Inside Man: How Chinese Spies Used Lies, Romance and Betrayal to Target the Federal Reserve

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0:50Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Hey, everyone, it's Eamon Javers here from CNBC, and we have an incredible story of a Chinese intelligence attempt to penetrate the U.S. Federal Reserve. It involves sex and romance, trust and betrayal, and stakes as large as the global economy itself. It's called Inside Man. We hope you'll enjoy it. Did they ever ask you to give stuff that, you know, was non-public information? No, no. I mean, there was a guy. There was a guy. That's the voice of John Rogers.

1:38It's February 4th, 2020, and Rogers knows he's in trouble. He's in his late 50s, and he's a senior advisor at the Federal Reserve. He's come in for a voluntary interview with the Federal Reserve's Office of Inspector General. He's sitting in this room talking to these investigators because someone has been threatening him. It's the beginning of a saga that would raise questions about the security of information inside the Federal Reserve. It also reveals the lengths that Chinese intelligence agencies are willing to go to get access to that information. CNBC's investigation of the Rogers case has yielded a trove of information not previously available to the public.

2:19Much of this account comes from evidence and testimony in the federal prosecution against Rogers. The stakes were as large as the global economy itself, but it all unraveled over something unexpected. Someone online has been threatening to send nude pictures of Rogers to the vice chairman of the Federal Reserve, Richard Clarida. That was only possible because Rogers had taken the nude photos himself on his Federal Reserve phone and on Federal Reserve property at the office gym. He'd sent them to people he was chatting to on the Internet. What's worse, those people are now threatening to kidnap Rogers' 18-month-old daughter.

2:59On Saturday morning, I received a threatening message. This message had a lot of details about me and my personal life. Rogers told investigators he was the victim of a classic sextortion scheme, someone threatening to humiliate him and demanding money. Rogers had gone to higher-ups at the Fed, who directed him to these investigators for help. He was a divorced father of four grown children, and his second marriage had started to unravel. He said he kind of felt like a loser when he turned to the Internet for companionship. Rogers explained to investigators that he met his current wife and the mother of his then 18-month-old daughter on a website called asiendating.com.

3:48At the time, she was living in Shanghai. The investigators asked questions about the nude photos, but they also want more detail on Rogers' trips to China. A lot more detail. I was invited to a conference there for the first time in 2013 in Shanghai and met with a lot of professors, mostly professors, some graduate students, in particular a graduate student. Great guy. I owe everything to him. But I thought he was weird at first. He's a big, huge dude. He's a power lifter, very physically fit, knows all about U.S. sports, the NBA, so our communication was very easy. His English is good. I thought the guy wanted me to write his PhD thesis.

4:37The person he's talking about is a man Rogers knew as Hu Min Li, but that wasn't his real name. The U.S. government believes he's Jin Chuan and that he's a Chinese spy. Espionage is an intensely personal sport between people. And was there anything about Rogers himself, his situation in life, his personality that made him the kind of target an intelligence officer would salivate over? The guy is rife with vulnerabilities. This is the dark part of case officer work. When you're looking to recruit people to serve as spies, as agents, you're looking for people who have problems in life that they need help with.

5:14They're vulnerabilities. Li arranged for Rogers to travel to a conference in China, which would give him the opportunity to meet with a woman he had connected with online. She was 24 years younger and would eventually become his second wife. Her name is Yu Lu, but she goes by Yu Yu. She's not been accused of any wrongdoing, and CNBC did not uncover evidence of any connection between Yu Yu and Chinese intelligence. The relationship took off. During just their second in-person visit, Yu Yu became pregnant. And very quickly, Rogers and Yu Yu were discussing marriage, who Min Li helped facilitate it all.

5:51At one point, he went to the hospital with Yu Yu for a paternity test to establish that Rogers was the father of her baby. And he also set up a divorce from Yu Yu's first husband, even going back and forth with Rogers over how much money to pay the other man to finalize the divorce. Then Lee arranged details of Rogers and Yu Yu's wedding in Hong Kong. And he smoothed over visa difficulties so Yu Yu could leave China and move in with Rogers and their new baby in the Washington, D.C. suburb of Vienna, Virginia. And through it all, Hu Min Lee continued to ask Rogers more and more detailed questions about the Federal Reserve.

