Zhong Jie Chen, 47, Formerly of Columbia, Maryland, Pleaded Guilty Today to Misappropriating $354,520 of COVID-19 Relief Funds

Summary

This Federal Bureau of Investigation and USAO - District of Columbia news release, published 2024-02-28, reports that Zhong Jie Chen, 47, formerly of Columbia, Maryland, pleaded guilty to wire fraud for misappropriating $354,520 of COVID-19 relief funds that he was supposed to use to operate his restaurants. It says Chen used the funds to engage in day trading. Wire fraud has a statutory maximum penalty of 20 years in prison, and under the plea agreement Chen must pay restitution and be liable for a forfeiture money judgment. The court accepted the plea in the District of Columbia and scheduled sentencing for July 2, 2024. The release says PPP and EIDL loans to the two restaurants totaled approximately $964,843.

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WASHINGTON – Zhong Jie Chen, 47, formerly of Columbia, Maryland, pleaded guilty today to misappropriating $354,520 of COVID-19 relief funds that he was supposed to use to operate his restaurants. Chen used the misappropriated funds to engage in day trading. The announcement was made by U.S. Attorney Matthew M. Graves and FBI Special Agent in Charge David J. Scott of the Washington Field Office’s Criminal and Cyber Division.
Chen, who now lives in New Jersey, pleaded guilty to wire fraud, which has a statutory maximum penalty of 20 years in prison. As part of his plea agreement, Chen must pay restitution and be liable for a forfeiture money judgment. U.S. District Court Judge Christopher R. Cooper, who accepted Chen’s guilty plea in the District of Columbia, scheduled sentencing for July 2, 2024.
In court documents, Chen admitted that, while he was a Maryland resident, he was the sole owner of two restaurants, one in Washington, D.C., the other in College Park, MD. Between May 2020 and July 2021, he applied for Paycheck Protection Program (PPP) and Economic Injury Disaster (EIDL) loans for the restaurants.
The Paycheck Protection Program was a COVID-19 pandemic relief program administered by the U.S. government’s Small Business Administration (SBA) that provided forgivable loans to small businesses for job retention and certain other expenses. Once PPP loan applications were approved, businesses received loan proceeds from third-party lenders. In response to the COVID-19 pandemic, the SBA also offered EIDL loans to certain entities, including small business owners. These loans were provided directly from the SBA and were low-interest, fixed-rate, long term loans. Both PPP loans and EIDL loans could only be used for specified purposes.
Between May 2020 and July 2021, Chen’s two restaurants received PPP and EIDL loans totaling approximately $964,843. On loan applications, Chen acknowledged understanding how the loans could be used and that if he knowingly used funds for unauthorized purposes, he could be held legally liable by the federal government, and potentially charged with fraud.
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.
This case was investigated by the FBI Washington Field Office. It is being prosecuted by Assistant U.S. Attorneys Kondi Kleinman and Ryan Sellinger, who were assisted by paralegal specialists Sonalika Chaturvedi and Michon Tart.

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