Hayward man faces charges in Chinese spy scheme

A U.S. citizen was arrested Friday at his home in Hayward on suspicion of spying for China, federal prosecutors announced Monday. Xuehua Peng, also known as Edward Peng, has been charged with acting as an illegal foreign agent for delivering sensitive national security information to intelligence officers in Beijing.

Investigators say that Peng, 56, was acting at the behest of the People’s Republic of China’s Ministry of State Security when he rented hotel rooms to use as “dead drops” in Newark, Oakland and Columbus, Georgia, on at least five occasions from October 2015 to June 2018.

On each occasion, Peng would either leave large sums of cash, pick up a secure digital (SD) card, or both. After making the exchange, Peng would travel to China to hand-deliver the SD card, according to the U.S. Attorney’s Office.

The acts of espionage also began with a “dry run,” in which Peng retrieved an empty package in June 2015, prosecutors said.

FBI Special Agent in Charge John Bennett said Monday in a statement:

“Putting an end to Mr. Peng’s alleged actions are an important and significant step in dismantling the PRC’s overall efforts against our country.”

Bennett said:

“Our message is clear: the FBI, along with our intelligence community partners, will pursue foreign adversaries — at any level of an operation — and disrupt their malicious activity when it is detected.”

Peng first appeared in court on Friday after his arrest, and is currently being held on no-bail status. He returns to court at 10:30 a.m. Wednesday.

If convicted of acting as an agent of a foreign government without notifying the U.S. Attorney General, Peng faces a maximum sentence of 10 years in federal prison and a fine of $250,000.