U.S. authorities have charged three individuals – Stanley Yi Zheng, Matthew Kelly, and Tommy Shad English – over an alleged illicit procurement operation to acquire and divert restricted artificial intelligence-related chips and servers to China, according to the U.S. Department of Justice, in a case highlighting concerns over AI chip smuggling to China.

The Department said the three defendants are accused of “conspiring to commit smuggling and export control violations.”

According to the Department of Justice, they allegedly sought millions of dollars’ worth of export-controlled computer chips from a California-based hardware company for illegal shipment to China via Thailand.

“The cutting-edge AI chips the defendants allegedly schemed to export to China represent the best of American ingenuity and years of strategic investment in maintaining our technological leadership,” said Assistant Attorney General for National Security John A. Eisenberg. “NSD is committed to protecting U.S. innovation and ensuring that those who violate U.S. export controls face serious consequences.”

According to court documents, the planning began around May 2023, when the trio started coordinating to acquire servers containing export-controlled computer chips. To bypass U.S. export controls, the three defendants used the names of Thailand-based companies as the purported purchasers of the computer servers, even though the co-conspirators intended for the U.S.-origin AI chips to be diverted to China.

In October 2023, defendant English allegedly ordered 750 computer servers worth $170 million, with 600 containing a computer chip that was controlled on the U.S. Commerce Control List and required a license for export to China. In January 2024, English transferred over $20 million to the company as partial payment for the October 2023 order, signing an “Advanced Computing Certification,” certifying that the computer servers were not destined for China or any other country subject to heightened export requirements.

During a compliance review discussion over email, Company-1 noted that Zheng’s company was based in China and flagged it as “odd” that no one from the Thailand-based company was copied. Company-1 further stated, “China is a restricted destination under U.S. export controls, and U.S. companies are restricted from selling to businesses or end users headquartered in China.”

“Protecting sensitive defense technology from diversion to foreign adversaries is a top priority,” said Special Agent-in-Charge Jason J. Sargenski of the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS), Southeast Field Office.

Sargenski emphasized that such advanced computing technologies are critical in military artificial intelligence and national defense capabilities and “when individuals attempt to illegally acquire or export this technology for profit, they are putting national security and our warfighters at risk.”

The Federal Bureau of Investigation also flagged the case  on social media, highlighting concerns over attempts to illegally route sensitive U.S. technology to foreign destinations.

Chinese National and Two U.S. Citizens Charged With Conspiring to Smuggle Artificial Intelligence Technology to China @FBIAtlanta

Read more about this case: https://t.co/nWB6bHp4ze pic.twitter.com/qJvwPGIN3h

— FBI (@FBI) March 25, 2026

Stanley Yi Zheng, 56, of Hong Kong, China, was arrested on March 22, 2026, and the government has requested that Zheng be held in federal custody without bail pending trial.

Matthew Kelly, 49, of Hopewell Junction, New York, and Tommy Shad English, 53, of Atlanta, Georgia, surrendered to federal authorities on March 25, 2026. Their initial appearances are scheduled in the District of New Jersey and the Northern District of Georgia, following criminal complaints issued on March 20, 2026, in the Northern District of Georgia.

This case is being investigated by the Department of Commerce’s Bureau of Industry & Security, the Defense Criminal Investigative Service, Homeland Security Investigations, and the Federal Bureau of Investigation. Assistant U.S. Attorney Samir Kaushal of the United States Attorney’s Office for the Northern District of Georgia and Trial Attorney Brett Ruff of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

The charges are part of a broader U.S. crackdown on AI technology smuggling. In a separate case announced the same week, the Department of Justice charged three individuals, including Super Micro co-founder, for trying to smuggle AI technology to China. The defendants, Yih-Shyan Liaw, a U.S. citizen and co-founder of SMCI, Ting-Wei Sun and Ruei-Tsang Chang, citizens of Taiwan, allegedly conspired to “divert high performance computer servers” assembled in the U.S. and integrating U.S. AI technology to China.

Also Read: Washington Calls It “Promoting Secure Exports.” But Is It a Chokehold on Global AI?