6:28When we say that he's book smart and street dumb, this is what we're talking about. He's incredibly naive. I think it's this sort of rarefied ivory tower kind of person who's there. And he basically sees I can help everyone. I can help, you know, my good buddy, Hooman Lee, with the information he's talking about to be a better teacher. And it turns out that Lee's approach to Rogers back in 2013 and the entire arc of their relationship is right out of an intelligence operative's playbook. Hooman Lee's approach to John Rogers would likely have been part of a much more elaborate operation than Rogers could have seen.

7:04To understand why, we sat down with Ralph Goff, a retired 35-year veteran senior executive with the Central Intelligence Agency. Goff was not involved in the government's investigation of Rogers. The first impressions would have started long before he met Rogers. The first impressions would have been what he was collecting, no doubt from the rosters of people working at the Fed. And then they look at some and start doing some deep dives, start looking at their email traffic, start looking at their telephones. There's all sorts of data they can get access to. And the Chinese are very good at accumulating data on Americans.

7:36If you have an online presence, if you're very active online, as Mr. Rogers was, they're going to have access to that. It's not until Rogers meets a woman online who lives in Shanghai and wants to travel to Shanghai to meet her in person that you start to see this real uptick of this relationship. Explain what that looks like from an intelligence officer's perspective. If he's reached to someone online in China, the Chinese intelligence services have full access to that. So if this woman wasn't a plant by Chinese intelligence into that web dating site, I'm sure that they had a meeting with her soon after that contact.

8:17Really? Yes. Yeah. And your cooperation is a lot more coerced on that side than it is on ours. So what would they tell her? They would tell her that you're going to pursue a relationship with this person for the good of the state, for the good of your family. you're going to pursue a relationship with this person. So explain why the Chinese would have such an appetite to spend all these hours and days and months and years on this case. Why could it possibly be worth that much time? Well, because they invest so much in intelligence. The Ministry of State Security has around 800 ,000 employees. It's gigantic.

8:49And that's just one agency, right? You've got the Ministry of Public Security, which is like an internal agency. You've got the People's Liberation Army, which has intelligence components. You've got a huge new cyber service. The Communist Party has its own intelligence gathering. So there's a huge amount of effort and resources put into espionage. And so for this case, Officer Lee from the Chinese service, this was his case. And he was going to see it through to a successful recruitment. And from his perspective, he looks at Rogers and says, hey, I've got an inside man. That's right. That's right.

9:21But it's what Lee seemed to be trying to accomplish with his inside man that so concerned federal investigators. And in that recorded conversation, the depth of Roger's devotion to Lee really comes through.

9:57something in it for them, too. But, you know, and I did have to be careful about my role in the Fed. And boy, the Chinese are watching everything that the U.S. does. I don't mean that in an espionage way. I'm sure they are doing espionage, but I don't confront that. They just want to know what's the Fed thinking.

10:20Lee's questions to Rogers about what the Fed was thinking, including questions under headings like the dollar and the exchange rate and about China, and questions about then-newly-elected President Donald Trump. How does the Fed evaluate the trade war with China proposed by Trump, Lee asked. Will the Fed adjust the monetary policy to cooperate with the trade war? What specific measures will the Fed take? In his message to Rogers, Lee said, I'm wondering if you could help us to collect answers from your colleagues or documents and teach us when we meet. The question is whether or not John Rogers crossed the line and became a spy for the Chinese, with Hu Min Li as his handler.

11:02In his efforts to answer Li's questions, did Rogers pass on secret Fed information? The U.S. government would eventually conclude that he did, but his lawyers say he simply responded to the questions with publicly available information. If it's just a primer of what a deleting textbook would have on a graduate level, what are we really predicting here? So you're saying that nothing that Rogers ever sent to the Chinese was sensitive or inappropriate? Yes. After receiving the question list, Rogers emailed two colleagues inside the Fed looking for answers. I'm wondering if you can point me to some readings on the Fed and China.

11:39I'm traveling to a conference in Beijing soon, Rogers wrote. I want to be helpful to my generous hosts, of course, but I never seem to be able to provide them with the right material. Part of it, I think, is that they want me to reveal some kind of Fed secrets they believe exist. Rogers asked the colleagues to provide material he could appropriately share with the Chinese. The request he made, a federal investigator would testify, was for the same information Hu Min Li had asked him for. A colleague responded with two attachments, one of which was labeled Internal FR for Federal Reserve. Rogers, the federal agent would testify, changed the heading on that document to non-confidential slash external and sent it on to Ho Min Lee.

