China has arrested an American aid worker based near its border with North Korea, a sign authorities are increasingly sensitive about activities by foreigners in the region. Peter Hahn, 74, a North Korean-born naturalised US citizen, was formally arrested by authorities in China's northeastern Yanbian prefecture on charges of embezzlement and counterfeiting receipts, his attorney Zhang Peihong said. The charges appeared to be an excuse to incriminate the devout Christian, who had also provided food to North Korean children, Zhang said. "I am not optimistic about the case's prospects now that he has been arrested," he said. "The charges clearly have no merit." The 74-year-old maintains his innocence of the charges, which "cannot be stood up", Zhang added. Hahn set up a vocational school for Chinese and Korean youth in 2002, and had spent time in the border town of Tumen since the 1990s. While rights advocates have seen an apparent crackdown on religious groups in the Chinese border region, it was unclear whether Hahn was targeted because of his beliefs. Hahn's aid work was inspired by his Christian faith, Zhang said. No court date has been set but Hahn is likely to face trial within three months. The maximum sentence for the two crimes is 12 years in prison. A source with direct knowledge of the case but who declined to be named said several foreign workers associated with Hahn's charity had been deported in recent months. Authorities this summer also froze Hahn's bank accounts and barred him from leaving China. After he retired as a US social worker, Hahn moved to Tumen in hopes of helping North Koreans, according to a 2005 profile in the Los Angeles Times . He ran two bakeries inside North Korea that made rolls for schoolchildren, and his Tumen River Vocational School trained abandoned teenagers in trades such as baking. Hahn also reportedly set up a factory in the North Korean city of Rajin where he made soybean paste. In Washington, State Department spokeswoman Jen Psaki confirmed Hahn's arrest. She said a US consular officer visited Hahn in jail and the US consulate in Shenyang was providing all possible consular assistance.