Hayward Man Accused of Spying on Behalf of Chinese Government

The complaint says he acted at the direction and under the control of officials in China in retrieving classified information

A Bay Area man who operates tours for Chinese students and visitors was charged with being an illegal foreign agent and delivering classified U.S. national security information to officials in China, U.S. government officials announced Monday.

U.S. Attorney David L. Anderson accused Hayward resident Xuehua Edward Peng, 56, of a "combination of age-old spycraft and modern technology."

"The charges announced today provide a rare glimpse into the secret efforts of the People's Republic of China to obtain classified national security information from the United States," Anderson said.

U.S. government officials say they have charged an American citizen living in the Bay Area with acting as a spy for China.

The U.S. is engaged in a trade war with China, but John Bennett, the FBI agent in charge of San Francisco, said international politics had nothing to do with the arrest and charges against Peng.

"We have criminal spies that are running around in our area of responsibility and it's the FBI's mission to stop this, so what's going on in the rest of the world, it doesn't matter to us," he said.

FBI Director Christopher Wray has said China poses a more serious counterintelligence threat to the United States than any other country, including Russia. In July, he testified before a Senate panel that the FBI had more than 1,000 investigations involving economic espionage and attempted intellectual property theft, nearly all of which lead back to China.

The Justice Department has brought multiple cases in the last year involving Chinese espionage and has also brought charges against operatives working with the Ministry of State Security as law enforcement officials grapple with how to deal with an increasing threat of China trying to steal information from American companies.

Last October, prosecutors charged a Chinese spy with attempting to steal trade secrets from several American aviation and aerospace companies, the first time an MSS operative was extradited to the U.S.

Anderson did not say how long Peng had been operating as a spy for China's Ministry of State Security, only that the FBI employed a double agent in 2015 who conducted exchanges with Peng in the San Francisco Bay Area and in Columbus, Georgia.

Over six occasions between 2015 and 2018, Peng would secure a hotel room and leave up to $20,000 there, authorities said in the driminal complaint. The double agent would then get a key to the room, take the cash and leave a digital card containing information, it said.

Peng would then take the card and travel to Beijing to meet Chinese intelligence officers, authorities said.

Peng was arrested at his home Friday and ordered held without bond at a hearing before U.S. Magistrate Judge Joseph C. Spero. He is scheduled to return to court Wednesday.

The criminal complaint says Peng is a naturalized U.S. citizen who entered the country on a temporary business visitor visa and became a permanent resident in 2006. Peng was naturalized in September 2012.

He holds an acupuncturist license from the state.

If convicted, he could face up to 10 years in prison and a $250,000 fine.

Copyright AP - Associated Press
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