US prosecutors announced Tuesday criminal fraud charges against a Taiwanese national who spent nearly $3 million in small business loans on a Rolex watch, a Mercedes and other luxury items.
Authorities arrested Sheng-Wen Cheng, 24, and released details of an alleged scheme in which he claimed as employees numerous celebrities, professional athletes and other public figures, including one who was dead.
The group included a television co-anchor, a former National Football League player and a prominent Penn State football coach who is dead, said a press release from the US Attorneys office in New York.
The defendant, also known as Justin Cheng, presented his company as having more than 200 employees to obtain $7 million from federal programs, including the Small Business Administration's Paycheck Protection Program (PPP).
In reality, Cheng's enterprises had no more than 14 employees, the Justice Department said.
"While small business owners throughout the country sought loans from the Paycheck Protection Program in order to pay employee wages and maintain basic business functions, Justin Cheng, a self-proclaimed 'serial entrepreneur,' acquired more than $3 million in financial relief, which he then used for personal benefit," said FBI Assistant Director William Sweeney Jr.
"This isn't the first case of SBA fraud we've seen, and it won't be the last, but rest assured those who try to buck the system will be met with federal criminal charges wherever and whenever possible."
The PPP was established as part of a massive federal relief plan earlier this year in response to coronavirus shutdowns. The program grants forgivable loans to small businesses to cover salaries and other essential expenses.
But the program has had a number of stumbles since its rushed creation. There have also been earlier criminal cases, including one involving a Texas man who spent $200,000 in PPP funds on a Lamborghini.
In Cheng's case, nearly $900,000 was routed to accounts in Taiwan, Britain, South Korea and Singapore.
Cheng's expenditures included $17,000 per-month for a luxury condominium, $50,000 in furnishings for the apartment and about $37,000 at Louis Vuitton, Chanel and other upscale retailers, the Justice Department said.