May 21, 2021
Fraud Friday – Fintech CEO Pleads Guilty to PPP Loan Fraud
24-year-old fintech CEO, Sheng-Wen Cheng (aka Justin Cheng) has pleaded guilty to using forged documents to obtain over $3.7 million in government-guaranteed Paycheck Protection Program (PPP) loans. Cheng’s PPP loan proceeds have been traced to numerous personal luxury expenses, including the purchase of an 18-carat gold Rolex watch worth $40,000, a Mercedes Sedan valued at $173,000, and rent and move-in fees for a luxury condominium which costs $17,000 per month.
According to court documents, Cheng is a recent Penn State graduate who owns and operates numerous fintech companies including Alchemy Coin, Celeri Network, and Wynston York LLC. In April 2020, he submitted online PPP applications to at least five financial institutions on behalf of his fintech companies. In connection with these loan applications, Cheng falsely represented that the companies had over 200 employees and paid a total of approximately $1.5 million in wages on a monthly basis. In reality, they had no more than 14 employees.
In order to support the false representations on the loan applications, Cheng submitted fraudulently altered tax documents and fake payroll records containing the forged electronic signature of a payroll company employee. The Department of Justice reports that the names of the purported employees included several professional athletes, artists, actors, and public figures.
Based on the fraudulent PPP loan applications, a total of more than $3.7 million in PPP loans were approved. However, instead of using the PPP loan proceeds for payroll costs, Cheng transferred over $1 million abroad, withdrew approximately $360,000 in cash, and spent at least $279,000 on personal luxury expenses.
In addition to the COVID-19 pandemic loan fraud, Cheng also faces time in prison for securities fraud and wire fraud. His final sentencing is scheduled for August 3, 2021.