12:23Rogers' attorney said that as a senior Fed official, Rogers had the authority to use his judgment to change the heading on the document because he had also removed any sensitive information from it. Lee also asked Rogers to teach classes on international finance in the Fed, and sometimes those classes included just a couple of students. at night and in hotel rooms in China. The U.S. government argued that these classes were a thin cover for illicit espionage, but federal investigators didn't know exactly what happened in those hotel rooms. Prosecutors said the way Rogers helped set up the classes was suspicious.

13:02Rogers signaled that he was happy to teach the classes, but he had concerns about how the arrangement would be set up. There has to be a lot more done to make this legitimate in the eyes of the Fed, he wrote. Remember, it has to be teaching and not consulting. I am only allowed to teach. Rogers suggested that the classes should have a course title, a list of students, a syllabus, and exams and homework. He wrote to Lee, I know this sounds like a lot, but think about what would happen if I was asked to produce any information on any one of those six items and I had no answer. That would cause me a lot of trouble.

13:38In October of 2018, Rogers suggested to Lee that their next class could focus on trade policy uncertainty. Later, he emailed a colleague asking for Fed material on trade policy uncertainty. The colleague forwarded Rogers a document on washing machine tariffs. Just how secret the information in that document was, or whether it was a secret at all, would later become a point of contention between prosecutors and Rogers' lawyer in court. Rogers forwarded the document to his personal Gmail account, and from there sent it to Li. A few days later, Rogers met Li in person in China to teach another class.

14:17Months later, on June 13, 2019, Rogers printed out two documents, one of which was marked as Class II FOMC Restricted Information, the second highest classification in the Fed's security system. The next day, he boarded a flight to China. On June 16th of 2019, Rogers took a picture of a class in session in a hotel room in Beijing. In the picture were three people. Two of them, prosecutors said later, worked for the Security and Intelligence Services of the People's Republic of China. We are just minutes away from one of the most anticipated Federal Reserve decisions on interest rates in years.

14:55Three days later, Rogers messaged Li a copy of the new Federal Reserve Open Market Committee decision, which that day was to maintain the Fed's target rate for the federal funds rate at 2.25 to 2.5%. Lee replied, same as you predicted. Lee wanted to understand what might be coming next, but there's some slight changes in the statement, like deleting the word patient, he wrote. Some economists said it's preparing for declining the interest rate. Rogers responded, exactly. It's a very interesting development. In his rough English, Lee seemed to be pushing to understand the dynamic among the members of the Federal Reserve Board, which at the time was chaired by Jerome Powell.

15:35Not Powell himself, Lee wrote. Even James Bullard agree with Trump. Rogers replied, yep. But Rogers' lawyer says none of this was inappropriate. Considering how it is the Fed makes decisions, there's no real way to predict those, you know, besides what the Fed has already been saying publicly at all the meetings. So what the Chinese would be able to do would be the same thing that Reuters does, that Bloomberg does, that all these large financial organizations do. Once in the United States, though, Rogers' new marriage with Yu Yu began to come under some strain. By early 2019, Rogers and Yu Yu were fighting over text messages.

16:13Yu Yu demanded more money from Rogers, and Rogers said he'd given enough, including paying for Yu Yu's parents' apartment. Rogers turned to Lee for solace, messaging his Chinese friend for advice in his relationship with his wife. Can you call her, Rogers wrote? I'm so angry with her. Calm down, man, Lee replied. Let's talk with her with a peace heart, maybe after take us sleeping tonight. But you use criticisms of Rogers continued. You need to take responsibility for your wife and a new baby, she wrote. You have too many girlfriends. Rogers sent those texts to Lee, who replied, That's insane.

16:49Why is she saying that? In the spring of 2019, UU and Rogers showed up together at the Vienna Police Department to report an assault. According to a case report, Rogers told officers that friction had emerged between UU and another woman who had been living in their home. Rogers' lawyer says this woman was a masseuse Rogers visited for back problems and later invited to live in the home. Eventually, verbal arguments between the two women gave way to a physical brawl. Yu Yu told the officer, The woman scratched her face and breast and pulled her hair. An officer asked if there was any relationship between Rogers and the other woman.

