Prosecutors accuse U.S. citizen of spying for China

By Darryl Coote

Oct. 1 (UPI) -- Prosecutors have charged a naturalized U.S. citizen with spying for the People's Republic of China.

Xuehua Peng, also known as Edward Peng, was arrested by Federal Bureau of Investigation agents on Friday at his Hayward, Calif., residence, following a multiyear investigation into his alleged role working as a courier of classified U.S. state information for China.


According to the 23-page complaint that was unsealed Monday, prosecutors accuse Peng, 56, of acquiring state information from an FBI "confidential human source" through conducting "dead drops" at California and Georgia hotels before flying the information to China.

The complaint states that Peng, who works as a tour and sight-seeing operator in the San Francisco area, would rent a room at a hotel and ask that a key be left at the front desk for a person named "Ed." The confidential human source would then pick up the key and tape a small package similar to a cigarette pack in the room's dresser located under the television. The source would also find a payment of either $10,000 or $20,000 there. Peng would then retrieve the package and shortly after fly for Beijing.

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Peng, who became a naturalized citizen in 2012, is accused of conducting six dead drops including a dry run between June 2015 and June 2016, picking up four SD cards and leaving $70,000 in payment for the FBI's source, prosecutors said in the filing.

The dead drops were arranged by China through coded messages and the U.S. government "carefully selected" the information the FBI's source would handover to Peng, the complaint said.

The complaint also states that the FBI secretly filmed Peng conducting some of the dead drops.

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"His arrest exposes and disrupts an operation by those Chinese intelligence officers to collect such information without having to step foot in this country," Assistant Attorney General of National Security John C. Demers said in a statement. "Coming on top of our many recent Chinese espionage cases -- involving both national defense and intellectual property information -- this case illustrates the seriousness of Chinese espionage efforts and the determination of the United States to thwart them."

If found guilty, Peng faces a maximum of 10 years in prison and a fine of $250,000. He was due in federal court in San Fransisco on Oct. 3.

"Putting an end to Mr. Peng's alleged actions are an important and significant step in dismantling the PRC's overall efforts against our country," said John Bennett, special agent in charge of the FBI San Francisco Division. "Our message is clear: the FBI, along with our intelligence community partners will pursue foreign adversaries -- at any level of an operation -- and disrupt their malicious activity when it is detected."

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