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FBI Arrests Hayward Man Accused Of Spying For Chinese Intelligence Agency

HAYWARD (CBS SF) – Federal authorities have arrested and charged a Hayward man for allegedly acting as an illegal foreign agent who delivered classified information to a Chinese intelligence agency.

The Department of Justice announced Monday that 56-year-old Xuehua "Edward" Peng was arrested at his residence in the East Bay last Friday.

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.

Peng, a U.S. citizen, is being held without bail. He made his initial appearance in San Francisco federal court last week and is expected to appear in court again on Wednesday.

If convicted, Peng faces up to 10 years in prison and a $250,000 fine.

Peng was acting as a San Francisco tour guide for Chinese tourists. According to his neighbors in his suburban Hayward neighborhood, Peng was quiet and unassuming. He has a wife and two children.

KPIX 5 spoke to Peng's wife, who did not want to talk on camera. She said she has no idea how her husband could be involved in such an act.

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