Two Chinese nationals face federal espionage charges after allegedly running a years-long spy operation targeting U.S. Navy personnel and bases on behalf of Beijing’s intelligence agencies.
The FBI arrested Yuance Chen and Liren “Ryan” Lai on Friday following a sprawling, years-long federal investigation that uncovered dead drops of cash at California recreation centers and suspicious photography at Navy recruitment offices, according to court documents. The filing reveals the methods by which Chinese operatives are allegedly attempting to penetrate the Navy’s sailors and facilities.
“Two Chinese nationals were caught spying on our Navy and trying to recruit American service members for the CCP’s intel service. Our FBI won’t stand for it. We tracked them, we stopped them, and we’re not done yet,” FBI Director Kash Patel wrote on X. “Espionage on U.S. soil will be met with full force.”
Neither the FBI or the Justice Department immediately responded to requests for comment.
Federal prosecutors hit the pair with one count each of acting as unregistered agents of a foreign government, a charge that carries up to ten years in prison and a $250,000 fine. Chen — a lawful resident since 2015 — was picked up outside his home in Happy Valley, Oregon. Naval Criminal Investigative Service agents arrested Lai — who overstayed his tourist visa — in Houston during a coordinated sweep on Friday morning. They made initial appearances Monday in Portland and Houston, and prosecutors say they will seek pre-trial detention, calling both defendants serious flight risks.
The now-unsealed complaint says Lai first recruited Chen during a 2021 trip to Guangzhou, where Ministry of State Security (MSS) offices laid out “tasking” orders, cash payments and cover stories. The duo allegedly arranged a $10,000 backpack dead-drop in a Livermore, California, locker in January 2022 to bankroll future operations.
The MSS — the civilian service responsible for foreign espionage and domestic counterintelligence — has steadily expanded its reach over the past two decades, U.S. officials say. The agency often recruits through overseas ethnic Chinese communities.
Throughout 2022 and 2023, investigators say, Chen travelled to a Navy installation in Washington state and the San Gabriel recruiting office, where he photographed a bulletin board listing recruits — many of them Chinese-born — and sent the images to his MSS handler. He later struck up an online friendship with an enlisted sailor and finagled a January 2025 tour of the USS Abraham Lincoln carrier in San Diego, sending the sailor’s personal details back to Guangzhou within hours, according to the FBI.
Chen allegedly met again with MSS officers in Guangzhou in April 2024 and March 2025 to report on progress and discuss further payments. Lai, meanwhile, traveled through the Southwest by car during a month-long U.S. stay this spring, movements the FBI says were consistent with operation surveillance.
“This case underscores the Chinese government’s sustained and aggressive effort to infiltrate our military and undermine our national security from within,” Attorney General Pam Bondi said, promising to “expose foreign operatives, hold their agents to account and protect the American people from covert threats.”
The Chinese embassy in Washington did not respond to a request for comment.
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