A man was sentenced to six years in prison Wednesday in Manhattan federal court after pleading guilty to defrauding a program meant to assist struggling small businesses during the COVID-19 pandemic.
Sheng-Wen “Justin” Cheng of Taiwan will serve time for multiple fraud schemes, including some that occurred before the pandemic, according to NBC News. Cheng, who was a New York resident, pled guilty in April.
Authorities say the man applied for over $7 million in aid for small businesses through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the SBA’s Paycheck Protection Program (“PPP”) and other programs meant to assist Americans struggling financially during the COVID-19 pandemic.
The Internal Revenue Service (IRS) alleges Cheng used fake identities to apply for several of his companies including Alchemy Finance from April to August 2020, according to a press release.
In his applications, Cheng claimed other individuals were the owners of his companies, and that the Cheng Companies collectively had 200 workers and $1.5 million in monthly payroll. In reality, Cheng’s companies had no more than 14 employees, the press release said.
The self-proclaimed “serial entrepreneur” received nearly $3 million from the program and sent over $1 million abroad, prosecutors said. (RELATED: Woman Charged With Receiving CARES Funds For A Medical Provider That Wasn’t Operational, Cutting Checks For Relatives)
To support his applications, Cheng submitted doctored tax records that were never actually filed with the IRS, and payroll records complete with a forged electronic signature from a payroll company.
He also submitted a faulty payroll summary that listed over 90 employees for one of his companies that included several current and former public figures. A co-anchor on Good Morning America, a former professional football player and a prominent Penn State football coach who is now deceased all made the list, according to the press release.
Cheng spent the money he received from the government on luxury items including an 18-carat gold Rolex watch, rent and furniture for a luxury condominium, a Mercedes and designer clothing, prosecutors said. The court ordered Cheng to forfeit these items upon his release from prison.
In addition to the loan fraud, Cheng was found guilty of committing other crimes prior to the pandemic.
“Cheng committed securities fraud by lying to investors in his blockchain-based peer-to-peer lending platform, [Alchemy], and wire fraud by engaging in an advance fee scheme,” said U.S. Attorney Audrey Strauss in the IRS statement. “Now Cheng has been sentenced to prison for his multitude of crimes.”
In a letter to the judge, Cheng reportedly discussed the rise in Anti-Asian hate crimes during the Coronavirus pandemic, and how he gained the nickname “China Virus” by his peers while spending time in jail after his arrest, according to NBC News.
“This incarceration period has also been my great reset, as I am finally able to face the reality of myself,” Cheng wrote. “It’s been a painful but great journey.”
Lawyers for Cheng requested leniency with his sentence, claiming their client suffered from an abusive childhood and other setbacks, according to NBC News.
“Justin is extremely remorseful,” the lawyers wrote in sentencing papers according to NBC. They said Cheng has agreed to return to Taiwan after he serves his prison term.