Zhong Jie Chen, a 47-year-old former Maryland resident, has been sentenced to 18 months in federal prison after pleading guilty to wire fraud charges. Chen misappropriated $354,520 in COVID-19 relief funds, which were intended to support his two Shanghai Tokyo Café restaurants during the pandemic. Instead, Chen diverted these funds to his personal accounts for day trading, stated U.S. Attorney Matthew M. Graves and FBI Special Agent David J. Scott, according to a Justice Department release.
After admitting to the theft, Chen, who now resides in New Jersey, was also sentenced to three years of supervised release and ordered to pay $369,087 in restitution. The Honorable Christopher R. Cooper handed down the sentence, which followed a guilty plea entered on February 28, where Chen acknowledged his intention to use some of the relief funds for activities unrelated to his business operations, particularly engaging in day trading through his Robinhood and TD Ameritrade accounts.
During the period from May 2020 to July 2021, Chen’s restaurants secured Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans amounting to about $964,843, designed by the U.S. government’s Small Business Administration to aid small businesses in maintaining payroll and covering other approved expenses during the economic downturn caused by the pandemic.
In the loan applications, Chen affirmed he understood the terms of use for the relief funds, aware that misuse could result in legal action, including fraud charges. Despite this, he falsely certified that he would allocate all proceeds for business-related purposes, Chen later admitted to siphoning $354,520 of these funds into personal investment accounts, the Justice Department reported.
The investigation into Chen's fraudulent activities was conducted by the FBI's Washington Field Office, with the prosecution led by Assistant U.S. Attorneys Kondi Kleinman and Ryan Sellinger. They were supported by paralegal specialists Sonalika Chaturvedi and Michon Tart.
