TL;DR Breakdown
- How 24-year-old crypto scammer fraudulently raised $7m from different sources.
- Cheng now risks an 80-year jail term
Justin Chang, a 24-year-old ICO fraudster, has confessed to making $7 million fraudulently from fake loan applications and misguiding investors in a fake initial coin offering three years ago.
Cheng, a Taiwanese and an immigrant in the U.S. (student visa), used other individuals’ identity to submit online applications to the SBA and at least five financial institutions for over $7 million in government-guaranteed loans.
He also paraded himself as a serial entrepreneur and committed security fraud by lying to investors in his blockchain-based peer-to-peer lending platform. He used the platform to commit wire fraud by engaging in an advance fee scheme, U.S. Attorney Audrey Strauss argued.
Cheng also solicited and obtained investments in Alchemy Coin Technology Limited and related companies, which he controlled through materially 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, the crypto scammer lied to the SBA and several banks about ownership of his companies, the number of people employed, and how any loan proceeds would be applied, using forged and fraudulent documents in the process. He spent much of the money on personal luxury items.
He applied for a loan from five different banks and sent a loan application to the U.S. government’s Paycheck Protection Program and Economic Injury Disaster Loan programs.
The 24-year-old crypto scammer managed to get $7 million worth of COVID-relief for his fictitious employees. To pull this, Cheng falsely represented a loan application with the number of employees and wages paid by the Cheng Companies.
Cheng submitted fraudulent and doctored tax records that were never actually filed with the IRS and payroll records containing the forged electronic signature of a payroll company employee.
He used the proceeds to buy a $40,000 Rolex, rent for a $17,000-a-month apartment, and a 2020 Mercedes.
His sentencing was adjourned for the 3rd of August as he faces up to 80 years in prison.
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