Two Chinese nationals appeared in federal courts Monday, facing serious charges of operating as unregistered foreign agents. The FBI arrested them for allegedly conducting espionage operations targeting U.S. military personnel.
Key Facts:
- Arrested: Yuance Chen (38) and Liren “Ryan” Lai (39)
- Charges: Acting as unregistered agents of China’s government
- Activities: Recruiting U.S. Navy personnel, cash payments through “dead drops”
- Potential sentence: Up to 10 years in prison, $250,000 fine each
The Arrests
The FBI arrested Yuance Chen in Happy Valley, Oregon, and Liren “Ryan” Lai in Houston, Texas, on Friday. Both men are charged with working for China’s Ministry of State Security (MSS) without proper notification to U.S. authorities.
Chen, a Chinese national and U.S. legal permanent resident, lived in Oregon. Lai entered the United States in April 2025 on a tourist visa. However, prosecutors say his real purpose was intelligence gathering.
“This case underscores the Chinese government’s sustained and aggressive effort to infiltrate our military and undermine our national security from within,” said Attorney General Pamela Bondi.
The Alleged Spy Network
Court documents reveal the alleged spy network began around 2021. According to prosecutors, Lai recruited Chen to work for China’s intelligence service.
The MSS is China’s primary civilian intelligence agency. This organization handles foreign intelligence collection and targets American military secrets.
In January 2022, the two men allegedly coordinated a sophisticated cash payment operation. They used a “dead drop” technique, leaving at least $10,000 in a backpack at a recreational facility in Livermore, California.
Targeting U.S. Military Personnel
After the initial cash drop, the defendants expanded their operations. Their new focus was recruiting U.S. Navy personnel as intelligence assets.
Chen visited multiple military locations, including:
• A U.S. Naval installation in Washington State
• A Navy recruitment center in San Gabriel, California
During his visit to the recruitment center, Chen obtained personal information about military recruits. He then transmitted this data to MSS officers in China.
The Chinese intelligence service provided Chen with specific training. This training covered recruitment techniques and methods to avoid detection by U.S. authorities.
“The Chinese Communist Party thought they were getting away with their scheme to operate on U.S. soil, utilizing spy craft, like dead drops, to pay their sources,” said FBI Director Kash Patel.
Ongoing Intelligence Operations
Chen began targeting a specific Navy employee through social media. He then provided detailed information about this individual to his Chinese handlers.
To maintain contact with MSS officers, Chen made multiple trips to China. These meetings occurred in Guangzhou in April 2024 and March 2025. During these visits, he discussed compensation and received new assignments.
Lai’s recent activities also raised suspicions. While claiming to be in the U.S. for business purposes, he undertook an unexplained cross-country journey from Houston to Southern California.
Law Enforcement Response
The arrests resulted from a coordinated multi-agency investigation. The operation involved FBI offices in San Francisco, Portland, Houston, and San Diego.
The Naval Criminal Investigative Service (NCIS) provided crucial assistance. This collaboration reflects the serious concern about foreign threats to U.S. military personnel.
“NCIS and the Department of the Navy take the foreign intelligence gathering threat very seriously, as the PRC has for years attempted through various means to recruit U.S. service members,” said NCIS Director Omar Lopez.
Legal Implications
Both defendants face charges under federal law requiring foreign agents to register with the U.S. government. This law serves as a transparency measure to monitor foreign influence activities.
If convicted, each defendant faces up to 10 years in federal prison. Additionally, they could receive fines of up to $250,000.
The Justice Department has increased enforcement of foreign agent registration requirements in recent years. These efforts aim to counter foreign influence operations targeting American institutions.
Broader National Security Context
This case highlights ongoing concerns about Chinese intelligence activities in the United States. U.S. officials have repeatedly warned about Beijing’s systematic intelligence gathering efforts.
The MSS operates globally and has been linked to numerous espionage cases. These operations target American military, technological, and economic secrets.
The timing comes amid heightened U.S.-China tensions over national security issues. These include cybersecurity concerns, trade disputes, and military competition in the Indo-Pacific region.
What Happens Next
The case will proceed through the federal court system. Multiple offices are handling the prosecution, including the Northern District of California and the National Security Division.
The defendants are presumed innocent until proven guilty in court. However, the case serves as a reminder of ongoing foreign intelligence threats to U.S. national security.
As this case develops, it underscores the continued need for vigilance in protecting sensitive military information and personnel from foreign recruitment attempts.
Source: This article is based on information from a U.S. Department of Justice press release dated July 1, 2025, and court documents filed in the Northern District of California. The defendants are presumed innocent until proven guilty in a court of law.
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