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

Kevin Mallory, 60, of Leesburg was arrested 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 defense contractors, according to the affidavit. He held Top Secret security clearance until he left government service in 2012.

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, the Shanghai Academy of Social Sciences, that he now believed were Chinese intelligence agents. He said they had given him a special communications device for transmitting documents.

According to the affidavit, Mallory told the FBI agents that the only documents he transferred were two unclassified "white papers" he had written on U.S. policy matters, for which he said he was paid $25,000.

But FBI agents searched the device and found other documents and messages that Mallory thought had been deleted, according to the affidavit. In one message, Mallory wrote to the suspected Chinese agent, "your object is to gain information, and my object is to be paid."

The agent responded, "my current object is to make sure your security and to try to reimburse you."

According to the affidavit, the Chinese officers were encouraging Mallory to resume working for the government so that he could obtain "a position of access."

An analysis of the documents on the device found four classified documents, including three with a Top Secret classification.

Indeed, according to the affidavit, the Chinese agent asked Mallory in one of the messages found on the device why there was blacked-out information on the top and bottom of certain pages. Mallory responded that the black was to cross out the Top Secret designations on the page. But he assured the agent that the information was valuable. "Unless read in detail, it appeared like a simple note," he wrote.

Mallory, wearing a gray tank top and black Army athletic shorts, requested a court-appointed lawyer at his initial appearance. He was ordered held pending a detention hearing scheduled for Friday afternoon. The FBI was at his suburban Leesburg home, about 40 miles (65 kilometers) west of Washington, much of Thursday executing a search warrant.

Dana Boente, acting assistant attorney general for national security and the U.S. Attorney for the Eastern District of Virginia, where the case will be prosecuted, said in a statement that the charges "should send a message to anyone who would consider violating the public's trust and compromising our national security by disclosing classified information."

Geremy Kamens, the federal public defender appointed to represent Mallory, declined to comment Thursday night.

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