Alchemy Coin CEO sentenced to 7 years for $7M COVID relief and ICO scams

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A man charged with defrauding the US government with over $ 7 million in well-organized COVID relief fraud has been sentenced to seven years in prison by a federal court. Justin Cheng is also charged with $ 400,000 investor fraud in an alleged ICO scam.

Cheng, a Taiwanese resident, entered the United States on a student visa to attend Pennsylvania State University. According to the U.S. Department of Justice (DoJ), he filed online applications from April to August 2020 and ended up receiving over $ 7 million from the SBA’s paycheck protection program. The PPP is a program that pays forgivable loans to small businesses to help keep jobs during the economic devastation of COVID-19.

The DoJ said Cheng claimed to employ more than 200 people and pay over $ 1.5 million in monthly wages when in fact he had 14 employees. In his online applications for the loans, he added some random names, as well as the names of well-known people, including a television presenter and a former NFL player.

After receiving the money, Cheng did not use it for business expenses as required by law, authorities said. Cheng has reportedly sent $ 1 million overseas, withdrawn $ 360,000 in cash, and spent an almost similar amount on personal expenses, including purchasing a $ 40,000 18-karat gold Rolex and a 2020 S560X4 Mercedes .

For the Taiwanese citizen, it didn’t stop there. From 2017 to 2019, it attracted investors who spent $ 400,000 on Alchemy Coin Technology Limited.

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

The 25-year-old pleaded guilty to four counts in April this year. As reported by CoinGeek, he admitted that he cited serious US scams, securities fraud, wire transfer fraud, and bank fraud, respectively. The maximum sentence he could serve was 80 years, but Judge Alison Nathan sentenced him to 72 months in prison. He is also serving three years of supervised release and forfeiting the luxury goods confiscated in connection with his arrest.

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