JACKSONVILLE, Fla. – The case of a Jacksonville-based Navy officer accused of leaking top secret information to the Chinese government was back before a judge Tuesday, and News4Jax has learned prosecutors are seeking special surveillance privileges used for investigating potential spies and terrorists.

A status conference was held in federal court about which attorneys would be representing Lt. Fan Yang and his wife, Yang Yang. The Yangs and two others from China were arrested this month, accused in a scheme to leak U.S. military goods and intelligence to Chinese nationals.

Fan Yang, a China-born U.S. citizen who became a U.S. Navy officer, was not present due to a transportation issue; however, his wife Yang Yang, who is also a U.S. citizen, was in court. With top secret clearance and access to some of the most exclusive military aircraft and equipment, Fan Yang had a lot at his fingertips.

Federal agents are attempting to link Fan Yang and Yang Yang to a scheme to smuggle inflatable boats and military-use engines to China. They allegedly made more than $200,000 in the scheme. Details started to come out after the FBI and NCIS raided the Yangs' Jacksonville home off San Jose Boulevard.

The News4Jax I-TEAM learned agents are concerned that's just the tip of the iceberg and that the Yangs could have been involved in something more sinister, like leaking top secret information from the U.S. military to the Chinese government. Investigators have said the couple lied about their contact with potential foreign operatives.

New court documents, filed from the Department of Justice, show the U.S. is now invoking something called FISA, the Foreign Intelligence Surveillance Act. It gives investigators access to surveillance warrants and special privileges when they suspect espionage or terrorism from foreign powers.

"It is very, very concerning and probably has a big impact on national security," said former FBI agent Toni Chrabot, who now runs Risk Confidence Group. "There's potential grave damage that has been done."

Fan Yang was represented by Dale Carson. Yang Yang was represented by Bill Kent.

The Yangs' next hearing is scheduled for Thursday at the Federal Courthouse in Downtown Jacksonville. That could change if the couple are indicted before the hearing.