Two Chinese nationals were arrested late last week in the United States on allegations they were working on behalf of the Chinese government, seeking to spy on Navy bases and personnel.
Yuance Chen, 38, is a Chinese national and a legal permanent resident who lives in Happy Valley, Oregon, and Liren “Ryan” Lai, 39, is a Chinese resident who resides there but recently arrived in Houston on a B1/B2 visitor visa. Both were arrested last Friday and made their initial appearances in federal court on Monday, and were also accused of trying to recruit sailors to turn on the U.S.
Lai allegedly recruited Chen on behalf of China’s Ministry of State Security in 2021 and acted as a conduit between them.
The duo was directed “to oversee and/or carry out various clandestine operations in the United States, including facilitating a ‘dead drop’ payment of cash on behalf of the MSS, gathering intelligence about U.S. Navy service members and bases, and assisting with efforts to recruit other potential MSS assets from within the U.S. military,” the criminal complaint filed against them said.
When the two were both in China in January 2022, they arranged for another MSS operative to carry out a $10,000 cash “dead drop,” a method of tradecraft to pass along intelligence without coming face-to-face with the recipient of the information, in a day-use locker at a recreational facility in Livermore, California.
Chen’s wife is believed to have facilitated the dead drop. Chen allegedly directed her to scout out multiple locations for it. The criminal complaint alleges that she was captured on surveillance footage carrying a black backpack entering the locker room area, appearing to take a photo of the vicinity, and departing without the backpack.
The complaint included their purported text messages discussing the dead drop timing.
A few months later, Chen is believed to have passed on photographs of U.S. Navy Base Kitsap to Lai and videos of him with a Navy recruiter at U.S. Navy Recruiting Station Alhambra in San Gabriel, California.
In May 2023, Chen’s wife sent him additional photos, the metadata corresponding with a creation date of May 3, 2023, in and around the Navy Recruiting Station Alhambra. These subsequent pictures included full names, programs, and hometowns of recent Navy recruits. Chen then sent these images to a China-based email service provider.
“The FBI arrested two Chinese nationals who were allegedly attempting to recruit U.S. military service members on behalf of the [People’s Republic of China],” said FBI Director Kash Patel. “The Chinese Communist Party thought they were getting away with their scheme to operate on U.S. soil, utilizing spy craft, like dead drops, to pay their sources. This case was a complex, coordinated effort and is an example of outstanding counterintelligence work done by FBI San Francisco, Portland, Houston, San Diego, and the Counterintelligence Division. The FBI will continue to vigilantly defend the homeland from China’s pervasive attempts to infiltrate our borders.”
Chen and Lai face up to 10 years of imprisonment and fines of up to $250,000 if convicted.
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The FBI has arrested 51 foreign intelligence agents since the beginning of the calendar year, Deputy FBI Director Dan Bongino said. The bureau has nearly 5,000 active counterintelligence investigations, including over 800 new cases opened this year alone.
“We’re moving quickly to arrest or disrupt enemy agents, because we know this heightened global threat environment means we need to be hypervigilant in protecting our Homeland,” Bongino said.