancy GPUs worth, get this, $25 million. Oh, and packing slips aimed straight at some new AI gig in Shenzhen. Sneaky, right?
Chuan Geng, a lawful U.S. dude, turned himself in like it was no big deal. His partner, Shiwei Yang, not so much. Visa expired ages ago, trying to skip town with a one-way to Taipei. Classic move. Geng got out on a $250K bond; Yang? Still cooling his heels in custody, with a hearing in August. They’re both in deep under the Export Control Reform Act, staring down potential 20-year sentences.
The Justice Department’s on this like white on rice, alongside the U.S. Attorney’s office. The FBI’s calling it “transshipment with modern flair” — pretty catchy if you ask me. BIS is thinking civil penalties and maybe banning them from exporting forever.
Public records say Geng was once, let’s say, CFO for a short-lived e-commerce company that didn’t pay taxes. Meanwhile, Yang ran a parcel-forwarding biz for sneaker traders. Not exactly tech giants, hence the whole “they’re just here to smuggle chips” accusation.
But hey, they still need some grand jury action for an indictment. Defense is already gearing up, probably claiming those were below the Commerce bar or something. Could get real technical with experts and bandwidth jargon. And who knows, a trial might kick off by spring 2026. Could be the first real peek into how the U.S. plans to tackle chip smuggling in the AI age. No idea where all this is headed, but it’s quite the ride, right?
Source: Justice Department (for what it’s worth)
