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Super Micro Computer will report third quarter earnings on Tuesday with two potentially explosive problems on its hands at once.

The first is that CEO and chairman Charles Liang told investors the server manufacturing company could hit $40 billion in revenue this fiscal year. Liang called the target “conservative,” when he first discussed it with investors, but that was before another problem erupted.

The second, and much more catastrophic issue, is that six weeks ago prosecutors charged Supermicro co-founder Yih-Shyan “Wally” Liaw and two others with allegedly conspiring to route $2.5 billion in servers studded with Nvidia chips through a front company in Southeast Asia. Prosecutors have alleged in the indictment that Liaw was the mastermind behind a scheme that allegedly involved filling a warehouse full of thousands of fake servers affixed with shipping labels attached using hair dryers to peel them off packages to fool auditors when the real buyers were in China. Liaw was a board member and senior vice president of business development at the time, although he resigned all his positions the day following his arrest on March 19.

Liaw, who has pleaded not guilty, co-founded Supermicro in 1993 along with Liang, and Liang’s wife, Sara Liu, who is also a board member. Neither Supermicro, Liang, nor Liu were named in the indictment. Liang, in a letter to investors, said Supermicro is a victim in the alleged scheme and is cooperating with authorities.

But at this point, not being named in the indictment is not the same as being entirely in the clear. The company has launched its own internal investigation to be led by the board’s lead independent director Scott Angel and board audit chair Tally Liu. In turn, Liu and Angel have hired law firm Munger, Tolles & Olson, which brought in forensic consultant AlixPartners. The probe could run for months and result in a plethora of management or board changes, including potentially determining whether the Department of Justice ever charges the company itself with wrongdoing—or gives it a break for cooperating and offering evidence from its own internal dig.

“All eyes will be watching the company now, including very much the Department of Justice, the Securities and Exchange Commission, and the new auditors, BDO USA,” said Brian Burke, a litigator and board advisor who has led hundreds of internal investigations.

Burke said the investigation could result in a spectrum of possible outcomes that could deal major to minimal disruption to Supermicro’s operations. Significant problems found in the investigation could move the markets and the stock price, he said, and could lead to a major shakeup at the highest levels.

“Findings could result in major disruption to the company’s market capitalization, management personnel, the makeup of management, and the makeup of the board,” said Burke.

For now, the company has said it won’t comment on the investigation or on another concurrent internal review it is conducting into its global trade compliance program to be led by general counsel Yitai Hu, and Supermicro’s newly named chief compliance officer, DeAnna Luna. Luna reports to Hu, who reports to Liang, and the findings of both probes will go directly to the independent board members, the company said.

David Rybicki, co-leader of law firm K&L Gates’ white collar defense and investigations practice group, said the investigation is likely to involve a comprehensive review of Supermicro’s IT systems, communications, and phone records, and will go well beyond the scope of a standard audit. Executives will have their work phones imaged, emails searched, and will be asked to sit for extensive interviews with the board’s lawyers. Most executives are likely to hire their own legal counsel, given the stakes. The worst outcome for Supermicro, said Rybicki, would be an investigation that the DOJ doesn’t trust.

“When you have these kinds of high profile catastrophic compliance failures, I think it’s fair to say they can be fatal for a company,” said Rybicki. That Supermicro was not indicted means it is “essential” for Supermicro to conduct a truly searching independent investigation with no interference or tampering from interested parties, given Liaw’s senior title and service as a board member, said Rybicki.

“Obviously there were serious compliance failures with an entire fake company and Potemkin warehouse set up, based on the allegations in the indictment,” said Rybicki. “This was a pretty sophisticated scheme, and one apparently that was not detected by the compliance function.”

According to the indictment, Liaw and two other lower-level workers in 2024 and 2025 allegedly cooked up an elaborate plan to sell Supermicro’s servers to an unnamed company based in Southeast Asia to obscure the real buyers of the servers, who were in China. The Department of Commerce requires that companies get specific licenses for the export of AI chips to China and Hong Kong because of the cutting edge it could give the Chinese military and its allies over the U.S.

For businesses like Supermicro and its long-time chip supplier Nvidia, the export restrictions have cut off a substantial source of business revenue. The DOJ claims the front company that allegedly purchased the data center from Supermicro bought $2.5 billion in massive quantities of servers and eventually grew to become one of the company’s top 15 buyers.

