US citizen accused of spying on behalf of Chinese government

Xuehua Edward Peng, spying, china
US attorney David Anderson announces criminal spy charges against a San Francisco Bay Area tour operator Xuehua Edward Peng Monday, Sept. 30, 2019, in San Francisco. Xuehua Edward Peng, who operates tours for Chinese students and visitors, was charged with being an illegal foreign agent and delivering classified U.S. national security information to officials in China, U.S. government officials announced Monday. (AP Photo/Janie Har)

SAN FRANCISCO — A California tour operator charged by U.S. officials with illegally ferrying information to China was a quiet and friendly man with a taste for luxury cars, a neighbor said.

Xuehua Edward Peng, 56, of Hayward was charged in documents unsealed Monday with being an illegal foreign agent and delivering classified U.S. national security information to officials in China, U.S. Attorney David L. Anderson said in San Francisco.

Anderson accused Peng, whom he described as a tour operator for Chinese students and visitors, of a “combination of age-old spycraft and modern technology.”

“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,” Anderson said.

Danilo Serrano said Peng moved in across the street from him about five years ago and kept a Lexus and Porsche parked outside. About a year ago, he bought “an expensive Tesla SUV, the nice one where the doors go up,” Serrano said.

Serrano recalled thinking, “Man, he must have a lot of money.”

The U.S. is engaged in a trade war with China. But John Bennett, the FBI agent in charge of San Francisco, said international politics had nothing to do with the arrest and charges against Peng.

“We have criminal spies that are running around in our area of responsibility and it’s the FBI’s mission to stop this, so what’s going on in the rest of the world, it doesn’t matter to us,” he said.

FBI Director Christopher Wray has said China poses a more serious counterintelligence threat to the United States than any other country, including Russia.

In July, he testified before a Senate panel that the FBI had more than 1,000 investigations involving economic espionage and attempted intellectual property theft, nearly all of which lead back to China.

The Justice Department has brought multiple cases in the past year involving Chinese espionage and has also brought charges against operatives working with the Ministry of State Security as law enforcement officials grapple with how to deal with an increasing threat of China trying to steal information from American companies.

Last October, prosecutors charged a Chinese spy with attempting to steal trade secrets from several American aviation and aerospace companies, the first time an MSS operative was extradited to the U.S.

Anderson did not say how long Peng had been operating as an unregistered spy for China’s Ministry of State Security, only that the FBI employed a double agent in 2015 who conducted exchanges with Peng in the San Francisco Bay Area and in Columbus, Georgia.

Over six occasions between 2015 and 2018, Peng would secure a hotel room and leave up to $20,000 there, authorities said in the criminal complaint. The double agent would then get a key to the room, take the cash and leave a digital card containing information, it said.

Peng would then take the card and travel to Beijing to meet Chinese intelligence officers, authorities said.

Authorities say the unnamed double agent went to the FBI in 2015 after China’s intelligence department tried to recruit the person as a spy. The unnamed agent was told by Chinese intelligence officials at a meeting in 2015 that “Ed” was reliable and had family in China, according to the complaint.

The criminal complaint says Peng is a naturalized U.S. citizen who entered the country on a temporary business visitor visa and became a permanent resident in 2006. Peng was naturalized in September 2012.

He holds an acupuncturist license from the state.

Peng was arrested at his home Friday and ordered held without bond at a hearing before U.S. Magistrate Judge Joseph C. Spero. He is scheduled to return to court Wednesday.

Qian Peng, the suspect’s daughter, said she could not comment because she had not seen the charges.

Serrano said he sometimes wondered what Peng did for a living but didn’t inquire.

“He seemed to travel a lot,” Serrano said, recalling he would sometimes see cars come to pick up Peng, who would get in with suitcases.

Serrano and Peng chatted about domestic things, he said, with Peng admiring the fencing and succulents in front of Serrano’s home. Peng installed a similar fence and planted succulents that Serrano gave him.

Serrano was shocked when told about the spy charges.

“I can’t believe Ed was a Chinese spy!” he said.

Court records indicate Peng will be represented by the federal public defender’s office. The office did not respond to requests seeking comment.

Anderson did not elaborate on Peng’s tour operations. Public records list Peng as president of U.S. Tour and Travel in San Francisco, but no website for the company was found in an online search.

He could face up to 10 years in prison and a $250,000 fine if convicted of working as an unregistered agent of a foreign government,