Bay Area man sentenced for Chinese espionage

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A former Bay Area tour operator was sentenced to four years in prison for serving as an unregistered agent for China’s Ministry of State Security in a scheme to use “dead drops” to pick up digital memory cards from a source and take them to China. Xuehua Edward Peng, 56, was sentenced Monday in federal court in Oakland. He was also ordered to pay a $30,000 fine, the U.S. Justice Department said. Peng pleaded guilty on Nov. 25, 2019, to acting at the direction and under the control of ministry of state security officials in China. If convicted at trial, he could have faced up to 10 years in prison and a $250,000 fine. The Hayward resident admitted that while he was on a business trip to China in March 2015, an official of the People’s Republic of China introduced himself and asked Peng to use his U.S. citizenship to assist him. Peng came to understand the official worked for China’s Ministry of State Security but agreed to take actions in the U.S. on behalf of China and learned how to use dead drops: rent hotel rooms, leave money and leave for several hours. “The official instructed Peng to return later and retrieve small electronic storage devices that the source would leave for him,” a Justice Department statement said. “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.”


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