Nvidia tells CRN that the indictments show that ‘that our due diligence process works well. Despite several efforts, the would-be smugglers failed to clear our diligence process and did not receive GPUs from us.’
The U.S. Department of Justice has for a second time in two weeks indicted multiple people for allegedly conspiring to export U.S. manufactured servers for eventual transfer to China in violation of U.S. export laws.
In this new action, the DOJ alleged that two U.S. citizens who appear to be IT solution provider executives, along with a Hong Kong national, conspired to ship servers with Nvidia GPUs via a Thailand company with their eventual destination being China.
The DOJ, in a press release, alleges that the three started conspiring in mid-2023 to “obtain computer servers with export-controlled computer chips from a California-based computer hardware company (Company-1) and ship them to Thailand with an ultimate destination of China, in violation of U.S. law.”
[Related: Accelerating AI Boom Drives Supermicro to Record Q2 Revenue Growth]
That California-based computer hardware company was not named in the release or the indictment, a copy of which was obtained by CRN.
However, that company is likely San Jose, Calif.-based Supermicro, a server and storage manufacturer and close partner of Nvidia. In the indictment, the DOJ includes a redacted copy of a purchase order dated December 29, 2023, that has the server vendor name blackened out but lists the servers to be purchased as model SYS-821GE-TNHR. That would correspond with a Supermicro server on its website, the GPU SuperServer SYS-821GE-TNHR.
Supermicro has not been charged with any wrongdoing in the indictment.
This case is the second case this month in which third-party persons or organizations are alleged to have tried shipping Supermicro servers with GPUs to China in violation of U.S. law.
Last week, Yih-Shyan “Wally” Liaw — a co-founder, board member, and senior vice president of business development at Supermicro — along with a Taiwan-based Supermicro employee and a third-party contractor were indicted for allegedly shipping $2.5 billion worth of servers assembled in the U.S. with Nvidia GPUs via Taiwan to another company where they were repackaged prior to shipping to their final destinations in China. Liaw, who was arrested, resigned from Supermicro’s board of directors.
Supermicro’s stock has fallen about 30 percent in response to the two cases from a close of $30.79 per share on March 19 to its current $22.56 per share.
Supermicro on Wednesday also became the target of a class-action lawsuit that alleges the company “issued false and misleading statements and/or failed to disclose material adverse facts” about its business, operations, and prospects related to its “significant” server shipments to China as well as “material weaknesses” in the company’s compliance controls.
Supermicro did not respond to a CRN emailed request for more information by press time. In a statement posted on its website after the first set of charges were announced last week, the company said that “the conduct by these individuals alleged in the indictment is a contravention of the Company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations. Supermicro maintains a robust compliance program and is committed to full adherence to all applicable U.S. export and re-export control laws and regulations.”
CRN has reached out to the DOJ for comment. An Nvidia spokesperson, in response to a CRN request for more information, wrote, “The complaint shows that our due diligence process works well. Despite several efforts, the would-be smugglers failed to clear our diligence process and did not receive GPUs from us.”
The indictment for the second case was unsealed Tuesday.
In the new indictment, the DOJ is charging Stanley Yi Zheng, Matthew Kelly, and Tommy Shad English with conspiring to commit smuggling and export control violations. They are alleged to have sought millions of dollars’ worth of export-controlled computer chips from a California-based computer hardware company for illegal shipment to China through Thailand.
The three have already been arrested and are in federal custody.
In the indictment, Tommy Shad English is identified as the CEO and registered agent of an unnamed entity the DOJ called “English Company,” which the DOJ said, based on its website, is a Georgia-based “leading Distributor, Aggregator, Fulfillment, VAR, and Service Provider of innovative solutions, services, IT equipment and Consumer Electronic devices.”
Matthew Kelly operates and is the registered agent of an unnamed entity the DOJ called “Kelly Company,” a New York-based company which the DOJ said provides system integration support to companies globally and “strategic guidance to international startups navigating the US market with tailored consulting and Go-To-Market strategies for products and services, including Mobile, IoT, Consumer Electronics, SaaS, Gen AI, Web3, Crypto, GPU/HPC, Drones and Robotics.”
Both companies said they have international business relationships, the DOJ said.
Zheng, meanwhile, operates Zheng Company, a Hong Kong, China-based company that “supposedly offers electronics that use sensors and wireless technology to help people achieve their fitness goals.”
The current allegations started when the U.S. Department of Commerce’s Bureau of Industry and Security in early 2024 received an anonymous email tip that English Company was “participating or attempting to participate in the transshipment of export-controlled commodities, computer parts offered for sale by COMPANY-1, to China.”
“Company-1” likely refers to Supermicro, the manufacturer of the SYS-821GE-TNHR referred to in the later purchase order.
The tipster provided screenshots of email communications between English and Zheng and others related to setting up a deal to acquire the servers. Kelly was added to the email string in early 2024.
“Company-1” (i.e., Supermicro) on January 26, 2024 responded to the email from English with Zheng and Kelly as carbon copy recipients with concerns that the purchase order, which was first mentioned in October of 2023 would end up in China, citing the fact that the Thailand company, which the DOJ called “Company-6,” supposedly making the order was not a part of the email string and that Zheng Company was based in China.
The order was for 232 servers with a total value of $61,788,560.
The chips required for the purchase order also needed vetting by the chip manufacturer which the DOJ called Company-2 but which is likely Nvidia given that the GPUs used by the Supermicro servers were manufactured by Nvidia.
“Company-2” employees allegedly expressed suspicions regarding the sale, causing “Company-1” to place the English Company order on hold and refund the partial payment that company had already made.
English in April of 2024 then requested “Company-1” export 500 Nvidia H100 GPUs to another Thailand-based company which the DOJ called “Company-5.” English provided “Company-1” an End User Certification calling “Company-5” the end user for the purchase.
Kelly on February 13, 2026, was stopped at Newark International Airport after flying from Rome, Italy, by U.S. Customs and Border Protection and Homeland Security Investigations, which detained his laptop and mobile phone as part of a border search.
According to the DOJ, Kelly’s mobile phone contained numerous WhatsApp messages under the group text name “GPU Partnership” showing that English, Zheng, and Kelly wanted to secure products from “Company-1” and “Company-2” to ship to China via Thailand. Screenshots of those messages were included in the indictment.
English at one point in the message string noted that the GPUs are highly restricted and hard to get, and wrote, “Only thing I ask is nothing illegally is going on and ill want that in writing.” (sic)
English in that same message implies that his company is a channel partner working with “Company-1” (i.e. Supermicro) when he wrote, “Not saying it is [illegal] but this is like gold and they are very strict who gets these and I can not risk loosing my partnership with them jepordizing my company.” (sic)
At one point in the message string, Zheng wrote, “”DO NOT MENTION ANYTHING ABOUT CHINA. Please drop those lines: We also have a few customers in China but it’s a banned country for distribution. two they act as a pass through partner for customers in China,” the DOJ wrote.
Zheng was arrested on March 22, while Kelly and English surrendered to federal authorities on March 25.
David Harris contributed to this article.
Photo courtesy of U.S. Department of Justice.
