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Feds Allege Multi-State Plot to Smuggle Advanced AI Tech to China, Triggering Bipartisan Alarm

Sen. Jim Banks, R-Ind. (Dominic Gwinn / Middle East Images via Getty Images)

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Fred Lucas is chief news correspondent and manager of the Investigative Reporting Project for The Daily Signal. He is the author of “The Myth of Voter Suppression: The Left’s Assault on Clean Elections.” Send an email to Fred.

Federal charges over an alleged conspiracy to smuggle advanced artificial intelligence technology to China have sparked bipartisan concern.

Federal prosecutors announced charges against one Chinese national and two Americans on Wednesday for allegedly violating U.S. export control laws by attempting to send restricted computer chips to China. The alleged conspiracy began in 2023, included an order for more than $100 million, spanned three states, and involved two large tech companies.

The three men charged are Stanley Yi Zheng, 56, a Chinese national; Matthew Kelly, 49, of Hopewell Junction, New York; and Tommy Shad English, 53, of Atlanta. The three are presumed innocent.

The office of U.S. Attorney Theodore S. Hertzberg of the Northern District of Georgia is prosecuting the case.

“Keeping sensitive tech from falling into the wrong hands is a matter of utmost importance to our national security and U.S. competitiveness,” Hertzberg said in a public statement.

“My office is proud to ensure that any bad actor who seeks to profit from endangering our security will face justice in an American courtroom.”

The criminal complaint says that in May 2023, Zheng, Kelly, and English began conspiring together to obtain servers with export-controlled chips and ship them to Thailand, with China as the final destination. The three allegedly used the names of Thailand-based companies as the purported purchasers of the servers.

According to the complaint, they attempted to order 750 computer servers for about $170 million. Of those, 600 had chips that were restricted by Commerce Department export rules and required a license for export to China. Yet by February 2024, the attempted purchases appeared to fall apart.

The 41-page criminal complaint says that two technology firms—Nvidia and Supermicro—tipped off federal law enforcement about the attempted smuggling. The trio allegedly sought to smuggle Nvidia graphics processing units (GPU), as well as compatible Supermicro servers, PC Magazine reported.

“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,” an Nvidia spokesperson told The Daily Signal in an email response.

A Supermicro spokesperson did not respond to an inquiry for this story by publication time.

Yi Zheng was arrested on March 22 and appeared in court in the Northern District of California on March 23. He is being held without bail pending trial, according to the Justice Department. Kelly and English surrendered to federal authorities on March 25, respectively in the District of New Jersey and the District of Northern Georgia, where they had initial court appearances.

After the announcement of charges on Wednesday, a conservative Republican and a liberal Democrat in the Senate seemed to find common ground.

Sen. Elizabeth Warren, D-Mass., in an X post said that she and Sen. Jim Banks, R-Ind., wanted a freeze on Nvidia’s export license due to security concerns.

“Nvidia’s CEO said there was no evidence its AI chips were being smuggled. DOJ indicted individuals at a big NVIDIA partner for allegedly smuggling the chips to China. @SenatorBanks and I want a freeze to NVIDIA’s export licenses until it takes our national security seriously,” Warren posted.

Nvidia's CEO said there was no evidence its AI chips were being smuggled.DOJ indicted individuals at a big NVIDIA partner for allegedly smuggling the chips to China. @SenatorBanks and I want a freeze to NVIDIA's export licenses until it takes our national security seriously. pic.twitter.com/0u2VsisN7D— Elizabeth Warren (@SenWarren) March 25, 2026

Nvidia's CEO said there was no evidence its AI chips were being smuggled.DOJ indicted individuals at a big NVIDIA partner for allegedly smuggling the chips to China. @SenatorBanks and I want a freeze to NVIDIA's export licenses until it takes our national security seriously. pic.twitter.com/0u2VsisN7D

Banks was less explicit, but his X post on Wednesday said, “The AI race against Communist China isn’t just a technological race, it’s a moral one.”

The AI race against Communist China isn’t just a technological race, it’s a moral one. pic.twitter.com/UGyQpQUOpB— Senator Jim Banks (@SenatorBanks) March 25, 2026

The AI race against Communist China isn’t just a technological race, it’s a moral one. pic.twitter.com/UGyQpQUOpB

The Daily Signal contacted the court clerk for all three federal district courts in an attempt to reach the defense counsel for the three men charged. The clerks’ offices in New Jersey and Georgia said the filings from the case were not yet available.

A spokesperson for the Federal Public Defender’s office for the Northern District of California told The Daily Signal, “Federal public defender Ana Botello made a special appearance for Mr. Zheng, who informed the court he would be retaining his own counsel.”

Kelly’s phone number was listed on WhitePages.com, but no one answered the phone. The other defendants did not have listed numbers that corresponded to the localities based on information from the Justice Department.

Investigators in the probe obtained text messages between the three alleged co-conspirators. In one June 2023 text, Kelly referenced an attempt to purchase computers. “They just need more details about your company, customers, revenue, etc.,” she texted. English replied, “I’m not breaking my back. I fake these weeks ago.”

A March 2024 text showed Zheng telling Kelly, “DO NOT MENTION ANYTHING ABOUT CHINA.”

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