A Virginia man caught with $16,500 in cash in his carry-on luggage was charged on Thursday with transmitting top-secret documents to an apparent Chinese agent.

Kevin Mallory, 60, of Leesburg was arrested on Thursday and made an initial appearance in U.S. District Court in Alexandria, Virginia.

The self-employed consultant who speaks Chinese is charged under the federal Espionage Act and could face life in prison. In fact, if certain conditions are met, the charges could make Mallory eligible for the death penalty, prosecutor John Gibbs said at Mallory's initial appearance.

Court records indicate that Mallory was an Army veteran and worked as a special agent for the Diplomatic Security Service at the U.S. State Department from 1987 to 1990. Since 1990, he has worked for a variety of government agencies and defence contractors, according to the affidavit. He held Top Secret security clearance.

According to the affidavit, Mallory traveled to Shanghai in April, and was interviewed by Customs agents at O'Hare Airport in Chicago after he failed to declare $16,500 in cash found in two carry-on bags.

The FBI interviewed him the next month, and he admitted that he met with two people from a Chinese think tank that he now suspected were Chinese intelligence agents. He said they had given him a special communications device for transmitting documents.