Former SBA Employee Charged with Wire and Bank Fraud in Connection with Filing False Applications for PPP and EIDL Loans and Covid-19 Rental Assistance
Malaina Chapman, 37, of Hialeah, Fla. has been charged with conspiracy to commit wire fraud, wire fraud and bank fraud. She had her initial appearance in Miami federal court today.
According to allegations in the criminal complaint, Chapman was employed as a Disaster Relief Specialist with the Small Business Administration (SBA) from Sept. 28, 2020, through her resignation on March 18, 2021. While employed by the SBA, Chapman became involved in multiple schemes to defraud the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, as well as to defraud local credit unions and local and state programs designed to assist those affected by the Covid-19 pandemic pay their rent.
“Disaster relief was intended for people in need, namely functioning businesses, corporate forms, and sole proprietorships facing uphill prospects during the pandemic, not for those who sought to pad their pockets and defraud the government by making up entities or overstating their payroll and revenues to qualify for the relief," stated U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “We will continue to hold anyone accountable who exploits and defrauds financial institutions and the government’s pandemic response to enrich themselves at the expense of struggling businesses, employees, and local tenants. While the COVID-19 relief programs have ended, our commitment to identifying and prosecuting those who defrauded them has not.”
“Today’s charges highlight our unwavering commitment to protecting the integrity of SBA programs,” said SBA OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Braithwaite. “Exploiting relief efforts for personal gain undermines public trust and deprives legitimate businesses of essential assistance. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to ensuring that those who engage in fraudulent schemes are held accountable to the fullest extent of the law.”
On Feb. 10, 2021, Chapman, while employed by the SBA, submitted, via interstate wire communication, a loan application in the name of Upscale Credit Lounge to Lender 3. In support of her application, Chapman submitted a purported tax year 2020 Schedule C form that reported gross revenues of $103,674 and a tentative profit of $81,860. Lender 3 relied upon the representations in Chapman’s application and on Feb. 11, 2021, approved a loan in the amount of $17,052.50. Further investigation revealed that the Schedule C, attached to Chapman’s application was false and fraudulent.
On Feb. 19, 2021, Chapman, again while still employed by the SBA, submitted, via interstate wire communication, a PPP loan application with Lender 3 on behalf of DA TRAP. In her application, Chapman claimed that she had four employees and an average monthly payroll of $14,191. In support of her application, Chapman submitted four IRS Employers Quarterly Tax Return forms (Form 941), which purportedly documented the wages paid by DA TRAP. Lender 3 relied upon the representations in the application and on Feb. 26, 2021, approved a loan in the amount of $35,477.50. Further investigation revealed that the multiple IRS Forms 941 attached to Chapman’s application were false and fraudulent.
Chapman also conspired with others to submit false and fraudulent PPP loan applications on their behalf. Six defendants were charged in Case No. 24-CR-20079 and in that case defendant Raisha Kelly was the alleged ringleader of the conspiracy and prepared and caused the preparation of numerous false and fraudulent loan applications to be submitted to SBA-approved PPP lenders. Chapman aided and abetted this conspiracy by creating false and fraudulent IRS documents and sending them to Kelly, who in turn used them to submit false and fraudulent applications for PPP loans.
Read full story