U.S. Tour Guide Accused as Spy for China's Security Service
U.S. Tour Guide Charged With Spying for China's Security Service
(Bloomberg) -- The U.S. arrested a California man accused of spying for China’s security service while working as a tour guide in the San Francisco area.
Federal prosecutors in San Francisco on Monday announced charges against Xuehua “Ed” Peng, 56, described in the government’s complaint as a mechanical engineer who entered the U.S. on a temporary business visa and later became a naturalized citizen in 2012. Arrested on Friday in Hayward, California, he’s charged with acting as an agent of a foreign government without giving notice to the U.S. attorney general.
The U.S. says it uncovered Peng’s identity as a spy through a double-agent operation in China started in March 2015. U.S. agents secretly monitored drop-offs of packages at a hotel in Newark, California, that were traced to Peng, according to the complaint.
China’s Ministry of State Security schemed “to use an American citizen to remove classified security information to the PRC,” U.S. Attorney David Anderson said at a press conference. Peng’s activities for the company where he worked, U.S. Tour and Travel, “went far beyond innocent sight-seeing,” Anderson said.
The charges come amid intense scrutiny U.S. law enforcement officials are applying to ethnic Chinese scientists. Agencies across the federal government have mobilized against potential Chinese industrial spies, warning companies and universities and anyone else with intellectual property to be particularly vigilant when dealing with Chinese business partners and employees who might be what Christopher Wray, director of the Federal Bureau of Investigation, calls “nontraditional collectors” of information.
Anderson said Peng’s arrest is part of the Justice Department’s “China Initiative” announced in November.
“The northern district of California is ground zero for a largely secret battle between PRC-controlled spies and thieves” and U.S. efforts to contain them, Anderson said. The complaint provides a “rare glimpse into the PRC’s efforts to obtain classified security information of the U.S.,” he said.
Prosecutors said Peng would check into a hotel, tape envelopes containing $10,000 to $20,000 to the bottom of a hotel room dresser drawer and leave the key at the front desk, where a double agent would pick up the cash and leave memory cards containing information. Peng would later fly to China with the memory cards.
The data on the cards was "classified security information" that the U.S. had cleared for Peng to convey to China, according to Anderson, who declined to say whether Peng also transferred information to China that wasn’t approved by U.S. agents.
The case is U.S. v. Peng, 19-cr-71565, U.S. District Court, Northern District of California (San Francisco).
--With assistance from Chris Strohm.
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Joe Schneider
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