SAN FRANCISCO
Xuehua (Edward) Peng aka Edward Peng was sentenced this week to four years in prison, and ordered to pay a $30,000 fine for spying for China, according to federal officials.
While acting as an agent of China, Peng conducted pickups known as “dead drops” and transport Secure Digital (SD) cards from a source in the U.S. to the Ministry of State Security operatives in China, announced the Department of Justice.
“This sentence serves as a powerful deterrent to both Communist China, who will continue to attempt to recruit others to act on its behalf, and those who attempt to carry out such tasks at the direction of its intelligence services” said FBI San Francisco Special Agent in Charge John F. Bennett. “These actions are illegal and inexcusable. By working jointly with our partners, we will never stop our fight against hostile intelligence services and our determination to protect the national security of the United States should never be in doubt.”
According to his Nov. 25, 2019, guilty plea, Peng, a 56 year-old U.S. citizen living in Hayward, Calif., acted at the direction and under the control of MSS officials in China in retrieving classified information passed to him and leaving money behind for the source.
Peng admitted that in March 2015, an official from the People’s Republic of China (PRC) introduced himself to Peng while Peng was on a business trip to China.
The official asked Peng to use his citizenship in the United States to assist the official with matters of interest to the Chinese.
Peng eventually came to understand that the official was employed as an intelligence or security services officer for China, specifically of the Ministry of State Security and nevertheless agreed to perform activities in the United States on behalf of the PRC.
Peng’s plea acknowledged that he knew he was acting on behalf of the government of the PRC.
Specifically, Peng admitted that in March of 2015, he received instructions regarding how to use dead drops to exchange money for items to deliver to the PRC.
Peng admitted that the official directed him to locate and reserve hotel rooms where he was to leave money and then depart for several hours.
The official instructed Peng to return later and retrieve small electronic storage devices that the source would leave for him.
Thereafter, Peng was to fly to the PRC and deliver the retrieved devices to the PRC official. Peng never met nor interacted with the individual who left the devices for him and was instructed not to access the information stored on the SD cards.
According to the Plea, Peng participated in five dead drops involving drop-offs of cash and/or pick-ups of SD cards, after a practice run in June 2015.
After he participated in two dead drops in the San Francisco Bay Area between October 2015 and April 2016, Peng began making dead drops in Columbus, Georgia.
After three dead drops in Georgia, Peng informed the PRC official that he wanted to resume dead drops in the San Francisco Bay Area.
Peng did not complete a seventh dead drop before his arrest by federal authorities in September 2019.
Federal law requires people acting within the United States on behalf of a foreign government to file with the Attorney General a notice and documentation of their activities.
Peng acknowledged that he never filed with the Attorney General of the United States any notice or documentation of his actions as an agent of the People’s Republic of China or the Ministry of State Security.
Peng also admitted that the PRC official paid him at least $30,000 for the acts he performed as a courier for the MSS.
Peng plead guilty on Nov. 25 to an Information charging one count of acting as an agent of a foreign government without notice to the Attorney General, officials stated.
DOJ NOTED:
This case is being prosecuted by the Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California and the Counterintelligence and Export Control Section of the Department of Justice, National Security Division. The prosecution is the result of an investigation by the FBI and Internal Revenue Service-Criminal Investigation.