A backpack containing $10,000 in cash, concealed inside a recreational center locker in suburban Livermore, California, marked the beginning of what would become a sophisticated and far-reaching espionage operation targeting the United States military.
Two men coordinated the exchange from thousands of miles away across the Pacific, never once setting foot inside the facility. That locker drop served as the opening move in a multiyear Chinese espionage ring that ultimately penetrated the ranks of the U.S. armed forces. On Tuesday, the two Chinese nationals responsible for orchestrating the operation , Liren “Ryan” Lai, 40, and Yuance Chen, 39 , each received sentences of 30 months in federal prison, to be followed by three years of supervised release. Both men had previously entered guilty pleas to charges of conspiring and acting as unregistered foreign agents on behalf of the People’s Republic of China.
Federal court records document a steady and deliberate escalation in classic spycraft, directed by China’s primary civilian intelligence apparatus, the Ministry of State Security. By May 2021, Lai had recruited Chen into the network, initially functioning as the intermediary between Chen and Chinese intelligence handlers before Chen began receiving operational assignments directly from the agency.
By 2022, the scope of the mission had expanded well beyond financial transfers. Operating on American soil, Chen began conducting surveillance of U.S. military installations. Armed with a camera, he photographed Naval Base Kitsap in Bremerton, Washington , a critical homeport for the Pacific Fleet’s nuclear-powered submarines. In Southern California, Chen surveilled a Navy recruiting center, capturing video footage and photographs of active-duty sailors and young recruits as they entered the facility.
Working behind the scenes, Chen compiled detailed dossiers on American service members, recording personal identifying information to assist Beijing in identifying individuals potentially vulnerable to recruitment.
The operational relationship intensified in March 2023, when Lai traveled from China to the United States to deliver a dedicated mobile device to Chen. Chen described the hardware in communications as a “state secret,” intended exclusively for covert contact with their intelligence handlers. Chen subsequently traveled to China in 2024 and again in 2025, meeting directly with intelligence officers to receive new assignments targeting American military personnel.
By the spring of 2025, Chinese handlers dispatched Lai back to the United States to facilitate another transaction. In May, the agency directed him to travel to Phoenix to coordinate a second clandestine dead-drop payment, this time involving approximately $20,000 in cash.
The operation unraveled within weeks. On June 27, 2025, a joint counterintelligence operation led by the FBI and the Naval Criminal Investigative Service moved to close in, arresting both men. A federal grand jury in San Francisco returned an indictment days later. Lai entered his guilty plea on December 12, 2025, with Chen following on February 20.
“Liren Lai and Yuance Chen operated in a long-running scheme to undermine U.S. national security by supporting Chinese intelligence operations and recruiting in the United States,” said Assistant Attorney General for National Security John A. Eisenberg. “Lai’s and Chen’s activities, undertaken at the direction of the PRC, were extensive and brazen. The National Security Division is committed to holding accountable anyone who aids or abets such espionage efforts.”
Roman Rozhavsky, assistant director of the FBI’s Counterintelligence and Espionage Division, cautioned that the case exposes an ongoing and deliberate effort by foreign intelligence services to infiltrate American defense installations.
“By their own admission, Chen and Lai operated as illegal agents for the Chinese government on U.S. soil, carrying out clandestine intelligence work that included making covert payments, collecting sensitive military information, and attempting to recruit American service members,” Rozhavsky stated. “The Chinese government’s efforts to infiltrate our armed forces demonstrate just how far it will go to threaten U.S. national security, but it has underestimated the FBI’s commitment to thwarting its illegal activity and holding its agents accountable. Let this sentencing serve as a clear warning: If you attempt to jeopardize the safety and security of our service members, our citizens, or our nation, justice will find you.”
The San Francisco FBI field office led the investigation in coordination with NCIS, drawing operational support from federal field offices and prosecutors across Oregon, Washington, Southern California, and Texas.
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