By James T. Areddy

When Federal Bureau of Investigation agents last summer turned up heaps of cash during raids targeting former New York state gubernatorial aide Linda Sun, her husband claimed some of the money was revenue from a wine shop that he planned to deposit into its bank account.

One hitch: The FBI determined $200,000 in cash had appeared in the wine shop's accounts even before its grand opening. Another: Store sales were predominantly cashless.

In an indictment last year, the Justice Department alleged that Sun and her husband, Chris Hu, got rich as she levered proximity to two New York governors to help China. She was criminally indicted in September for illegally acting as a foreign agent and, along with her husband, was hit with financial charges including money-laundering conspiracies.

Now prosecutors have unsealed details of how they allege Sun orchestrated a "pay-to-play scheme" that generated a stream of funds and gifts as she did favors for China -- and how managing the intake was a family affair. The government alleged Sun's links to Chinese officials and their intermediaries had a direct bearing on the success of her husband's lobster-exporting business, which pulled at least $15.76 million into the U.S.

The couple denied charges of illegal behavior, and their lawyers referred to their past filings while saying they believe strongly in the merits of their defense.

In addition to tracking large inflows from China, FBI agents turned up $405,000 in "cash of unknown provenance" at Sun's home, her parents' place and in a safe and deposit boxes, according to last week's filing. The indictment listed expenditures including a $4 million Long Island home, a $2.1 million Honolulu condo and jewelry and vehicles, such as a white 2024 Ferrari Roma. And it alleged much of the purchases were made in cash and sometimes in the names of family members or shell companies.

"As a result of Linda Sun's activities on behalf of the [Chinese] government, Chris Hu's businesses made millions of dollars in [China]," the unsealed filing alleges.

The allegations identify Hu's New York City shop, Leivine Wine & Spirits, as a hub of activity. They linked the shop to alleged money laundering and an effort by Sun to influence city permitting on behalf of its landlord, George Xu, an area developer and political benefactor. They suggest that the gala opening at the shop, in the Flushing neighborhood in the city's Queens borough, was used to butter up local politicians such as Rep. Grace Meng (D., N.Y.). Xu didn't respond to questions. A spokesman for Meng cited her strong support for her district's small businesses.

The FBI said it uncovered a document showing how Hu tallied cash deposits into business and personal bank accounts, every one of them slightly less than the $5,000 threshold that require financial institutions to file federal suspicious-activity reports.

It alleged shell companies in the names of other people not publicly identified were used to buy Sun's Range Rover for more than $140,000 and the couple's 47th-floor Hawaii condo. When a bank inquired about $1.5 million in deposits to an account in the name of a woman who appears to be Sun's mother, a family representative described her as a sales agent and the wires as "sales commission and bonus," though the woman had declared no income when she applied for U.S. unemployment benefits.

Propaganda value

The case against Sun is among the most prominent examples of Justice Department efforts to prosecute people in the U.S. for helping China build influence. It is also the rare case to draw a direct line between favors for China and moneymaking, suggesting how seemingly innocuous actions to promote Beijing's political views in the U.S. can be extraordinarily valuable to Chinese officials.

Much of what the government alleges Sun did on behalf of Beijing as a gubernatorial liaison to New York's Asian communities might not raise eyebrows. She steered Democratic Gov. Andrew Cuomo and his successor Gov. Kathy Hochul, also a Democrat, toward either meeting Chinese representatives or avoiding action that might ruffle feathers with Beijing, such as accepting invitations to see visiting Taiwanese officials.

For China, a U.S. politician's appearance or statement can have important propaganda value.

"What appears to be a routine diplomatic courtesy to a Western audience becomes powerful evidence of international endorsement when recontextualized for Chinese domestic consumption," said Adam Leslie, executive director of Washington think tank ASPI USA.

Sun's defense team last year sought to dismiss the government's case by arguing the foreign-influence charges stem primarily from "internal opinions and advice that Ms. Sun allegedly conveyed only to her colleagues for the purpose of making political and policy decisions." A more recent defense filing pushed back on the FBI's allegations about the family's cash, including by saying the wine business's early $200,000 in deposits flagged by the government "derived from pre-opening day cash sales at the store, not from criminal activity."

The Sun case is one of several federal indictments in recent years that alleged Chinese influence in the U.S., which until now the Justice Department has often prosecuted by alleging violations of the Foreign Agents Registration Act.

Among the cases, a Flushing hotel owner, China-born coal baron Quanzhong An, awaits sentencing after pleading guilty to federal charges associated with a pressure campaign he participated in with his daughter against a local resident whom authorities in China have accused of corruption.

Court filings in another case suggest a defendant might be considering a plea bargain on charges associated with running an alleged Chinese police station in New York City's Chinatown, after his associate last year pleaded guilty to acting as a foreign agent.

And in one of the few such prosecutions to reach trial, a Boston jury last month acquitted a China-born U.S. citizen charged with acting as an unregistered agent for supplying Chinese officials with information about local political dissidents.

It is unclear how aggressively the Justice Department will prosecute such cases in the future. On her first day at the helm of the agency for the Trump administration, Attorney General Pam Bondi ordered the FBI's Foreign Influence Task Force disbanded and said criminal charges under FARA "shall be limited to instances of alleged conduct similar to more traditional espionage by foreign government actors."

There was already a high bar to successfully proving criminal foreign influence and there might now be fewer cases going forward, said Tessa Capeloto, a partner at Washington law firm Wiley Rein, whose client work has included advising on FARA issues.

Even so, Capeloto said she expects "we'll see prosecutions when the activity is on behalf of a foreign government."

Write to James T. Areddy at James.Areddy@wsj.com

(END) Dow Jones Newswires

March 08, 2025 09:00 ET (14:00 GMT)

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