Note that the transfer pricing strategy only makes sense for this fellow because he's not a US citizen/resident. If he were, it would be illegal to not report the income of the (wildly-profitable) off-shore entity. And if you have to report the income on both sides, there's no point playing transfer pricing games.

But due to his foreign residency and citizenship, he only has to report the US-based income to the IRS, and the transfer pricing shenanigans are "legal" but subject to repricing by the IRS.