Rybicki said Liang would almost certainly be interviewed as part of the investigation. His joint 13.5% ownership stake with his wife and Liaw’s 2.6% stake with his spouse will have no bearing on the probe. The committee is likely to want to speak with Liaw, but whether he cooperates will be a decision for him and his counsel, said Burke, since he’s no longer an employee. The investigation, with lead director Angel and audit chair Liu at the top of the pyramid, is structured to maintain independence.

With their advisors, Angel and Liu will devise the scope of the investigation and will decide what they might share with Liang and the full board and when. Even more critically, they’ll also decide what to share with the government, said Burke.

“For it to remain an independent investigation and to have that all-important credibility, it has to be truly independent—with a capital I,” he added.

Supermicro’s auditor BDO will also be watching closely and is highly likely to conduct its own “shadow investigation,” said Burke. Supermicro hired BDO USA in November 2024 after its previous auditor, Ernst & Young, quit suddenly in the middle of an audit. EY’s noisy resignation letter stated that it could no longer rely on management, triggering a previous board-led investigation in 2024. In Burke’s experience, BDO is likely to push for involvement in shaping the scope of the investigation and will have no interest in a scope that is too narrow.

“BDO wants to ride on the independent committee’s investigation to give them assurance—so that they don’t end up having a repeat of what happened with EY,” said Burke.

However, BDO’s seat at the table could create tension for the Supermicro committee. If the auditor wants to sit in on interviews conducted by Munger, Tolles for instance, attorney-client privilege would be waived and not just to BDO—but to the whole world, said Burke. If you give a privileged work product to one third party, you’ve disclosed it, he said, meaning the SEC and plaintiffs lawyers could demand to see it.

“BDO has an important position as a stakeholder,” said Burke. “But their presence at the table can be disruptive to the privilege.”

BDO did not immediately respond to a request for comment.

This is hardly the Supermicro board’s first rodeo with an independent investigation. In 2024 after EY’s sudden departure, the board brought in Susie Giordano as a new board member and appointed her to lead an independent probe. Giordano hired law firm Cooley and forensic firm Secretariat Advisors.

As part of the 2024 investigation, Giordano reviewed 11 specific export transactions noted by EY and whether the shipments complied with U.S. laws and regulations at the time they were shipped. According to the company, Giordano did not “see any evidence suggesting that anyone at the company tried to circumvent export control regulations or restrictions or that anyone at the company was aware that any of its products might be diverted to a prohibited end user or location.” The review found the company had a reasonable compliance program undergirding its systems of export control regulations.

Given that the indictment alleges that Liaw’s chip-smuggling scheme took place partly in 2024, Supermicro has a bigger hill to climb in ensuring it has credibility with regulators, said Burke. He noted that these types of investigations are difficult even in ideal conditions, but this one will be substantially more so because Liaw allegedly went to great lengths to conceal the scheme, he said.

“What we call the heart and mind of a company is embodied by people who are in the positions of founder, senior management, and board of directors,” said Burke. “Here, we have all of that in one person who is alleged to have been the mastermind behind this supposed scheme.”

Liaw’s role adds complexity on top of an already complex investigation into prior alleged conduct, on top of the complexity of digging through Liaw’s alleged deception.

However, Burke noted that the relationship between Liaw and the current co-founders are relevant, but not determinative or dispositive. People change and evolve and businesses get the same benefit of evolving and improving, he noted. Supermicro in 2006 pleaded guilty to illegally exporting servers and equipment to Iran. In 2020, Supermicro paid a $17.5 million penalty to the SEC after an investigation into its internal accounting controls after being suspended and delisted from Nasdaq in 2018 for failing to file timely financial reports. In 2024, it faced the threat of being delisted again after EY’s resignation.

The fact that Angel is the Supermicro board’s lead independent director and its newest board member means he doesn’t carry any “baggage” from Supermicro’s previous brushes with the law, said Burke. He’s a Deloitte veteran of 37 years, with more than two decades in Silicon Valley, which is a “textbook” example of a board member who should lead a probe such as this, said Burke.

“Credibility matters in any investigation but with this one, I think the team—meaning directors, their counsel, and the forensic consultant—will make extra effort to go above and beyond,” said Burke. They’ll want to make sure that both the investigation itself is credible, and that the ultimate findings are credible.

“Because even though they don’t carry the baggage of the prior report and the brushes with the law, the company does,” said Burke.

This story was originally featured on Fortune.com