Chinese Nationals Yuance Chen and Liren Lai Arrested in Coordinated FBI Sting for Allegedly Operating as Illegal Agents of China’s Ministry of State Security: Accused of U.S. Navy Espionage, Recruitment Attempts, and Covert Cash Transfers on American Soil

In a case that underscores the growing geopolitical tension between the United States and the People’s Republic of China, two Chinese nationals—Yuance Chen, a resident of Happy Valley, Oregon, and Liren Lai, a recent entrant to the United States on a tourist visa—have been arrested and charged with operating as unregistered foreign agents for the Chinese Ministry of State Security (MSS). The FBI, in collaboration with the Naval Criminal Investigative Service (NCIS), conducted the arrests in Oregon and Houston, Texas, respectively. The charges, announced by the U.S. Department of Justice on Friday, allege that both men were involved in an extended espionage operation targeting sensitive components of U.S. Navy infrastructure, recruitment operations, and military personnel.

According to a federal criminal complaint filed in the Northern District of California, Chen and Lai are accused of participating in clandestine activities that included surveillance of military sites, transmission of sensitive personnel information, and direct recruitment of U.S. service members on behalf of China’s top civilian intelligence agency. These acts, prosecutors argue, were not isolated or impulsive, but rather part of a sophisticated, long-term operation orchestrated by the MSS—a shadowy branch of the Chinese state apparatus tasked with foreign intelligence and political security.

At the heart of the complaint lies the claim that Liren Lai recruited Chen in 2021, forging a covert partnership that would span years and international borders. Their in-person meeting in Guangzhou, China in January 2022 served as a critical operational touchpoint, during which the two allegedly coordinated a “dead drop” exchange in the U.S.—a hallmark of classic espionage tradecraft. Investigators say that the drop, executed in Livermore, California, involved a day-use locker that concealed $10,000 in cash, earmarked for Chen as payment from MSS handlers. This episode alone, authorities contend, reveals the depth of coordination and the level of funding channeled into PRC intelligence operations on American soil.

But the operation did not stop there. In fact, Chen and Lai allegedly intensified their covert efforts throughout 2022 and 2023, transitioning from preliminary reconnaissance to direct intelligence-gathering. The complaint details multiple visits to U.S. Navy installations, including a particularly sensitive location in Washington State, and a recruitment center in San Gabriel, California. There, Chen is said to have photographed a bulletin board listing personal details of Navy recruits, including names, hometowns, and program assignments—data that, while not classified, could still be of immense value to foreign intelligence services, especially when filtered for individuals with ties to China.

One chilling detail included in the report is that many of the recruits listed their hometowns as “China,” a demographic thread that could have been exploited by the MSS to identify potentially vulnerable or sympathetic individuals. The Department of Justice asserts that these photos were transmitted electronically to Chinese intelligence officials, constituting a breach of U.S. sovereignty and an escalation in the targeting of military human resources by foreign actors.

More disturbing still is the allegation that Chen initiated contact with a U.S. Navy service member via social media, arranged a guided tour of the USS Abraham Lincoln in San Diego, and subsequently shared information about the individual with MSS operatives. While the nature and depth of the shared information are not publicly disclosed, the complaint implies that Chen was following MSS guidance to cultivate relationships, explore payment incentives, and discuss Navy job placements—all classic hallmarks of an active recruitment campaign.

The instructions from the MSS were reportedly detailed and strategic. Chen was allegedly coached not only on what to say to U.S. military personnel, but how to say it—down to the tone of the conversation, the cover story, and the timing. This tactical specificity further strengthens the government’s argument that the espionage was not haphazard or opportunistic, but a highly structured and well-resourced foreign intelligence operation.

Chen’s international travel patterns are also a critical part of the investigation. Records show that he returned to Guangzhou in April 2024 and again in March 2025, each time to meet directly with MSS officials. These meetings, the DOJ states, were used to coordinate new tasks, discuss risks, and deliver payments—raising additional questions about the scale of the MSS network in the United States and its level of influence over operatives like Chen.

Meanwhile, Liren Lai, who entered the U.S. in April 2025 on a tourist visa, drew immediate scrutiny due to his unusual travel patterns. Though ostensibly in the U.S. for “business purposes,” Lai undertook an extensive cross-country trip from Houston to California and was later found to have returned to Junction, Texas more than a month after his initial entry. The FBI alleges that this pattern of movement reflects operational behavior consistent with a foreign intelligence officer: establishing routes, checking on local assets, and possibly assessing new recruitment opportunities.

At the core of the federal charges is a violation of the Foreign Agents Registration Act (FARA), which mandates that individuals acting on behalf of a foreign government must notify the U.S. Attorney General. Chen and Lai are accused of willfully failing to do so, a felony that carries penalties of up to 10 years in prison and fines reaching $250,000.

Speaking to the broader implications of the case, Assistant Attorney General John Eisenberg of the DOJ’s National Security Division offered a stark assessment: “Hostile foreign intelligence services like the PRC’s Ministry of State Security dedicate years to recruiting individuals and cultivating them as intelligence assets to do their bidding within the United States.” Eisenberg’s statement was not merely a condemnation of Chen and Lai, but an assertion of the DOJ’s commitment to proactively confronting foreign espionage before it translates into national security breaches.

The statement by FBI Director Kash Patel echoed these concerns and provided further context: “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.” Patel emphasized that thanks to collaboration with NCIS, the FBI was able to intercept and dismantle the espionage network before it inflicted long-term damage. He added: “The United States will not tolerate espionage on American soil.”

While both suspects are currently in custody, the investigation remains active and ongoing, with federal authorities urging members of the public to report any suspicious foreign influence activity to the FBI. Given the scope of the alleged operation and the involvement of the MSS, it is likely that investigators will now turn their attention to any additional operatives or targets that Chen and Lai may have encountered or attempted to recruit.

This case stands as a stark reminder of the persistent and evolving threat posed by foreign intelligence operations, particularly from nation-states like China, which have been known to blend traditional human intelligence tactics with cyber operations and influence campaigns. The Ministry of State Security, with its dual focus on foreign intelligence and domestic political security, has grown increasingly aggressive in its outreach, especially in targeting diaspora communities and military institutions overseas.

From a policy perspective, the arrests may intensify calls within Congress for tougher oversight on foreign student and tourist visas, as well as renewed scrutiny over vulnerabilities within U.S. military recruitment and personnel systems. At the same time, the DOJ and intelligence community are expected to increase inter-agency cooperation and expand counterintelligence briefings for service members and civilian defense employees.

At a time when U.S.–China relations remain strained over trade, cybersecurity, and military posturing in the Indo-Pacific, the revelation of an active espionage campaign conducted on American soil is more than just a legal matter—it is a strategic warning. Whether additional charges will be filed, or whether Chen and Lai will become cooperating witnesses in exchange for leniency, remains to be seen. For now, their arrest sends an unequivocal message to foreign operatives: the United States is watching, and it will act.