August 20, 2021
Fraud Friday – Fintech CEO Sentenced 6 Years for Fraud Schemes
Justin Cheng, also known as Sheng-Wen Cheng, submitted fraudulent relief applications that said other individuals were the sole owners of his companies and that they had over 200 employees and a $1.5 million monthly payroll. These companies had no more than 14 employees. Cheng used the names of former athletes, artists, actors, and public figures for his “employees”. Some of these employees included a co-anchor on Good Morning America, a former NFL player, and a former Penn State football coach who is deceased. He supported this information with doctored tax records and a payroll summary with a forged electronic signature from a payroll company.
He submitted PPP and EIDL applications to the SBA and at least five other financial institutions from around April 2020 to around August 2020. He managed to obtain over $7 million in relief loans for his companies Alchemy Finance Inc., Alchemy Guarantor LLC, Celeri Network Inc., Celeri Treasury LLC, Wynston York LLC, and Neo Bellum Industries Inc.
With his PPP funds, he transferred more than $1 million abroad, withdrew $360k, and spent at least $279k on personal expenses including an 18-carat gold Rolex watch, rent and move-in fees for a luxury condominium, a 2020 Mercedes, and purchases from luxury stores like Louis Vuitton and Yves Saint Laurent.
From 2017-2019, he committed securities fraud by obtaining $400k in investments through materially false and misleading statements and omissions of information for his blockchain-based peer-to-peer lending platform. Then, in 2018/19 Cheng committed wire fraud by obtaining $380k in refundable “due diligence fees” from dozens of start-up companies. He claimed he would assess the companies for investments or help them secure funding, but he did not have the finances or desire to invest in these companies.
“Sheng-Wen Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for financially struggling small businesses hurt by the COVID pandemic. Further, Cheng committed securities fraud by lying to investors in his blockchain-based peer-to-peer lending platform, and wire fraud by engaging in an advance fee scheme. Now Cheng has been sentenced to prison for his multitude of crimes,” says U.S. Attorney Audrey Strauss.
DOJ Press Release