Former Fed adviser sentenced for lying about China contacts

A former senior adviser at the Federal Reserve Board of Governors was sentenced to more than three years in prison after prosecutors said he lied about giving restricted Fed information to Chinese intelligence operatives, the Justice Department said Wednesday. For investors, the case centers on one of the most market-sensitive information streams in the world: the Fed’s internal thinking on interest rates.

John Harold Rogers, 64, was convicted in February of making false statements to federal investigators, according to U.S. Attorney Jeanine Pirro. The jury cleared him of a more serious count: conspiracy to commit economic espionage, a charge involving an alleged scheme to steal or pass along valuable economic information for a foreign power.

U.S. District Judge Dabney Friedrich also ordered Rogers to serve 12 months of supervised release after prison, the Justice Department said. Rogers has already spent about 18 months in custody, and that time will count toward his sentence, according to CNBC. His defense team had asked the court not to impose more prison time beyond that period.

Why Fed information is so sensitive

Rogers worked in the Fed Board’s international finance division from 2010 to 2021 and had access to nonpublic material on monetary policy and discussions of the Federal Open Market Committee, the central bank panel that sets the direction of U.S. interest rates, according to the Justice Department.

Rate decisions matter because they ripple through the price of U.S. Treasurys, stocks, currencies and loans. Treasurys are U.S. government bonds, and their prices can move sharply when investors get new information about where rates may go next.

Prosecutors said early access to Fed rate decisions could have helped Beijing make “enormous profits” while trading its roughly $1.5 trillion in U.S. Treasury holdings, according to the Justice Department.

Pirro said Rogers denied sharing restricted monetary-policy information when investigators questioned him. In a statement, she said Rogers secretly passed sensitive Fed material to Chinese spies for years and then lied to investigators and under oath at trial.

What prosecutors said happened

The Justice Department said Rogers, a U.S. citizen with a doctorate in economics, allegedly began a covert relationship in 2017 with Hummin Lee, described by prosecutors as a Chinese intelligence operative he met at a conference in China.

Prosecutors said Rogers provided Fed information during meetings in Chinese hotel rooms that were presented as academic teaching sessions. The Justice Department also said Rogers printed restricted documents before trips to China, emailed materials to a personal account after removing classification markings, and sent sensitive information to a professor at Fudan University.

In return, prosecutors said Rogers received university professorships and financial benefits.

During a February 2020 interview with the Fed’s inspector general, Rogers was asked whether he had ever shared restricted Federal Reserve information outside the board, according to the Justice Department. Prosecutors said he answered, “never.”

CNBC reported that China’s Ministry of Foreign Affairs did not respond to its request for comment.

The sentencing comes as the Trump administration has increased its focus on alleged Chinese economic espionage, CNBC reported. The case adds a criminal-law example to a broader U.S. concern: how access to sensitive economic and technology information can become a national-security issue when it crosses borders.

This story draws on original reporting from CNBC Markets.