An ICO fraudster has pleaded guilty to a $7 million COVID-relief loan racket.

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An ICO fraudster used more than $7 million in fraudulently purchased COVID relief to pay for lavish personal expenses such as a Rolex, a luxury hotel, and a new Mercedes.

During 2018, a 24-year-old New York native admitted to obtaining more than $7 million in COVID-19 relief by fake loan applications and misleading investors in a fraudulent initial coin offering.

According to a Tuesday announcement from the United States Department of Justice, Taiwanese national, Justin Cheng — also known as “Justin Jung” — submitted a series of online loan applications accompanied by forged tax and payroll records between May and August of last year.

Cheng’s applications included falsified Internal Revenue Service tax and payroll reports purporting to show the identities of 200 workers making $1.5 million a month from Cheng’s companies. The list, though, included names of current and former public personalities, including a Good Morning America co-anchor and a deceased celebrity, “former Penn State football coach.”

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In addition to filing for at least five separate banks, the scammer applied for loans through the United States government’s Paycheck Protection Scheme and Economic Injury Disaster Loan services.

Cheng was successful in obtaining $7 million in COVID-relief for his fake workers, which he allegedly expended on personal expenses such as a $40,000 Rolex, $17,000-a-month rent, and a 2020 Mercedes. Audrey Strauss, United States Attorney, stated:

“Cheng 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. Cheng spent much of the money on personal luxury items.”

The self-described “serial entrepreneur” has pleaded guilty to running a fake ICO for his company between August and October 2018.

Cheng solicited investors to engage in the initial coin offering (ICO) for his venture, Alchemy Coin Technology Limited, in 2018, whilst making misleading claims about the firm’s finances and the readiness of its peer-to-peer lending network and failing to reveal that the ICO was an unlicensed offering. According to the Department of Justice:

“These investments were obtained through materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the product readiness of its purported blockchain-based peer-to-peer lending platform, and the registration of its tokens as part of an initial coin offering.”

District Judge Alison J. Nathan set a sentencing date for Aug. 3, with Cheng facing up to 80 years in prison.

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