Sheng-Wen Cheng, COVID Loan Fraud, New York 2023

Sheng-Wen Cheng, a Taiwanese national living in New York City, has been arrested and charged in a $7 million scheme to defraud federal small business loan programs created during the COVID-19 pandemic. Prosecutors say Cheng, also known as Justin Cheng and Justin Jung, used stolen identities and forged documents to falsely claim his companies employed over 200 people and paid $1.5 million in monthly wages—when records show they had no more than 14 employees. The fraud targeted the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Program, both designed to keep struggling businesses afloat.

According to the Department of Justice, Cheng submitted fraudulent applications to the U.S. Small Business Administration and five financial institutions, seeking over $7 million in relief funds. Of the approximately $2.8 million he managed to obtain, federal investigators say Cheng transferred more than $880,000 abroad, withdrew about $360,000 in cash or cashier’s checks, and spent at least $275,000 on personal luxuries. Among his alleged purchases: an 18-carat gold Rolex, a Mercedes, and a luxury Manhattan condo leased for $17,000 a month—all while genuine small business owners faced layoffs and closures.

Cheng is charged with multiple counts of major fraud against the United States, wire fraud, bank fraud, and one count of aggravated identity theft. Authorities say he forged the electronic signature of a payroll company employee on documents submitted to lenders to back up his false payroll claims. The fraud was uncovered through a joint investigation by the FBI, IRS Criminal Investigation (IRS-CI), and the SBA Office of Inspector General, who have been cracking down on pandemic relief abuse as part of a broader federal crackdown.

“At a time when so many small businesses and their employees are facing dire financial straits, Sheng-Wen Cheng allegedly saw not an emergency lifeline but a gravy train,” said Acting U.S. Attorney Audrey Strauss. “Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially strapped by the COVID-19 pandemic.” She added that the funds were intended for payroll, not personal enrichment.

FBI Assistant Director William F. Sweeney Jr. condemned the fraud, stating that true entrepreneurs trying to survive the pandemic are directly harmed by such crimes. “Justin Cheng, a self-proclaimed ‘serial entrepreneur,’ acquired more than $3 million in financial relief, which he then used for personal benefit, as alleged today,” Sweeney said. “This isn’t the first case of SBA fraud we’ve seen, and it won’t be the last—but those who try to buck the system will be met with federal criminal charges.”

Cheng was taken into federal custody this morning and is scheduled to appear before U.S. Magistrate Judge Stewart D. Aaron in Manhattan. If convicted, he faces decades in prison and full forfeiture of the illicitly obtained funds. The case underscores the ongoing federal effort to track down and prosecute individuals who exploited pandemic relief programs meant for struggling American businesses.

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