Two businessmen have been arrested for allegedly violating U.S. export control laws, according to an announcement from U.S. Attorney Nicholas J. Ganjei. The case involves a Houston-based company and its owner, who have pleaded guilty to smuggling advanced artificial intelligence (AI) technology out of the United States.
“Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation’s security by funneling cutting-edge AI technology to those who would use it against American interests,” said Ganjei. “These chips are the building blocks of AI superiority and are integral to modern military applications. The country that controls these chips will control AI technology; the country that controls AI technology will control the future. The Southern District of Texas will aggressively prosecute anyone who attempts to compromise America’s technological edge.”
Assistant Attorney General for National Security John A. Eisenberg added, “The United States has long emphasized the importance of innovation and is responsible for an incredible amount of cutting-edge technology, such as the advanced computer chips that make modern AI possible. This advantage isn’t free but rather the result of our engineers’ and scientists’ hard work and sacrifice. The National Security Division, along with our partners, will vigorously enforce our export-control laws and protect this edge.”
Alan Hao Hsu, also known as Haochun Hsu, 43, from Missouri City, Texas, along with his company Hao Global LLC, pleaded guilty on October 10 to charges related to smuggling and unlawful export activities.
Court documents reveal that between October 2024 and May 2025, Hsu and others exported or attempted to export at least $160 million worth of Nvidia H100 and H200 Tensor Core graphic processing units (GPUs), which are subject to export controls due to their potential use in both civilian and military applications. These GPUs are considered among the most advanced available and their export to China is prohibited under U.S. law.
The investigation found that Hsu and associates falsified shipping documents in order to hide the true nature of the goods being shipped as well as their final destinations. More than $50 million in wire transfers from China were used to fund these operations. The GPUs were ultimately shipped illegally to China, Hong Kong, and other locations.
In addition to Hsu, two Chinese nationals have been charged: Fanyue Gong (also known as Tom Gong), 43, a resident of Brooklyn, New York; and Benlin Yuan, 58, a Canadian citizen living in Mississauga, Ontario. Law enforcement arrested Gong in New York on December 3 and Yuan in Sterling, Virginia on November 28.
Yuan serves as CEO of a Sterling-based IT services firm linked to a large Beijing IT company; Gong owns a New York technology business.
According to charges filed against them, Gong and Yuan worked with employees at logistics companies based in Hong Kong as well as an AI technology firm in China in order to circumvent U.S. export restrictions.
Gong is accused of using intermediaries or straw purchasers within the United States who falsely claimed goods were intended for domestic customers or those located in countries not subject to licensing requirements for such exports. After acquiring Nvidia GPUs through these channels, individuals working for Gong removed identifying labels from the products before re-labeling them under a fictitious company name (“SANDKYAN”) prior to shipment overseas.
Shipping paperwork was also altered so that exported items appeared as generic computer parts rather than controlled technologies bound for restricted destinations like China or Hong Kong.
Yuan allegedly recruited people tasked with inspecting mislabeled GPUs on behalf of logistics firms based abroad while instructing them not to disclose shipments’ true destination was China. He also discussed strategies for misleading authorities if questioned about detained shipments.
If convicted at trial on conspiracy charges relating to violations of U.S. export law reforms or smuggling offenses respectively Yuan could face up twenty years imprisonment while Gong faces up ten years if found guilty.
Hsu awaits sentencing scheduled for February 18 where he faces up ten years incarceration; his company could be fined twice any illicit gains realized from criminal conduct alongside probationary penalties.
Both Yuan and Gong remain detained pending further court proceedings while Hsu has been released on bond until sentencing takes place.
Multiple federal agencies participated in investigating this case including offices within Department of Commerce’s Bureau of Industry & Security – Office Export Enforcement (Dallas Field Office), Immigration & Customs Enforcement Homeland Security Investigations (Dallas), FBI field offices located New York City Washington D.C., with prosecution led by Assistant U.S Attorneys John Marck Mark McIntyre together Trial Attorneys Fatema Merchant Yifei Zheng DOJ National Security Division Counterintelligence Export Control Section.
A criminal complaint is only an accusation; all defendants are presumed innocent unless proven guilty through legal proceedings.
