July 21, 2017

Fraud Friday — SBA Borrower Pleads Guilty for Siphoning Loan Proceeds for Personal Use

By Bob Coleman
Editor, Fraud Friday

John Cheng signed SBA Form 4 certifying BNB Hana Bank proceeds of a $3.75 million loan from BNB Hana Bank would be used to open a restaurant in Skilllman, New Jersey.

Cheng’s SBA loan application falsely stated that the loan would be used for construction, acquisition of machinery and equipment, and working capital.

However, after receiving $2,082,229 Cheng used the funds to pay off gambling debts, sent money to family members, and paid a federal tax bill.

The 58-year old Cheng pled guilty Wednesday and will be sentenced in October.

“The charge to which Cheng pleaded guilty is punishable by a maximum potential penalty of 30 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Under his plea agreement, Cheng must pay restitution of $2,657,687.15 to the bank he defrauded and forfeit $1,696,506,” says the Feds.