Hayward man arrested for espionage, allegedly providing U.S. secrets to China

HAYWARD, Calif. (KGO) -- U.S. government officials on Monday announced charges accusing an American citizen living in Hayward with acting as a spy for China.

U.S. Attorney David L. Anderson said 56-year-old Xuehua (Edward) Peng is accused of being an illegal foreign agent and delivering classified United States national security information to officials in the People's Republic of China.

A video released by the U.S. Justice Department looks innocuous enough-- a man walking around a hotel room, at one point opening and closing a drawer, but according to officials, what it really shows is a spy hard at work for the People's Republic of China.

"The PRC is stealing from our free society, what they cannot create for their own people within a tightly controlled communist dictatorship," said John Bennett, the FBI's Special Agent in Charge for the San Francisco Division.

Over a four year period, from 2015 to 2018, a federal complaint alleges Peng conducted numerous "dead drops" in Georgia and in the Bay Area, acting as an illegal foreign agent for the Chinese government.

Peng allegedly used hotel rooms in Newark and Oakland to leave an envelope with cash for an informant, usually in exchange for an SD card loaded with sensitive U.S. national security information, a card that Peng would then personally deliver to Chinese government officials in Beijing.

"Dead dropping an SD card is a potent combination of age-old spycraft and modern technology," said David Anderson, the U.S. Attorney for the Northern District of California. "During these dead drops, Peng would rent and then occupy a hotel room, tape an envelope containing cash to the underside of a dresser drawer and then leave the room key at the front desk. The double agent would retrieve the key, retrieve the cash and tape the SD card to the same place where the money had been left."

On Friday morning, the FBI raided Peng's Hayward home. A neighbor shared still photos with ABC7 News. According to the neighbor, who did not want her name used, agents spent several hours at the modest house gathering evidence.

"It's really surprising. It's crazy," she said. "He seems like he has a lot of money. Driving a Porsche, a Tesla... every day, he seems he had Amazon orders coming in."

Peng is being held without bond and is scheduled to appear in federal court in San Francisco Wednesday morning.

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

ABC7's Laura Anthony and the Associated Press contributed to this report.