San Francisco–Xuehua (Edward) Peng a/k/a Edward Peng was sentenced today to 48 months in prison and ordered to pay a $30,000 fine for acting as an agent of the People’s Republic of China’s Ministry of State Security (MSS) in connection with a scheme to conduct pickups known as “dead drops” and transport Secure Digital (SD) cards from a source in the United States to the MSS operatives in China.
Peng pleaded guilty to the charge on November 25, 2019. According to his plea agreement, Peng, a 56 year-old U.S. citizen living in Hayward, Calif., acted at the direction and under the control of MSS officials in China in retrieving information passed to him and leaving money behind for the source. Peng admitted that in March of 2015, an official from the People’s Republic of China (PRC) introduced himself to Peng while Peng was on a business trip to China. The official asked Peng to use his citizenship in the United States to assist the official with matters of interest to the PRC. Peng eventually came to understand that the official was employed as an intelligence or security services officer of the PRC, specifically of the Ministry of State Security (“MSS”), and nevertheless agreed to perform activities in the United States on behalf of the PRC. Peng’s plea acknowledged that he knew he was acting on behalf of the government of the PRC.
Peng admitted that in March of 2015, he received instructions regarding how to use dead drops to exchange money for items to deliver to the PRC. Peng admitted that the official directed him to locate and reserve hotel rooms where he was to leave money and then depart for several hours. Peng was instructed to return later and retrieve small electronic storage devices that would be left for him. Thereafter, he was to fly to the PRC and deliver the retrieved devices to the PRC official. Peng never met nor interacted with the individual who left the devices for him and was instructed not to access the information was stored on the SD cards.
According to his plea agreement, Peng participated in five dead drops involving drop-offs of cash and/or pick-ups of SD cards, after a practice run in June 2015. After he participated in two dead drops in the San Francisco Bay Area between October 2015 and April 2016, Peng began making dead drops in Columbus, Georgia. After three dead drops in Georgia, Peng informed the PRC official that he wanted to resume dead drops in the San Francisco Bay Area. Peng did not complete a seventh dead drop before his arrest by federal authorities in September 2019.
Peng also admitted that the PRC official paid him at least $30,000 for the acts he performed as a courier for the MSS.
Peng has been in custody since his arrest on September 27, 2019, and will begin serving his prison term immediately.
