Defendants facilitated secret cash payments using Livermore drop box targeting U.S. military personnel for China’s Ministry of State Security
The FBI San Francisco Field Office was assisted by FBI’s Portland, Houston and San Diego Field Offices, and Naval Criminal Investigative Service
By William Elwood, Public Affairs Officer, U.S. Attorney’s Office Northern District of California
OAKLAND – Two nationals of the People’s Republic of China (PRC) were sentenced today to federal prison for conspiring to act as agents of the PRC government and acting as agents of a foreign government without prior notification to the Attorney General. Liren “Ryan” Lai, 40, and Yuance Chen, 39, were each sentenced to 30 months imprisonment and three years of supervised release by U.S. District Judge Jon S. Tigar. The defendants agreed to operate under the direction and control of the PRC’s Ministry of State Security (MSS), carrying out clandestine intelligence activities in the United States that included facilitating secret “dead drop” cash payments in exchange for information related to the national security of the United States, gathering information about U.S. military personnel and installations, and assisting efforts to recruit potential intelligence assets from within the U.S. military.
“These defendants were directed by a foreign intelligence service to gather information about the U.S. military in the hopes of undermining our national security. This office and our federal law enforcement partners stand watch day and night to prevent our adversaries from doing just that, and we will continue to do so,” said United States Attorney Craig H. Missakian. “There are many nations around the world that wish this country ill. And today’s sentences should demonstrate our commitment to holding accountable anyone who poses a similar threat to our nation.”
According to court documents, Lai and Chen began acting as agents of the MSS no later than May 2021. The MSS is the PRC’s principal civilian intelligence service, responsible for conducting foreign intelligence and counterintelligence operations. Lai recruited Chen into the scheme and initially served as an intermediary between Chen and MSS intelligence officers. Chen subsequently received assignments directly from MSS officers.
As detailed in the government’s sentencing memorandum, Lai and Chen facilitated a clandestine cash payment of approximately $10,000 in January 2022. While the defendants were in the PRC, they coordinated with individuals in the United States to leave a backpack containing the cash in a locker at a recreational facility in Livermore, California. Such arrangements, known as “dead drops,” allow intelligence operatives to transfer money or information without directly meeting the intended recipient.
The defendants’ illegal activities extended beyond facilitating covert payments on behalf of the MSS. Beginning in 2022, Chen gathered information about U.S. military installations and personnel at the direction of Lai and MSS intelligence officers. These activities included obtaining photographs of Navy Base Kitsap in Bremerton, Washington, and photographs and videos of military recruits and active-duty sailors inside a Navy recruiting station in Southern California. Chen also collected personal identifying information about a U.S. Navy employee and maintained detailed biographical information about military personnel who were potential intelligence targets.
In March 2023, Lai traveled to the U.S. and delivered a cell phone to Chen for covert communications with the MSS referred to by Chen as a “state secret.” Chen later traveled to China in 2024 and 2025, where he met with MSS officers and received additional assignments concerning U.S. service members.
In April 2025, Lai again traveled from China to the U.S. to carry out assignments for the MSS. The following month, the MSS directed him to travel to Phoenix to facilitate another clandestine cash payment of approximately $20,000 in furtherance of its intelligence operations.
Lai and Chen were arrested on June 27, 2025, during a coordinated Federal Bureau of Investigation (FBI) counterintelligence and law enforcement operation. A federal grand jury in the Northern District of California returned an indictment on July 1, 2025, charging both defendants with conspiracy to act as agents of a foreign government without prior notification to the Attorney General, in violation of 18 U.S.C. § 371, and act as agents of a foreign government without prior notification, in violation of 18 U.S.C. § 951.
Lai pleaded guilty to both offenses on December 12, 2025. Chen pleaded guilty to both offenses on February 20, 2026.
The FBI San Francisco Field Office led the investigation, with assistance from the FBI’s Portland, Houston and San Diego Field Offices, and the Naval Criminal Investigative Service.
The National Security, Cyber & Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California and the National Security Division’s Counterintelligence and Export Control Section handled the prosecution of the case. Significant operational support and assistance was also provided by the U.S. Attorney’s Offices for the District of Oregon, the Southern District of Texas, and the Southern District of California.
Case No. 4:25-cr-00186-JST
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