A 24-year-old New York resident has pleaded guilty to acquiring over $7 Mln in Coronavirus relief via fraudulent loan applications and misleading investors within a fraudulent ICO [Initial Coin Offering] during 2018.
In line with an official announcement on 20th April from the United States DOJ [Department of Justice], Taiwanese national, Justin Cheng – also referred to as “Justin Jung” – Cheng submitted a series of online loan applications amid forged tax and payroll records between May and August of last year.
Cheng’s applications featured fraudulent IRS tax and payroll records purporting to document the names of 200 employees earning $1.5 Mln in monthly wages from Cheng’s businesses. However, the list consisted of names from present and former public figures along with Good morning America co-anchor and a deceased “former Penn State football coach.”
Additionally, applying with a minimum of five different banks, the scammer sent loan apps to the United States government’s Paycheck Protection Program and Economic Injury Disaster Loan programs.”
Cheng was successful in securing $7 Mln worth of Coronavirus relief for his fictitious employees, that was reportedly spent on personal expenses along with a $40k Rolex, rent for a $17k a month apartment, and 2020 Mercedes. U.S. Attorney Audrey Strauss revealed:
“Cheng lied to the SBA and a number of other banks about ownership of his firms, the number of individuals employed, and the way any loan proceeds would be applied, using forged and fraudulent documents within the process. Cheng spent much of the cash on personal luxury items.
The self-described “serial entrepreneur” also pled guilty to operating a fraudulent ICO between August to October 2018 for his firm.
Earlier in 2018, Cheng solicited investors to participate within the ICO for his firm, Alchemy Coin Technology Limited, while making false statements about the firm’s finances and readiness of its p2p lending platform, and failing to disclose the ICO was an unlicensed offering. The DOJ explained:
“These investments were obtained via materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the merchandise readiness of its purported blockchain-based p2p lending platform, and therefore the registration of its tokens as a part of an ICO [Initial Coin Offering].”
District Judge Alison J. Nathan set a sentencing date for 3rd Aug., with Cheng facing up to 80 years in prison.