Alleged Chinese spy caught delivering information on US government: Feds

In an indictment unsealed Monday, the Department of Justice alleges that a naturalized U.S. citizen was working with the Chinese government as a "courier" for information about the U.S. government on behalf of China.

The U.S. attorney for the Northern District of California charged Edward Peng, 56, with one count of acting as a foreign agent by transmitting secure digital, or SD, cards through "dead drops."

The dead drops were allegedly directed by Beijing in coded language.

Dead drops are "a method of spy craft used to pass items or information between two individuals using a secret location, thus not requiring them to meet directly, so as to maintain operational security," according to the indictment.

The government alleges the drops happened between June 2015 and July 2018 and the government shared video of the alleged drops.

"It is important to understand that we believe that Edward Peng, who is a U.S. citizen who has been living in the United States, has been knowingly working as a courier for the Chinese government," John Bennett. the FBI special agent in charge of the San Francisco field office, said at a press conference.

"In this role, Peng has engaged in several clandestine operations to facilitate the delivery of information from the United States to the MSS (Ministry of State Security) Intelligence officers in China," Bennett continued.

The indictment says that Peng completed six dead drops on behalf of the Chinese government -- first at a hotel owned by a retaliative and then at a hotel in Columbus, Georgia.

The SD cards that Peng distributed contained "classified information," according to the indictment. Peng was allegedly paid between $10,000 and $20,000 to make the drops.

The government alleges that Peng, a tour guide and sight-seeing operator in San Francisco, would go into hotel rooms in Georgia and California and ask for a hotel key left for "Ed."

Then, the government alleges that once inside the room, the SD card was stored in a container similar to a "cigarette pack" placed by a double agent, someone who was really working for the United States.

Once Peng picked up the package, he would fly back to China with the SD card dropped off by a source.

"The confidential human source chose to report MSS's engagement with him to the FBI and chose to cooperate in this criminal investigation. As alleged in the complaint, the defendant in this case made the wrong choice, the defendant chose to work as a secret agent for the MSS's spy network," U.S. Attorney for the Northern District of California David L. Anderson said at a press conference.

Peng and the Ministry of State Security handler would often speak in code on the phone -- such as referring to an upcoming trip to China as a trip with the "educational company." In a drop in Georgia, Peng flew from California to make the drop and collected $20,000, according to the government.

"Peng was observed taking large sums of money from a hotel dresser drawer and removing a hidden disc from the dresser, which contained information intended for the Chinese government," Bennett said.

Peng is due in court on Oct. 2.

The Justice Department has stepped up its enforcement of cases related to China.

In January, Chinese company Huawei and Skycom were charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, among other charges. Huawei and Huawei USA are charged with conspiracy to obstruct justice related to a grand jury investigation in the Eastern District of New York.

Huawei Chief Fiancial Officer Meng Wanzhou is charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud, then-then-acting Attorney General Matt Whitaker said at a news conference.

Earlier this month, a Chinese woman was found guilty of trespassing at Mar-a-Lago, President Donald Trump's Florida club. She had several electronic devices, including one used to find hidden cameras, in her hotel room when she was arrested.