Federal authorities have charged three individuals – a Chinese national and two U.S. Citizens – with conspiring to illegally export advanced artificial intelligence (AI) technology to China. The alleged scheme involved obtaining millions of dollars worth of computer chips from a California-based company and routing them through Thailand, circumventing U.S. Export controls. The case highlights the growing concern over the illicit transfer of sensitive technology to countries seeking to bolster their AI capabilities, a field increasingly seen as critical to national security and economic competitiveness.
The Justice Department announced the charges against Stanley Yi Zheng, 56, of Hong Kong, China; Matthew Kelly, 49, of Hopewell Junction, New York; and Tommy Shad English, 53, of Atlanta, Georgia, on March 26, 2026. According to court documents, the trio allegedly conspired to acquire computer servers containing high-performance chips controlled under the U.S. Commerce Control List, which restricts exports to certain countries, including China, without a license. This case underscores the ongoing efforts by the U.S. Government to safeguard American innovation and prevent the flow of cutting-edge technology to potential adversaries.
Alleged Scheme to Circumvent Export Controls
The investigation, led by the Department of Commerce’s Bureau of Industry & Security, the Defense Criminal Investigative Service, Homeland Security Investigations and the FBI, revealed a complex operation designed to disguise the ultimate destination of the AI chips. Beginning in May 2023, Zheng, Kelly, and English reportedly worked together to purchase computer servers from a California company, referred to as “Company-1” in court filings. They allegedly used Thailand-based companies as fronts, falsely claiming the servers were destined for use within Thailand, when their true destination was China.
In October 2023, English, acting on behalf of one of the Thailand-based companies, placed an order for 750 computer servers valued at approximately $170 million. Of these, 600 contained chips requiring a license for export to China. English allegedly signed a certification stating the servers were not intended for China or any other restricted country. A partial payment of over $20 million was transferred to Company-1 in January 2024. However, the deal began to unravel when Company-1 flagged inconsistencies, noting Zheng’s China-based company and the lack of representation from the purported Thailand-based buyer in email correspondence. As noted in court documents, Company-1 pointed out that “China is an embargoed country restricted by the US government.”
A subsequent review by the chip manufacturer, identified as “Company-2,” further stalled the transaction. Their attempts to verify the end-user in Thailand proved unsuccessful. Despite this setback, the alleged conspiracy continued. In April 2024, English attempted to order another 500 servers, again using a Thailand-based company as a front and signing a false end-user certification.
Text Messages Reveal Intent and Awareness
Evidence presented by prosecutors includes text message exchanges between the three defendants that allegedly demonstrate their awareness of the illegal nature of their activities and their intent to deceive U.S. Authorities. In a June 2023 exchange, Kelly discussed the require to provide more detailed information about Zheng’s company, whereas English admitted to “faking” corporate details. Later that month, Zheng reportedly discussed the market value of Company-2’s chips in China, indicating a clear understanding that the final destination was China.
Perhaps most telling is a March 2024 exchange where Kelly drafted a solicitation message seeking partners to distribute the chips, explicitly mentioning potential customers in China. Zheng immediately responded, instructing Kelly to remove any mention of China, stating, “We will draw attention[] from US government for embargo[] violation.” He then added, “We just talk about it, no one can hold it as evidence[] against us.” This exchange, according to the Justice Department, illustrates a deliberate effort to conceal the true purpose of the scheme.
National Security Implications and Government Response
The case has drawn strong condemnation from national security officials. Assistant Attorney General for National Security John A. Eisenberg stated that the AI chips “represent the best of American ingenuity and years of strategic investment in maintaining our technological leadership.” He emphasized the Department of Justice’s commitment to protecting U.S. Innovation and holding accountable those who violate export controls. The Department of Justice’s press release details the charges and the ongoing investigation.
FBI Assistant Director Roman Rozhavsky echoed these concerns, noting that “foreign adversaries” are employing increasingly “brazen schemes” to acquire valuable U.S. Technology. He stressed the importance of enforcing export controls to safeguard America’s economic and national security. The Department of Defense also weighed in, with Special Agent-in-Charge Jason J. Sargenski of the Defense Criminal Investigative Service highlighting the critical role of advanced computing technologies in military AI and national defense. These technologies, he stated, are essential to maintaining the readiness of U.S. Warfighters.
The charges against Zheng, Kelly, and English carry significant penalties. Zheng, who was arrested in Hong Kong on March 22, 2026, and appeared in federal court in California on March 23, 2026, is being held without bail pending trial. Kelly and English surrendered to authorities on March 25, 2026, and will face initial appearances in New Jersey and Georgia, respectively. The defendants are presumed innocent until proven guilty.
This case is part of a broader crackdown on the illegal export of sensitive technologies to China. The U.S. Government has been increasingly focused on preventing the transfer of technologies that could be used to enhance China’s military capabilities or undermine U.S. Economic competitiveness. The Bureau of Industry and Security, in particular, has been strengthening export controls and increasing enforcement efforts. For more information on U.S. Export controls, visit the Bureau of Industry and Security website.
The next scheduled court appearance for Stanley Yi Zheng is currently pending before U.S. Magistrate Judge Lisa J. Cisneros. Initial appearances for Matthew Kelly and Tommy Shad English are scheduled in the District of New Jersey and Northern District of Georgia, respectively. Further updates on the case will be available through the Department of Justice. We encourage readers to share their thoughts and perspectives on this important issue in the comments below.
