Watch CBS News

Alleged Bay Area Chinese Spy Denied Bail

SAN FRANCISCO (CBS SF/AP) -- A federal judge denied bail and the services of a public defender Wednesday to a Bay Area tour operator charged with carrying national security documents to officials in China.

U.S. Magistrate Judge Jacqueline Corley ruled that Xuehua Edward Peng was a flight risk.

"He has substantial ties to China including Chinese government," Corley said in making her ruling. "He also has personal ties."

She added she wasn't satisfied that the presence of his wife and two young daughters in the Bay Area was enough to keep him from fleeing to China. Prosecutors presented evidence at the bail hearing that Peng also has a bank account, mistress and apartment in China. He has traveled between the Bay Area and China 15 times since 2015.

Assistant U.S. public defender Ellen Leonida argued that Peng had no previous record besides an illegal crabbing infraction and was prepared to post property. She had asked the judge for monitored home confinement.

Corley also ruled that Peng's had enough financial resources to be denied the future use of a public defender. Prosecutors told the judge that Peng and his wife had just closed on a new home in Castro Valley.

Xuehua "Edward" Peng courtroom sketch vicki behringer
Xuehua "Edward" Peng courtroom sketch vicki behringer

Peng has not entered a plea. If convicted, Peng faces up to 10 years in prison and a $250,000 fine.

Before his arrest, Peng was acting as a San Francisco tour guide for Chinese tourists. According to his neighbors in his suburban Hayward neighborhood, he was quiet and unassuming.

Prosecutors claim Peng participated in anonymous drops where he left money in hotel rooms in exchange for documents on a digital card provided by a person secretly working with the FBI.

According to the complaint, Peng acted at the direction of Chinese intelligence officials in retrieving classified information passed to him by a source, or leaving behind money for the source, on multiple occasions between 2015 and 2018.

Authorities said Peng staged several "dead drops" at hotel rooms in the Bay Area (in Newark and Oakland) and Georgia.

In surveillance video, Peng can be seen taping what investigators say is $20,000 in cash to a dresser in a Georgia hotel room for a source to pick up in exchange for an SD card left by the source for cash.

In reality, a double agent working for the FBI was the one who left the memory card in the dresser.

According to court documents, that double agent penetrated the spy ring in the Bay Area in 2015. The agent was directed to Peng, who would pick up the memory cards and fly them from the U.S. to China, to deliver information that was passed to him on the SD cards.

Authorities said the FBI secretly filmed Peng performing the drops and intercepted phone conversations with handlers in China.

Xuehua "Edward" Peng
Surveillance video of Xuehua "Edward" Peng, who is accused of spying for a Chinese intelligence agency. (Department of Justice)

"The conduct charged in this case alleges a combination of age-old spycraft and modern technology," U.S. Attorney David Anderson said. "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 and the battle being waged by our intelligence and law-enforcement communities to protect our people, our ideas, and our national defense."

"This arrest is the 4th case we've seen of Chinese espionage just in the last several months. I think it's both a reflection of how aggressive the Chinese are being and how aggressive we are being in trying to push back on it," said Mike Morrell, the former acting director of the CIA.

© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.