Two Men Accused of Spying for Chinese Intelligence in U.S. Navy Espionage Case

Federal authorities have arrested two men accused of operating as covert agents for the Chinese government, allegedly targeting U.S. Navy personnel and facilities in a suspected intelligence-gathering effort.

The Department of Justice announced that Yuance Chen, a resident of Happy Valley, Oregon, and Liren Lai, who recently arrived in Houston on a tourist visa, have been charged with acting on behalf of China’s Ministry of State Security (MSS), the country’s main foreign intelligence agency.

According to a criminal complaint, the two suspects were allegedly involved in a wide-ranging operation that included identifying and attempting to recruit U.S. Navy service members, gathering information about military facilities, and coordinating secretive financial exchanges.

Details of the Alleged Operation

Investigators allege the operation began in 2021, when Lai recruited Chen to cooperate with the MSS. In January 2022, both traveled to Guangzhou, China, where they reportedly coordinated a covert $10,000 cash payment from the MSS, placing it in a locker in Livermore, California — a method referred to as a “dead drop.”

Afterward, the duo allegedly continued efforts to identify individuals within the Navy who might be susceptible to recruitment. The DOJ says they visited several military-related sites, including a Navy facility in Washington State and a recruitment center in San Gabriel, California.

During one of these visits, Chen reportedly photographed a bulletin board that displayed names and information of Navy recruits, many of whom had “China” listed as their hometown. Authorities claim these images were transmitted to an MSS officer.

U.S. Officials Respond to Espionage Concerns

The FBI, working with the Naval Criminal Investigative Service (NCIS), arrested the suspects on June 20. In a statement, FBI Director Kash Patel emphasized the seriousness of the charges.

“These individuals were allegedly acting on behalf of a hostile foreign intelligence service,” he said. “Thanks to strong cooperation between agencies, we were able to disrupt this effort and protect our national security.”

The DOJ further alleges that Chen communicated with at least one Navy member via social media and even arranged a visit aboard the USS Abraham Lincoln in San Diego. That individual’s details were also allegedly passed to MSS contacts.

Legal Charges and Possible Sentences

Both Chen and Lai face charges of acting as agents of a foreign government without prior notification to the U.S. Attorney General. If convicted, they could face up to 10 years in prison and fines of up to $250,000.

Prosecutors say Chen continued to meet with MSS officers in China as recently as March 2025, while Lai entered the U.S. again in April 2025, claiming to be visiting for business purposes.

The case highlights continued concerns over foreign intelligence operations targeting U.S. institutions and personnel. The investigation remains ongoing

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