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SAN FRANCISCO (CN) — The Justice Department announced on Tuesday it charged two men with attempting to recruit U.S. Navy members as intelligence assets on behalf of the Chinese government, among other clandestine activities.
Attorney General Pamela Bondi celebrated the charges in a statement.
“The Justice Department will not stand by while hostile nations embed spies in our country — we will expose foreign operatives, hold their agents to account and protect the American people from covert threats to our national security,” Bondi said.
The defendants, Yuance Chen and Liren “Ryan” Lai, are charged with operating as agents of a foreign government without notifying the U.S. attorney general, which is illegal under federal law. If convicted, the defendants could face a fine of up to $250,000 and a prison term of up to 10 years.
Sanjay Virmani, the Special Agent in charge of the investigation at the FBI’s Field Office in San Francisco, said the charges represented a “significant disruption” of a Chinese intelligence operation on U.S. soil.
“The FBI will not tolerate efforts by foreign intelligence services to operate inside the United States, and we will continue to use every lawful tool to defend our country’s security and sovereignty,” Virmani said.
The Justice Department accused the two Chinese nationals of conducting various spy activities while in the United States, including organizing “dead drop” payments of cash for information relating to U.S. national security, gathering intelligence about U.S. Navy service members and bases as well as trying to recruit U.S. military members as potential Chinese intelligence assets.
Chen and Lai were arrested by the Federal Bureau of Investigation on June 27 on a criminal complaint that accused them of conducting multiple covert activities on behalf of the People’s Republic of China — specifically its main foreign intelligence service, the Ministry of State Security.
Chen and Lai made their initial appearances in federal court on Monday in Oregon and Texas, respectively.
In its complaint, the Justice Department claims that Lai recruited Chen to work on behalf of the Chinese intelligence agency around 2021, beginning a career of clandestine activity that included organizing “dead-drop” payments on the agency’s behalf.
The Justice Department said that on one occasion in January 2022, Lai and Chen facilitated a dead-drop payment of at least $10,000 on behalf of the Chinese agency, working with other individuals located in the United States to leave a backpack with the cash at a day-use locker at a recreational facility located in Livermore, California.
In 2022, the Justice Department claims that Lai and Chen began to identify potential assets for Chinese intelligence recruitment within the ranks of the U.S. Navy, including contacting Navy employees over social media and visiting naval installations in Washington state, as well as a U.S. Navy recruitment center in San Gabriel, California.
While in the recruitment center, Chen reportedly obtained photographs of a bulletin board containing the names and hometowns of recent Navy recruits, which the government claims he later transmitted to a ministry intelligence officer in China.
Federal prosecutors claim that Chen received instructions from the Chinese intelligence agency on what to say to potential intelligence recruits about potential payment, the preferred job assignments for their potential recruits and methods for minimizing Chen’s risk of being found out.
They also accuse Lai of lying about his travel activities during an April 2025 trip to Houston, Texas, concealing his true purpose for being in the United States under the guise of being an online retail seller.
The Justice Department also said that the Ministry of State Security is just one wing that the Chinese government uses to collect intelligence in the United States on political, economic and security developments that might affect the People’s Republic of China.
The FBI’s San Francisco Field Office is leading the investigation, with assistance from FBI offices in Portland, Houston and San Diego, as well as the Naval Criminal Investigative Service.
This case was filed in federal court in the Northern District of California.
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