A former Maryland man has owned up to swiping over $350,000 in funds meant for pandemic relief, money that was earmarked to keep his restaurants afloat during COVID-19's economic turmoil. Instead, he tried his luck in the stock market with the ill-gotten gains. Zhong Jie Chen, 47, now living in New Jersey, pleaded guilty to wire fraud charges – a crime that carries up to two decades behind bars, the U.S. Attorney's Office in D.C. disclosed.
Chen, previously hailing from Columbia, Maryland, was the sole proprietor of two eateries, one in Washington, D.C., the other in College Park, MD. Between May 2020 and July 2021, in the thick of the pandemic, he applied for, and received, significant financial support via the Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans, according to justice.gov. These government lifelines were intended to help small businesses keep their workforce employed and manage other expenses during the crippling economic crisis.
Nevertheless, Chen had other plans as he funneled $354,520 of the emergency funds into personal day trading rather than his restaurants. " Chen admitted that he falsely certified that all loan proceeds would be used for business-related purposes even though he knew and intended that he would misappropriate some loan proceeds to a personal investment account to allow him to engage in day trading. He admitted that he misappropriated $354,520 of loan proceeds and used those funds to engage in day trading." the statement on the U.S. Department of Justice's website explained.
The loans, amounting to approximately $964,843, were part of federal initiatives operated by the Small Business Administration that provided critical financial relief to small businesses grappling with the operational challenges wrought by the pandemic. The PPP loans were forgivable if used correctly, and EIDL loans offered low-interest, long-term financial support – but, Chen's maneuvering to steer these funds into the stock market violated the agreed terms. In court documents, Chen 'admitted that he falsely certified that all loan proceeds would be used for business-related purposes,' highlighting a breach of trust and manipulation of a system designed to aid those in need.
Chen is scheduled for sentencing on July 2, 2024, before U.S. District Court Judge Christopher R. Cooper. The fate of these embezzled funds, now acknowledged in his guilty plea, rests in the court's hands. Furthermore, Chen has been ordered to make restitution and is liable for a forfeiture money judgment. The case was investigated by the FBI Washington Field Office and is prosecuted by Assistant U.S. Attorneys Kondi Kleinman and Ryan Sellinger, backed by the meticulous efforts of paralegal specialists Sonalika Chaturvedi and Michon Tart.
