Published: Wed, October 02, 2019
Worldwide | By Lisa Hogan

Hayward man faces charges in Chinese spy scheme

Hayward man faces charges in Chinese spy scheme

Peng is alleged to have couriered thousands of dollars of cash through a series of dead drops to a double agent working for the U.S., and to have picked up classified information provided by the agent and delivered it to China, according to a court-filed affidavit.

The complaint alleges he retrieved four SD cards from hotel rooms between October 2015 and June 2018, and in each instance traveled to Beijing shortly thereafter.

Xuehua Peng, also known as Edward Peng, was arrested on Friday in the San Francisco suburb of Hayward, California, and was denied bail during an initial court appearance by a U.S. magistrate judge that same day, federal prosecutors said at a Monday morning news conference.

United States government officials on Monday announced charges accusing an American citizen living in California with acting as a spy for China.

The complaint alleges that Peng operated under China's Ministry of State Security (MSS), collecting information from agents via "dead drops" and passing along that information to the MSS, while also delivering payments to the agents.

Then, on October 8, the source emailed his handler saying he would be traveling to San Francisco for sightseeing on October 24 - a coded message indicating the source would be conducting a dead drop at the same hotel on that day, the complaint says.

The 56-year-old Peng presented himself as a tour guide who ran sight-seeing excursions in San Francisco to Chinese visitors and students.

A criminal complaint filed September 24 and unsealed Monday revealed that Peng is accused of "acting as an illegal foreign agent in delivering classified United States national security information to officials of the People's Republic of China's Ministry of State Security", or MSS.

Peng allegedly worked under the Ministry of State Security (MSS), China's preeminent intelligence agency.

The FBI snared Mr Peng, also known as "Edward Peng", as part of an elaborate "double agent operation" launched in March 2015.

A "dead drop" is an espionage tactic in which people use a secret location to exchange something to avoid the need for direct interaction.

In an indictment unsealed Monday, the Department of Justice alleges that a naturalized US citizen was working with the Chinese government as a "courier" for information about the USA government on behalf of China. Anderson is a lawyer for the Northern District of California, which is handling prosecution in the case.

"I believe that "Ed" - who was later identified as Peng - had been instructed in spycraft, practised it and knew that he was working for intelligence operatives of the PRC", FBI Agent Spiro Fokas, said in a sworn affidavit filed with the criminal complaint, referring to the People's Republic of China.

Qian Peng, the suspect's daughter, said she could not comment because she had not seen the charges. If convicted of the charges, he faces a maximum sentence of 10 years, and a fine of $250,000 (£203,000).

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