U.S. Citizen Delivering State Secrets to China

Monday, The Department of Justice uncovered an interesting discovery where a U.S. citizen was busted, delivering classified information to the Chinese government.  Edward Peng, 56, who is a naturalized citizen of the United States of America and a tour guide and sight-seeing operator in California, is accused of picking up items designated for him at hotels and handing off to China.  What Peng did not know is that he was caught on hotel cameras in the alleged act.

Upon arriving at the hotels, Peng would go to the front desk and say his name, “Ed.”  A key card was always left for him by the hotel manager and handed to him upon giving his name.  He would go to the designated room, go inside, and pick up a mysterious package that looked like a pack of cigarettes.  Inside the box was an SD card with top-secret information.  Upon leaving the hotel, “Ed” would head straight to China and deliver it to the Chinese intelligence agency MSS.

For the courier jobs, there was a reported amount of $10,000 to $20,000 for each task completed.  These tasks were called “dead drops” and were directed allegedly by Beijing and given to Peng in a coded language for instructions.

According to the indictment, dead drops are “a method of spycraft 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.  Peng was charged with “one count of acting as a foreign agent by transmitting secure digital or SD cards through ‘dead drops.'”  The government shared footage of the dead drops which happened between June 2015 and July 2018.  The indictments stated six dead drops were completed by Peng on behalf of the Chinese government.  All six dead drops contained “classified information.”

John Bennett is the FBI special agent who is in charge of the San Fransisco field office, delivered a press conference where he stated, “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.  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.”  He added, “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.”

U.S. Attorney for the Northern District of California David L. Anderson spoke at the press conference alongside Bennett.  He stated, “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.”

ABC News reported, “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.  The Justice Department has stepped up its enforcement of cases related to China.”

Wednesday, bail was denied by a federal judge for Edward Peng.  U.S. Magistrate Judge Jacquline Corley stated Peng was a flight risk.  She stated, “He has substantial ties to China including the Chinese government.  He also has personal ties.”  She also said she was not “satisfied that the presence of his wife and two young daughters in the Bay Area was enough to keep him from fleeing to China.”  The judge also denied the use of a public defender for Peng due to the substantial amount of money he had in his account.

No plea was made by Peng, and if he is convicted, he can face up to ten years in jail along with a $250,000 fine.  He only had a small crabbing infraction against him before being incarcerated.

The former acting director of the CIA Mike Morrell, stated, “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.”