Two Men Arrested in U.S. Navy Espionage Scandal, Accused of Spying for China
In a dramatic turn of events, federal authorities have arrested two men accused of acting as covert operatives for the Chinese government, allegedly targeting U.S. Navy personnel and sensitive military installations in a sophisticated intelligence-gathering operation.
The Alleged Espionage Plot
Yuance Chen, a resident of Happy Valley, Oregon, and Liren Lai, a recent arrival to Houston on a tourist visa, are now facing federal charges. They stand accused of working on behalf of China’s Ministry of State Security (MSS), the nation’s primary foreign intelligence agency.
Federal prosecutors reveal a wide-ranging espionage effort that allegedly involved recruiting U.S. Navy service members, gathering crucial information about military facilities, and orchestrating covert financial transactions. This operation is said to have spanned over two years, with a series of highly secretive actions designed to infiltrate the U.S. military infrastructure.
Details of the Covert Operation
The conspiracy reportedly began in 2021 when Lai enlisted Chen to collaborate with the MSS. In January 2022, the pair allegedly traveled to Guangzhou, China, to arrange a covert financial exchange, with a $10,000 cash drop placed in a locker in Livermore, California — a classic “dead drop” method used by intelligence agents to avoid direct contact.
From there, Chen and Lai are said to have escalated their espionage activities. They made visits to key military sites, including a Navy facility in Washington State and a recruitment center in San Gabriel, California. At one point, Chen photographed a bulletin board displaying Navy recruits’ names, many of whom were listed with “China” as their hometown. These photographs were allegedly transmitted to MSS handlers.
U.S. Government Responds
The operation was finally disrupted on June 20, when both men were arrested by the FBI and the Naval Criminal Investigative Service (NCIS). In a statement, FBI Director Kash Patel emphasized the severity of the charges, describing the duo as agents working on behalf of a hostile foreign power. “Thanks to unprecedented cooperation between federal agencies, we were able to expose and halt this effort to undermine U.S. security,” Patel said.
Further investigations revealed that Chen had been in contact with at least one Navy member via social media and even arranged a visit to the USS Abraham Lincoln in San Diego. Authorities allege that this individual’s details were also shared with MSS operatives.
Legal Repercussions and Sentences
Both Chen and Lai are charged with acting as agents of a foreign government without notifying the U.S. Attorney General, a serious federal offense. If convicted, they could face up to 10 years in prison and substantial fines of up to $250,000.
Court documents reveal that Chen continued his communications with MSS agents as recently as March 2025, while Lai re-entered the U.S. in April 2025 under the pretense of business meetings.
This case underscores growing concerns about foreign espionage targeting U.S. military and governmental systems. The investigation is ongoing, with U.S. officials vowing to remain vigilant against such covert activities.