Former Maryland Resident Sentenced in Theft of More than $350,000 in COVID-19 Relief Funds

Summary

A July 2, 2024 press release from the U.S. Attorney's Office for the District of Columbia announcing that the Honorable Christopher R. Cooper sentenced Zhong Jie Chen, 47, formerly of Randolph, Maryland, to 18 months in prison and three years of supervised release, and ordered $369,087 in restitution, after he pleaded guilty on February 28, 2024 to wire fraud. The release states that Chen owned two Shanghai Tokyo Café restaurants, in Columbia Heights and College Park, which received PPP and EIDL loans totaling approximately $964,843 between May 2020 and July 2021. It says he falsely certified that the proceeds would be used for business purposes and misappropriated $354,520 to day trade through his Robinhood and TD Ameritrade accounts.

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WASHINGTON – Zhong Jie Chen, 47, formerly of Randolph, Maryland, was sentenced today to 18 months in prison for misappropriating $354,520 of COVID-19 relief funds that he was supposed to use to operate his restaurants during the pandemic. Chen used the funds to engage in day trading. The sentencing was announced 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 in U.S. District Court on February 28, 2024, to wire fraud. In addition to the prison term, the Honorable Christopher R. Cooper ordered Chen to serve three years of supervised release and to pay $369,087 in restitution.
In court documents, Chen admitted that, while he was a Maryland resident, he was the sole owner of two Shanghai Tokyo Café restaurants, one in the District’s Columbia Heights neighborhood, and 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 two eateries.
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 the 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 through his Robinhood and TD Ameritrade accounts.
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.
24cr0050

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