Two businessmen have been arrested for allegedly violating U.S. export control laws in a case involving the illegal export of advanced artificial intelligence (AI) technology, according to an announcement from U.S. Attorney Nicholas J. Ganjei.
The investigation, known as Operation Gatekeeper, led to a Houston company and its owner pleading guilty to smuggling 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 stated, “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, and his company Hao Global LLC pleaded guilty on October 10 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). These GPUs are used in both civilian and military contexts for high-performance computing and advancing generative AI models. Their export to China is strictly prohibited under U.S. law.
Hsu and his associates falsified shipping documents to hide the true nature of the goods and their intended recipients. More than $50 million in wire transfers from China funded the operation, with GPUs ultimately shipped to China, Hong Kong, and other locations in violation of U.S. export restrictions.
Additional charges were filed against Fanyue Gong (also known as Tom Gong), a Chinese citizen residing in Brooklyn, New York; and Benlin Yuan, a Canadian citizen living in Mississauga, Ontario. Gong was arrested in New York on December 3; Yuan was arrested in Sterling, Virginia on November 28.
Yuan serves as CEO of a Sterling-based IT services company affiliated with a large Beijing IT firm; Gong owns a New York technology business.
According to prosecutors, Gong and Yuan conspired with employees at companies based in Hong Kong and China to circumvent U.S. export controls by using intermediaries or straw purchasers who misrepresented end users or destinations for Nvidia GPUs. The scheme involved relabeling products under false company names such as “SANDKYAN” before exporting them abroad.
Gong’s charges allege involvement in acquiring GPUs through intermediaries who falsely claimed they were destined for domestic customers or countries not subject to license requirements. Workers removed original labels from GPUs before shipping them overseas under generic descriptions.
Yuan is accused of recruiting individuals to inspect mislabeled shipments on behalf of a Hong Kong logistics firm while instructing inspectors not to disclose that goods were bound for China. He also allegedly discussed providing false information about customers when questioned by authorities regarding detained shipments.
Hsu faces up to ten years in prison at sentencing scheduled for February 18; Hao Global LLC could be fined up to twice its gross gain from the offense plus probation time if convicted.
If found guilty, Yuan could face up to twenty years for conspiracy under the Export Control Reform Act; Gong faces up to ten years for conspiracy related charges.
Hsu remains free on bond pending sentencing while Yuan and Gong are held pending further proceedings.
The investigation was conducted by several federal agencies including the Department of Commerce’s Bureau of Industry and Security - Office of Export Enforcement (Dallas Field Office), Immigration and Customs Enforcement’s Homeland Security Investigations – Dallas office, as well as FBI field offices in New York City and Washington D.C. Assistant U.S. Attorneys John Marck and Mark McIntyre are prosecuting alongside DOJ National Security Division trial attorneys Fatema Merchant and Yifei Zheng.
Authorities remind that criminal complaints are formal accusations only; defendants are presumed innocent unless proven guilty through due process.
