Two Chinese nationals convicted of running a covert intelligence operation targeting US military personnel have each been sentenced to 30 months in prison, the US Department of Justice announced on 31 October 2026. The case exposed a years-long scheme directed by China's Ministry of State Security (MSS) that involved secret cash drops, surveillance of Navy installations, and recruitment efforts inside the American military.

Who the Defendants Are

Liren 'Ryan' Lai, 40, and Yuance Chen, 39, were each handed 30 months in federal prison and three years of supervised release after being convicted of conspiring to act — and acting — as unregistered agents of a foreign government. Both defendants entered guilty pleas: Lai on 12 December 2025 and Chen on 20 February 2026.

How the Operation Worked

According to court documents cited by the Justice Department, the two men began operating as agents of Chinese intelligence no later than May 2021. Lai initially served as an intermediary between Chen and MSS officers before Chen began receiving assignments directly from those handlers.

In January 2022, the defendants coordinated a clandestine cash transfer of approximately $10,000. While in China, they arranged for associates in the United States to leave a backpack containing the money in a locker at a recreational facility in Livermore, California — a method the Justice Department described as a 'dead drop', designed to allow funds or intelligence to change hands without the parties meeting in person.

Surveillance of Navy Bases and Personnel

From 2022 onwards, Chen gathered information about US military installations and personnel at the direction of Lai and MSS officers. That surveillance included photographs of Navy Base Kitsap in Bremerton, Washington, as well as photographs and videos of military recruits and active-duty sailors inside a Navy recruiting station in Southern California.

Chen also collected identifying information on a Navy employee and compiled detailed biographical profiles of military personnel considered potential intelligence targets, the department said. In March 2023, Lai travelled to the United States and delivered a mobile phone to Chen for covert communications with the MSS.

Chen subsequently travelled to China in both 2024 and 2025, meeting intelligence officers and receiving further assignments related to US service members, according to the Justice Department.

What the Government Said

Assistant Attorney General for National Security John A. Eisenberg said the two men 'operated in a long-running scheme to undermine US national security by supporting Chinese intelligence operations and recruiting in the United States.'

Broader Context

This sentencing comes amid a sustained push by US federal prosecutors to expose and prosecute MSS-linked networks operating on American soil. The case follows a pattern of Chinese intelligence efforts to cultivate sources within the US armed forces — a strategy that US counterintelligence officials have repeatedly flagged as a growing threat. The use of dead drops, encrypted devices, and in-person handler meetings in China mirrors tradecraft documented in earlier MSS-linked prosecutions, underscoring the systematic nature of the alleged programme.

With both sentences now handed down, attention will turn to any broader network the two men may have supported — and whether additional prosecutions are forthcoming.