Today Edward Peng aka Xuehau Peng, who was identified by a U.S. double agent as a support asset of Chinese intelligence, was sentenced to 48 months in prison and fined $30,000 for acting as an agent of a foreign government.
In November 2019, Peng was arrested and pleaded guilty to the charges levied against him. Readers will remember that Peng was identified by a U.S. controlled asset, a double agent, as servicing dead drops and warm hotel drops of sensitive U.S. government information in both California and Georgia.
During the interview process, Peng revealed that he had been working on behalf of the Chinese Ministry of State Security (MSS) since March 2015. Peng was asked to use his status as a U.S. citizen to help China with “matters of interest to the PRC.” In 2015 he was provided instruction on how to use dead drops to exchange money for goods (in the form of SD, data storage, cards) delivered by human sources of the MSS who were operational in the United States.
U.S. counterintelligence entities were fortunate that their dangle was picked up by the MSS, vetted, and determined to be worth handling using a sensitive, resident clandestine support asset, Peng. The drops in the San Francisco Bay area, where Peng was resident, occurred at Chinese-owned hotels. When the operation shifted to Georgia, that provided the U.S. counterintelligence teams the opportunity to control the environment and videotape Peng in action.
The FBI’s San Francisco Division’s special agent in charge, John F. Bennett, said, “This sentence serves as a powerful deterrent to both Communist China, who will continue to attempt to recruit others to act on its behalf, and those who attempt to carry out such tasks at the direction of its intelligence services. These actions are illegal and inexcusable. By working jointly with our partners, we will never stop our fight against hostile intelligence services and our determination to protect the national security of the United States should never be in doubt.”
The case is another reminder of the lengths China will go to in carrying out espionage against the U.S. While it’s cybersecurity attacks and economic espionage are well documented, in recent months it’s more flagrant physical security breaches demonstrate how extensive, and active, China is across the U.S.
U.S. Attorney for the Northern District of California observed: “Today Xuehua Peng suffers the consequences of acting in the United States at the direction of a foreign government. This day of reckoning comes from Peng’s decision to execute dead drops, deliver payments, and personally carry to Beijing, China, secure digital cards containing classified information related to the national security of the United States. Peng will now spend years in prison for compromising the security of the United States.”
What remains unknown to us, but hopefully known to the Department of Justice and the FBI, are the identities of the other U.S. clandestine sources who were being serviced by Peng and providing secrets to the Chinese MSS.
