Crypto scammer earned over $7 million from a fraudulent COVID-relief loan.
A 24 year-old ICO fraudster, Justin Chang, confessed to acquiring $7 million from fake loan applications and misleading the investors in a fake initial coin offering three years ago.
Cheng, a Taiwanese and an immigrant in the US, used other individuals’ identity to submit online applications to the SBA and another five financial institutions for over $7 million in government-verified loans.
He also claimed that he is a serial entrepreneur and committed security fraud by lying to the investors in his blockchain-based peer-to-peer lending platform. He then used the platform to commit wire fraud by engaging in an advance fee scheme, the US Attorney Audrey Strauss alleged.
Cheng then solicited and obtained investments in Alchemy Coin Technology Limited and other related companies, which he allegedly controlled via false and misleading statements and omissions.
Finally, he fraudulently obtained due diligence fees from various start-up companies as part of an advance fee scheme. The Taiwanese pleaded guilty today before U.S. District Judge Alison J. Nathan.
Cheng lied to the SBA and many other banks about the ownership of his companies, the number of people employed, and how the loan proceeds can be applied, using the forged and fraudulent documents in the process. He then spent the money on personal luxury items.
He eventually applied for a loan in five different banks and then sent a loan application to the US government’s Paycheck Protection Program and Economic Injury Disaster Loan programs.
Cheng managed to get $7 million worth of COVID-relief for his fabricated employees. To do this, Cheng wrongly represented a loan with the number of employees and wages paid by the Cheng Companies.
Cheng then submitted fraudulent and altered tax records that were never actually filed with the IRS and payroll records that contain the forged electronic signature of a payroll company employee.
He used the money to buy a $40,000 Rolex, rent of a $17,000-per-month apartment, and a 2020 Mercedes.
His sentencing has been adjourned for August 3 as he faces up to 80 years in prison.
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