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“Today’s arrests reflect the FBI’s unwavering commitment to protecting our national security and safeguarding the integrity of our military,” said Patel.
“The individuals charged were acting on behalf of a hostile foreign intelligence service — part of the Chinese Communist Party’s broader effort to infiltrate and undermine our institutions,” he added.
“Thanks to outstanding coordination with our partners, including NCIS, we disrupted those efforts and sent a clear message: the United States will not tolerate espionage on American soil. Our counterintelligence operations remain focused, vigilant, and relentless.”
Court documents filed in the Northern District of California outline how Communist China has launched aggressive spy operations against the U.S. through multiple channels — the MSS being the tip of the spear. The agency doesn’t just gather intel on foreign threats; it tracks civilians, handles counterintelligence, and operates as a key arm of the CCP’s political police.
According to the complaint, Lai first recruited Chen in 2021 to begin working for the MSS. By January 2022, both men had traveled to Guangzhou, China, to coordinate a drop of $10,000 in cash, which was then placed in a locker in Livermore, California. A backpack stuffed with the funds served as payment for work done — and perhaps future espionage.
After the drop, their work didn’t stop. Lai and Chen reportedly scouted Navy facilities in Washington State and in California, where they took photos, identified potential targets, and even scoped out a Navy recruitment office in San Gabriel. There, Chen is accused of photographing a board with personal information of recruits — many with “China” listed as their hometown — and sending it directly to Chinese intelligence.
But it gets worse. The DOJ says Chen was given detailed talking points by MSS handlers — instructions on how to convince military recruits to spy, which jobs in the Navy would be most valuable to infiltrate, and how to avoid getting caught.
Chen reportedly contacted a Navy service member over social media and arranged a visit to the USS Abraham Lincoln in San Diego. Afterward, he allegedly forwarded personal details about the sailor to the MSS — a chilling example of how deep this effort had gone.
The plot continued into 2024 and 2025, as Chen traveled back to Guangzhou to meet with MSS officers and discuss compensation for his espionage. Meanwhile, Lai entered the U.S. in April 2025, claiming he was simply here for his online business and planned to stay only two weeks.
Now, both men face serious charges: acting as unregistered agents for a foreign government inside the United States. If found guilty, they could each face up to 10 years behind bars and a quarter-million-dollar fine.
In a time when China is growing bolder in its global ambitions, this arrest serves as a stark reminder that the CCP’s war on America is not just geopolitical — it’s already here. And thanks to the vigilance of U.S. law enforcement, this spy ring just got a lot smaller.
