John Chen, 71, of the People’s Republic of China (PRC) and Los Angeles, California, and Lin Feng, 44, a PRC citizen and resident of Los Angeles, California, pleaded guilty to acting as unregistered agents of the PRC and bribing an IRS agent, officials stated.
This was part of a plot targeting U.S.-based practitioners of Falun Gong, a spiritual practice banned in the PRC.
According to court documents, from approximately January 2023 to May 2023, Chen and Feng operated within the United States under the direction of the PRC government, including a government official identified as PRC Official-1.
Their activities were aimed at advancing the PRC’s campaign to repress and harass Falun Gong practitioners. The PRC has labeled Falun Gong as one of the “Five Poisons,” categorizing it among the top five threats to its authority.
In China, Falun Gong adherents face severe repression, including imprisonment, at the hands of the government.
As part of the PRC’s campaign against Falun Gong, Chen and Feng executed a scheme directed by the Chinese government to manipulate the IRS’s Whistleblower Program.
Their goal was to remove an entity (Entity-1) run by Falun Gong practitioners from its tax-exempt status.
Chen filed a faulty whistleblower complaint with the IRS, and he and Feng paid $5,000 in cash bribes to a purported IRS agent (Agent-1), who was actually an undercover officer.
They also promised to pay significantly more for Agent-1’s help in advancing the complaint. Neither Chen nor Feng informed the Attorney General that they were acting as agents of the PRC while operating in the United States.
During the scheme, Chen was recorded stating that the purpose of the bribes, directed and funded by the PRC, was to fulfill the Chinese government’s objective of “toppl[ing] . . . the Falun Gong.”
In a conversation intercepted via a judicially authorized wiretap, Chen and Feng discussed receiving “direction” on the bribery scheme from PRC Official-1.
They talked about deleting instructions from PRC Official-1 to avoid detection and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if their meetings to bribe Agent-1 did not go as planned.
Chen and Feng also acknowledged that PRC Official-1 was the government official “in charge” of the bribery scheme targeting Falun Gong.
As part of this scheme, Chen and Feng met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, Chen gave Agent 1 a $1,000 cash bribe as an initial payment. He also offered to pay Agent-1 a total of $50,000 for initiating an audit of Entity-1, and 60% of any whistleblower award from the IRS if his complaint was successful.
On May 18, 2023, Feng paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial payment to further the scheme.
Chen and Feng each pleaded guilty to one count of acting as an unregistered agent of a foreign government and one count of bribing a public official.
Chen pleaded guilty Wednesday and is scheduled to be sentenced on Oct. 30. Feng pleaded guilty Thursday and is scheduled to be sentenced on Oct. 31.
Chen and Feng faces up to 25 years in prison.
The FBI and the Office of the Treasury Inspector General for Tax Administration are investigating the case.
Assistant U.S. Attorneys Qais Ghafary, Michael D. Lockard and Kathryn Wheelock for the Southern District of New York and Trial Attorney Christina Clark of the Counterintelligence and Export Control Section are prosecuting the case.