OAKLAND, Calif. (CN) – In what a federal prosecutor declared a “day of reckoning,” a 57-year-old San Francisco Bay Area resident will serve four years in prison for acting as a courier of U.S. state secrets for China.
Xuehua Peng, a naturalized U.S. citizen who went by Edward, ran a tourist and sightseeing company for Chinese visitors in San Francisco.
He admitted to participating in five “dead drops” in San Francisco and Columbus, Georgia, where he left money in hotel rooms in exchange for United States government secrets stored on Secure Digital (SD) cards that were provided by a source unknown to Peng.
Peng would then fly to China to deliver the cards to an unnamed Chinese official.
Peng said he became entangled in the scheme while on a business trip to China in March 2015, where he was introduced to the Chinese official who asked him to put his U.S. citizenship to use for the People’s Republic of China.
He received at least $30,000 for his trouble.
This past September, he was arrested at his Hayward home and charged with one count of acting as foreign agent.
But according to the Department of Justice, the dead drops were part of an operation targeting China’s Ministry of State Security (MSS), and Peng was being surveilled by the FBI the entire time. The source who left the SD cards was actually a double agent for the U.S. government.
“As part of the operation, a confidential human source has met with MSS intelligence officers, provided them with classified information relating to the national security of the United States, and received financial payments in return. At all times, the government carefully selected the classified information for the source and were aware of the materials that the source passed,” says an affidavit signed by Special FBI Agent Spiro Fokas.
In a statement, Assistant Attorney General for National Security John Demers said the case revealed one of the ways Chinese agents can infiltrate the United States from afar.
“This case exposed one of the ways that Chinese intelligence officers work to collect classified information from the United States without having to step foot in this country. Peng acted as an agent of the Chinese Ministry of State Security in the United States, conducting numerous dead drops here on their behalf and delivering classified information to them in China. He pled guilty and is now being held accountable for his criminal actions and his betrayal of his oath of citizenship,” Demers said. “This case is but one example of the Chinese government’s multi-faceted espionage efforts and it both illustrates our determination to thwart those efforts and serves as a warning to other potential co-optees that we will find you and ensure you are punished.”
Peng, who has been in jail since his arrest, will begin serving his sentence immediately.