Two Chinese nationals have been charged with acting as agents of the People’s Republic of China’s government, accused of gathering intelligence on U.S. Navy personnel and bases while recruiting other military members to work for China’s primary foreign intelligence agency, the Ministry of State Security (MSS), according to a Monday report.
The Department of Justice announced that Yuance Chen, a resident of Happy Valley, Oregon, and Liren Lai, who entered Houston on a tourist visa in April 2025, were arrested. Both face charges related to conducting covert intelligence operations in the U.S. on behalf of the MSS.
In addition to recruiting potential MSS assets and collecting sensitive information on service members and military installations, the two men are also accused of facilitating a “dead drop” cash payment on behalf of the MSS.
The FBI arrested both men on Friday: Chen in Happy Valley and Lai in Houston, with assistance from the Naval Criminal Investigative Service (NCIS), according to Fox.
“Today’s arrests reflect the FBI’s unwavering commitment to protecting our national security and safeguarding the integrity of our military,” FBI Director Kash Patel told Fox News.
“The individuals charged were acting on behalf of a hostile foreign intelligence service — part of the Chinese Communist Party’s broader effort to infiltrate and undermine our institutions,” he continued.
“Thanks to outstanding coordination with our partners, including NCIS, we disrupted those efforts and sent a clear message: the United States will not tolerate espionage on American soil. Our counterintelligence operations remain focused, vigilant, and relentless,” he added.
According to a criminal complaint filed in the Northern District of California, the DOJ stated that the government of the People’s Republic of China conducts intelligence operations against the U.S. through various channels, including the MSS, which handles intelligence gathering on civilians as well as foreign intelligence, counterintelligence, and political security.
The complaint further alleges that Lai recruited Chen to serve the MSS in 2021, Fox reported.
In January 2022, the two men were in Guangzhou, China, where they reportedly coordinated a dead-drop payment of at least $10,000 on behalf of the MSS. The operation involved collaborating with accomplices in the U.S. to stash a backpack containing the cash in a day-use locker in Livermore, Calif., Fox continued.
After the cash drop, Lai and Chen continued their work for the MSS, assisting in identifying Navy personnel who might be willing to collaborate with the agency.
The DOJ reported that in 2022 and 2023, the two visited a U.S. Naval facility in Washington State and a Navy recruitment center in San Gabriel, California.
At the recruitment center, Chen allegedly photographed a bulletin board displaying the names, programs, and hometowns of Navy recruits. Most of those listed had “China” noted as their hometown, and the DOJ claims the photos were transmitted to an MSS intelligence officer in China, the Fox report continued.
The DOJ also alleged that the MSS instructed Chen on what to say to potential recruits regarding payments, preferred Navy job assignments, and ways to reduce the risk of Chen being exposed.
According to the complaint, Chen eventually communicated with a Navy member via social media and arranged a tour of the USS Abraham Lincoln in San Diego with that individual. Chen reportedly sent information about the Navy employee back to the MSS.
The complaint further alleges that Chen traveled to Guangzhou in April 2024 and March 2025 to meet with MSS intelligence officers and discuss compensation for specific assignments, Fox said.
Lai allegedly traveled to Houston in April 2025, stating that the trip was for his online retail business and that he planned to stay for two weeks, said the report.
Both Chen and Lai have been charged with acting as agents of a foreign government in the U.S. without notifying the attorney general. If convicted, they face fines of up to $250,000 and up to 10 years in prison, Fox added.