US Citizen Living In California Charged With Spying For Chinese Government

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The Department of Justice unsealed charges today in a criminal complaint charging Xuehua Peng, also known as Edward Peng, 56, for 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 (MSS).

According to the complaint filed Sept. 24, 2019, and unsealed this morning, Peng, 56, a U.S. citizen living in Hayward, California, acted at the direction and under the control of MSS officials in China in retrieving classified information passed to him by a confidential human source (the source), leaving money behind for the source, or both.  His activities included one dry run and at least five successful “dead drops” between October 2015 and July 2018.  The dead drops occurred in the Bay Area and in Columbus, Georgia.  

The table below summarizes the allegations in the complaint about each successful dead drop, including the date of the dead drop, the location of the dead drop, what Peng left in the hotel room, and what Peng retrieved from the hotel:

DateLocationPeng Left in the HotelPeng Retrieved from the Hotel
6/23/2015Newark, CAn/aEmpty package (dry run)
10/24/2015Newark, CAn/aSD card
4/23/2016Oakland, CA$20,000SD card
7/1/2017Columbus, GA$20,000n/a
9/9/2017Columbus, GA$10,000SD card
6/30/2018Columbus, GA$20,000SD card

In the June 23, 2015, “dry run,” no information or money was exchanged.  Instead, an empty package was left by the source for Peng at the front desk of a hotel, and Peng later retrieved it.  In the first successful dead drop, Peng retrieved a package containing an SD card from the front desk of a hotel.  In each of the other four successful dead drops, Peng booked hotel rooms and left a room key to be picked up by the source.  Peng then left envelopes of cash in the room, retrieved a secure digital card left there by the source, or both.

In each instance in which he retrieved an SD card from the hotel room, Peng then traveled to Beijing, China, shortly thereafter.  The complaint further alleges that Peng was told by an MSS handler, in coded language, where and when to conduct the dead drops, how much money to leave in exchange for the SD cards, and when to return to China to deliver them.  As alleged in the Complaint, the FBI secretly filmed Peng conducting some of the dead drops, and intercepted Peng’s telephone conversations with his MSS handlers in China. 

On Friday, Sept. 27, 2019, Peng was arrested at his residence in Hayward and made his initial appearance in federal court in San Francisco before U.S. Magistrate Judge Joseph C. Spero. Magistrate Judge Spero ordered Peng held without bond pending further proceedings. Peng’s next hearing has been scheduled for Oct. 2, 2019, at 10:30 am before the Honorable Jacqueline Corley, 450 Golden Gate Ave., 15th Floor, for a detention hearing and identification of counsel.

A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Peng faces a maximum sentence of 10 years, and a fine of $250,000 for acting as an agent of a foreign government without notifying the United States Attorney General in violation of 18 U.S.C. §  951.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

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