17:28I swear to God we're just friends, Rogers told the police. But the breakdown of Rogers' relationship with Yu Yu was complete. Rogers said Yu Yu moved into a guest room in his house. So this is John and Yu Yu's neighborhood in Vienna, Virginia. We traveled here today to see if we could get an opportunity to talk to Yu Yu and get her side of the story. So far, we haven't heard back from her.

17:54Rogers had another problem. In that recorded interview with the Federal Reserve agents, he was asked whether he had sent any sensitive documents to China. Did you ever provide or share any restricted board information? So let me, you know, restricted FR, restricted controlled, internal FR, FOMC information of any class. Did you share or provide any of this information with anyone else outside of the board? Never. But that wasn't true. Rogers had shared a sensitive document with a Chinese co-author over email, and the feds knew it. Rogers' attorney says Rogers gave an inaccurate answer because he was stressed about the nude photos, which is why he thought he was in that interview in the first place, and he wasn't thinking about his emails with the Chinese.

18:44They're focused on China, and now they're asking whether he's provided any of these Fed-sensitive documents. I think the relationship to that and, say, the extortion is a bit more attenuated. So what did he say? He said never. Because that was a lie. Yeah, it turns out that that was untrue. Roger's confession of the sextortion operation against him led to his firing from the Fed months later. And he'd been taking nude photos on his Fed phone. Yeah, at the Fed. That's right. He thought the incident was over, but behind the scenes, the inspector general had conveyed its findings to the FBI. More than three years later, in January of 2025, he was arrested by the FBI while walking his dog on his suburban street in Vienna, Virginia.

19:29When the agents searched his home, they found$50 ,000 in cash stored in a plastic grocery bag in the bottom of a closet in the room used by UU. Rogers was charged with one count of conspiracy to commit espionage and one count of making false statements to investigators at the Federal Reserve. But after his trial in early 2026, a federal jury was not entirely convinced by the government's case. Rogers was acquitted of that espionage charge, which carried the much steeper potential sentence, and found guilty only of lying to investigators. In July, he was sentenced to 38 months in prison on that conviction.

20:11Yu Yu and their daughter are now living in the house in Virginia. Rogers' attorney says he'll appeal that sentence. He says Rogers' biggest mistake was simply putting his trust in the wrong person. It's this idea that we, I think, we can all understand of the false friend and how deep that cuts, where we all have grown up, where you had someone who you thought was your friend who was in your corner, and you find out that they didn't care about you at all. And remember those nude photos, the sextortion threat that so scared Rogers that he went to the Fed IG's office for that recorded interview?

20:45His lawyer says those threats vanished on their own, which means the reason he went to the Fed in the first place turned out not to be much of an emergency at all. To CIA veteran Ralph Goff, the lesson is that any case involving alleged espionage inevitably leaves some frustrating open questions. It seems like when the FBI does their investigation, the inspector general at the Fed, there's one big thing that they don't know, which is what happened in that hotel room in China. The very place where the espionage allegedly happens, they can't see it. And so there's a big hole in this case, I think.

21:22Look, espionage is very difficult to prove in a court of law, right? We're not a police state. And espionage is one of those crimes where you've really got to have the goods on a person. So the government loses the case. I mean, the big charge here is conspiracy to commit espionage. And the jury quits him on that charge. They look at this and they say, that's not espionage. you look at it and you say absolutely espionage. Why? I think I side with the jury. The government has to prove the case beyond a shadow of a doubt. Our legal system has certain thresholds and this case didn't meet that threshold.

21:58I don't have a problem with that. So you believe it was espionage but you believe that the jury made the right call. Yes, I do. Thank you for listening to this CNBC investigative report inside man. If you enjoyed this podcast, check out my limited podcast series, which is called The Crimes of Putin's Traitor. It's the secret story of a young Russian oligarch who hacked his way to an illicit$93 million fortune and the FBI team who finally brought him to justice. You can binge all seven episodes of that one right now. It's called The Crimes of Putin's Traitor. I'm Eamon Javers. Thanks for listening.

22:40This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts.