US charges California tour guide Xuehua Peng with spying for China and passing along national security secrets


A naturalised American citizen of Chinese descent living in northern California has been charged with handing over classified national security secrets to Chinese officials using coded messages and secret "drop box" deliveries, according to a criminal complaint unsealed on Monday by the US Department of Justice.

The 22-page complaint accuses Xuehua Peng, also known as Edward Peng, 56, of being an illegal foreign agent directed by China's Ministry of State Security (MSS).

"His arrest exposes and disrupts an operation by those Chinese intelligence officers to collect such information without having to step foot in this country," Assistant Attorney General of National Security John Demers said in a statement. "This case illustrates the seriousness of Chinese espionage efforts and the determination of the United States to thwart them."

The Chinese Embassy in Washington did not immediately respond to a request for comment.

Peng " who reportedly had degree in mechanical engineering and was trained in traditional Chinese medicine but worked most recently as a tour guide for Chinese tourists " was arrested on Friday at his home and appeared in federal court in San Francisco the same day. His next hearing is scheduled for Wednesday.

Relative to recent cases in which scientists of Chinese descent have been charged with sharing so-called secrets " information in some cases that turned out to be readily available on the internet or part of the scientist's own research " this latest case appears to have many of the earmarks of a spy novel.

According to Justice Department officials, Peng was involved in carrying out dead drops of SD computer storage cards, cash deliveries involving tens of thousands of dollars and flights to Beijing to personally deliver the information. The department released two grainy videos showing a man allegedly securing with blue tape a wad of cash to the underside of a hotel room drawer " a room bugged by the FBI.

The complaint, filed on September 24 and released on Monday, alleges that Peng was directed by MSS officials to retrieve classified information passed on to him by a confidential source turned double agent and to leave money as payment to the confidential source. According to the complaint, Peng did a practice run in June 2015 in Newark, California, and at least four real exchanges of money and secrets in Newark, Oakland, California, and Columbus, Georgia, between 2015 and 2018 involving at least US$70,000.

The US fed the double agent "carefully selected" classified information, the complaint said, and was "aware of the materials that the Source passed." In one case, the SD card was reportedly left at a hotel front desk in a book marked for pickup by someone named "Ed". Several hours later, the complaint says, an Asian male later identified as Peng arrived in a silver Mercedes and retrieved the package.

Shortly after picking up each SD card, Peng would travel to Beijing to offload them, instructed to hide them in his wallet until he landed, the documents said.

The complaint also suggests that MSS exercised leverage over Peng, with an MSS agent reportedly telling the double agent at one point: "They control everything about Ed's company," adding "If Ed were to do anything he was not supposed to, they (the MSS) would 'cut him off'." At other times, according to a transcript of taped phone conversations, an MSS agent encourages Peng. "Thank you for your hard work," the agent is quoted as saying, telling him he can fly business class back to China.

"The charges announced today provide a rare glimpse into the secret efforts of the People's Republic of China to obtain classified national security information from the United States and the battle being waged by our intelligence and law enforcement communities to protect our people, our ideas and our national defence," said David Anderson, US attorney for the Northern District of California.

Peng faces up to 10 years in prison and a US$250,000 fine if convicted. It was not immediately clear if he had retained a lawyer.

The complaint further alleges that Peng was told by an MSS handler, using coded language that referred to the secret data as "pills" or "education material", where, when and how to conduct the dead drops, how much money to pay the source and when to return to China to deliver them.

"The FBI secretly filmed Peng conducting some of the dead drops, and intercepted Peng's telephone conversations with his MSS handlers in China," the complaint says.

The announcement follows a high-level conference over the weekend by the Committee of 100, a group that seeks to bolster US-China ties. At the meeting in Palo Alto, California, scientists, engineers, Nobel laureates and former US officials, many of Chinese descent, urged the Department of Justice and FBI to avoid racial profiling in their cases, even as they safeguard national security.

Conference attendees acknowledged the difficult balancing act the Chinese-American community faced, supporting genuine national security initiatives while trying to ensure that innocent people don't become collateral damage because they look Asian. This comes against the backdrop of growing tension between Washington and Beijing over trade, military, intellectual property, education and visa policies.

"There is really a chill in the air," said David Ho, a pioneer in HIV treatment and scientific director at the Aaron Diamond Aids Research Centre in New York. "A small number of bad apples does not connote systemic problems."

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.



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