United States attorney David L Anderson during a news conference on September 30, 2019 in San Francisco. The attorney's office of the Northern District of California announced a criminal complaint against Xuehua Peng, also known as Edward Peng, for acting as an illegal foreign agent for the People's Republic of China's Ministry of State Security. Photo: AFP/Justin Sullivan/Getty Images

A San Francisco tour operator was charged with spying for China after FBI investigators watched him undertake multiple “dead drops” of money and SD memory cards with sensitive information, the Justice Department said Monday.

Edward Peng Xuehua, a naturalized US citizen, was arrested in Hayward, California, on Friday and was ordered held without bond, the department said.

He was charged initially with acting as an illegal foreign agent for “delivering classified United States national security information to officials of the People’s Republic of China’s Ministry of State Security.”

Peng, 56, was exposed by what court filings said was a “double agent operation” targeting the MSS, China’s national intelligence arm. The FBI passed classified information to MSS agents using the US double agent, who was paid for the information.

The operation led them to Peng, who in 2015 was seen picking up an SD card with US secrets that the double agent had been told by her Chinese “handlers” to leave inside a book at the front desk of a hotel in Newark, California, near San Jose.

Months later, in October 2015, Peng was watched again picking up another book dropped at the same hotel that held a secrets-loaded memory card. He then flew to Beijing where, according to investigators, he contacted MSS agents and handed over the card.

The FBI watched on several other occasions between 2016 and 2018 when Peng either picked up the stolen US secrets or left money for the double agent in hotels in both the San Francisco area and Columbus, Georgia, at the direction of MSS agents.

Peng first came to the United States in 2001 on a business visa and stayed legally as a non-immigrant worker. He married and in 2006 became a permanent resident, and six years after that became a full citizen.

He had a registered business, US Tour and travel, which served visitors from China planning to study in the United States.

“His arrest exposes and disrupts an operation by those Chinese intelligence officers to collect such information without having to step foot in this country,” said Assistant Attorney General John Demers.

“This case illustrates the seriousness of Chinese espionage efforts and the determination of the United States to thwart them.”

Peng faces up to 10 years in prison and a fine of US$250,000 for acting as an unregistered agent of a foreign government – a charge often used by the Justice Department for espionage cases.


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