A plot by pro-American dissidents to overthrow one of the last Asian communist dictatorships has been thwarted by a US undercover agent who posed as an arms dealer.

Prosecutors in California charged ten people with conspiring to stage a coup in Laos, in a plot that recalls an airport departure lounge spy novel.

The alleged leader of the plot is a 77-year-old former Laotian general who has dedicated his life in exile in America to removing the communist regime from his homeland.

Laos remains one of the world’s most obscure countries, a landlocked jungle where communist guerrillas and US special forces fought a “secret war” 40 years ago. But now US authorities find themselves in the ironic position of leaping to the defence of an authoritarian regime they spent 13 years, and many lives, fighting to destroy.

Chief among those arrested yesterday and Monday was General Vang Pao, 77, a senior leader-in-exile of the Hmong ethnic group, and a former protégé of the US in its covert war in Laos, which lasted from 1962 to 1975.

Members of his group are accused of fundraising to form and equip a mercenary army in violation of the Neutrality Act, which forbids Americans from plotting against countries with which the US is at peace.

The plot was uncovered through the work of an undercover officer of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) who posed as an arms dealer offering to sell the group automatic rifles, rocket-propelled and Claymore grenades, anti-tank weapons, plastic explosives and Stinger surface-to-air missiles.

“This investigation read like a movie script, but turned out to be reality,” said Michael Sullivan, head of the ATF, who directed the operation code-named Tarnished Eagle. “Fortunately, we were able to disrupt their activities before their plot evolved into a coup against a country with which the United States is at peace.”

Laos was strategically important as a route for North Vietnamese communist forces travelling to and from the US-backed South. In an effort to block off the Ho Chi Minh trail, the US carried out intense bombing and enlisted the help of the Hmong, an ethnic group scattered across South-East Asia and southern China.

Tens of thousands of Hmong, under the command of General Vang, were killed or injured fighting on the American side. When the US abandoned South Vietnam in 1975, communist Pathet Lao forces took over in Laos, and the Hmong became objects of suspicion and persecution. More than 100,000 emigrated to the US, especially California, where leaders such as General Vang have kept alive the dream of overthrowing the communist regime – and remained resentful of the way in which the Hmong were used and abandoned by the US forces.

According to prosecutors General Vang’s group had dispatched spies to the Lao capital, Vientiane, and taken photographs of government buildings and the historic Royal Palace, which it was planning to destroy with explosives. “[The] insurgency planned to . . . topple [the] Lao Government and reduce government buildings in Vientiane to rubble,” a prosecution statement issued in Sacramento said.

Bob Twiss, the assistant US attorney, said: “We’re looking at conspiracy to murder thousands and thousands of people at one time.”

The former soldier accused of acting as a middleman for the arms deal is Lieutenant-Colonel Harrison Jack, a member of the California National Guard, who served as a covert operative in SouthEast Asia during the Vietnam War. The prosecutors claim that the conspirators had promised $150,000 (£75,000) for the first tranche of weapons in three instalments, and up to $9.8 million for further deliveries, to be raised from Hmong communities across the country.

The arms were to be shipped later this month to Thailand, which borders Laos. Meanwhile, the defendants allegedly attempted to recruit mercenaries from former members of the US army and navy special forces.

The Lao Government welcomed the arrest of its old enemy General Vang by the government that fought it for so long. “This is the great news,” said Yong Chanhthal-ansy, the Lao Foreign Ministry spokesman. “We hope the United States will prosecute them under the Patriot Act and punish the violators severely.”

Control orders

— The Lao population of 6.5 million has lived under communist dictatorship since Pathet Lao guerrillas took control of the country in 1975

— In the 19th and 20th centuries Laos formed part of French Indochina and was briefly occupied by Japan during the Second World War

— Since 1986 gradual economic liberalisation and relaxation of laws governing foreign investment has prompted rapid economic growth

— Tourism, particularly visitors from China, is the fastest-growing industry, although 80 per cent of the population still work in subsistence farming

— Travel and communication networks remain rudimentary and access to the internet is tightly controlled

— 193,000 Laotians, mostly members of the Hmong minority, live in the United States. More than 60,000 live in California

— Sources: CIA World Factbook; Times archives; Columbia Electronic Encyclopaedia

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