A Hayward resident passed American intelligence to Chinese security officials for years in an operation that combined both old-school and modern espionage, federal authorities said Monday.

Xuehua Peng, also known as Edward Peng, has been arrested and charged with spying for China. Federal authorities say that Peng, 56, paid for and ferried classified information to Chinese officials using so-called “dead drops” in Newark, California, Oakland, and Columbus, Georgia.

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Peng, who was the registered owner of the now-defunct U.S. Tour and Travel in San Francisco, allegedly paid a human source up to $20,000 for secure digital cards containing American intelligence, authorities said in a 23-page complaint unsealed today.

In five instances between 2015 and 2018, Peng booked a hotel room and left the key at the front desk for the source, as well as an envelope of cash inside the room. He later picked up the SD cards seemingly in exchange for the cash.

Authorities allege that Peng conducted the dead drops under orders from a China Ministry of State Security (MSS) handler who mandated the logistics of each drop, including Peng’s trips back to China to deliver the SD cards after he retrieved them.

The Federal Bureau of Investigations filmed the dead drops and also intercepted the communications between Peng and the MSS, according to the complaint.

A naturalized U.S. citizen, Peng first arrived in the U.S. in 2001 with a background in both mechanical engineering and traditional Chinese medicine, authorities said. Public records show he was licensed as an acupuncturist for several years and was associated with U.S. Tour and Travel from 2010 to 2014, when the business dissolved.

Peng was arrested at his Hayward home Friday and held without bond in San Francisco. If convicted, he could receive up to 10 years in prison, plus a $250,000 fine for acting as an agent of a foreign government without notifying the U.S. Attorney General.

The Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California and the Counterintelligence and Export Control Section of the Department of Justice, National Security Division, will prosecute the case.

His next hearing has been scheduled for Oct. 2.