A Hayward resident passed American intelligence to Chinese security officials for years in an operation that combined both old-school and modern espionage, federal authorities said Monday.
Xuehua Peng, also known as Edward Peng, has been arrested and charged with for spying for China. Federal authorities say that Peng, 56, paid for and ferried classified information to Chinese officials using so-called “dead drops” in Newark, California, Oakland, and Columbus, Georgia.
Peng, who is the registered owner of San Francisco-based U.S. Tour and Travel, allegedly paid a human source up to $20,000 for secure digital cards containing American intelligence, authorities said in a 23-page complaint unsealed today.
In five instances between 2015 and 2018, Peng booked a hotel room and left the key at the front desk for the source, as well as an envelope of cash inside the room. He later picked up the SD cards seemingly in exchange for the cash.
Authorities allege that Peng conducted the dead drops under orders from a China Ministry of State Security (MSS) handler who mandated the logistics of each drop, including Peng’s trips back to China to deliver the SD cards after he retrieved them.
The Federal Bureau of Investigations both filmed the dead drops and intercepted the communications between Peng and the MSS, according to the complaint.
Peng was arrested at his Hayward home Friday and held without bond in San Francisco. If convicted, he could receive up to 10 years in prison, plus a $250,000 fine for acting as an agent of a foreign government without notifying the U.S. Attorney General.
His next hearing has been scheduled for Oct. 2.
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, will prosecute the case.
Source:: The Mercury News – Politics