Virginia man charged with espionage

Kevin Patrick Mallory, 60, was arrested and charged Thursday with espionage and making false statements for allegedly delivering top-secret and secret documents to a suspected Chinese spy.

According to the criminal complaint, Mallory traveled to Shanghai in March and April and met with someone who represented himself as working for a Chinese think tank. However, the Chinese intelligence service often uses this organization as a cover for its intelligence officers, according to the FBI.

The Chinese intelligence agency is known to pay their sources not only in cash, but also through other means like business considerations.

According to the complaint, upon returning from Shanghai in April, U.S. Customs and Border Protection (CBP) did a "secondary search" of Mallory when he arrived at Chicago O'Hare Airport.

During that search, CBP found $16,500 in his two carry-on bags, an amount he did not declare on his customs form, according to court documents.

Mallory allegedly told CBP that said he was in China on a business trip as well as a father/son vacation.

According to the complaint, between March and April, Mallory contacted former co-workers, to help put him in touch with an employee at a U.S. government agency, which is not specified in the court documents.

The complaint also stated that during a subsequent meeting he told the government employee that he was given a communication device from the Chinese contact and he had been trained to use it.

On May 24, he was planning to meet with that person again, but instead, he was greeted by FBI agents, at which point he volunteered to an interview and search of his device, according to the complaint.

He told FBI investigators that he believed the contact worked for the Chinese intelligence service and that he was a former U.S. government employee who had "training and overseas experience, which made it easy for him to spot tradecraft," read the court documents.

He also told the FBI that he had been given a device and was trained to "use it specifically for private communications" with his Chinese contact -- someone he told authorities he was introduced to initially as a potential client, according to the court documents.

During an FBI review of his electronic device, Mallory voluntarily showed agents how to move from normal message mode to secure mode.

"When doing this, Mallory expressed surprise at seeing some message history," according to the court document.

One message he had allegedly sent said, "I can also come in the middle of June I can bring the remainder of the documents I have at that time."

Mallory told the agents that it was a reference to "two white papers" regarding open-source information and that he was just stringing along the contact, according to the complaint.

Upon additional searching, the FBI allegedly found additional messages, including one that read, "Your object is to gain information, and my object is to be paid for."

A handwritten index was also allegedly found on the device that described eight different documents. Four of the eight were found stored on the device. According to the complaint, of those four, three contained classified information and one was classified at the "top-secret level."

Mallory, who speaks fluent Mandarin, is self-employed with GlobalEx LLC, a company he founded in 2010, according to court documents.

He previously worked for the U.S. government in various capacities. He held an active security clearance when he worked for the government, but it was terminated when he left in 2012, according to the criminal complaint.

He made his initial appearance in the Eastern District of Virginia federal court Thursday at which he wore shorts and a tank top and requested a court-appointed attorney. A detention hearing is scheduled for Friday.

The FBI searched Mallory's home in Virginia this evening. FBI agents were seen bringing boxes out of the front door and loading up the back of a black SUV. K-9 dogs also searched the property.

"I just know he was a pretty quiet guy, kept to himself, nice, nothing out of the ordinary," said neighbor Cameron Norris. "I think everyone's just shocked, pretty surprised, definitely didn't see this coming."

ABC News' Janet Weinstein contributed to this report.