Ex-SBA employee in Miami charged with fleecing pandemic loan programs run by her agency
The U.S. Small Business Administration was the lifeline for millions of companies during the COVID-19 pandemic, guaranteeing zero-interest loans and forgiving them if the money was used for payroll and other overhead.
Now, a former SBA employee in Miami has been charged with ripping off the very agency that was tasked with doling out about $800 billion in emergency benefits nationwide after the coronavirus swept the nation in March 2020.
Malaina Chapman may be the first ex-SBA employee in the country to be charged with bilking the agency responsible for the Paycheck Protection Program and other pandemic loan programs, according to federal authorities. Chapman, 37, of Hialeah, advertised her side businesses in real estate and credit services on her Instagram account under the handle, upscale_yourhomegirl.
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Chapman was arrested Wednesday morning and made her first appearance in federal court. A magistrate judge allowed Chapman to be released on a $550,000 bond that will require her to make a deposit of $5,000.
However, Judge Edwin Torres refused her request for a court-appointed attorney after Chapman admitted that she owned three homes in Miami-Dade County with her brother that they inherited from their mother. She said the total value of the three single-family homes was $1.16 million, with only one outstanding mortgage of $100,000.
“I don’t think she qualifies” for a court-appointed defense lawyer, Torres said, suggesting that she could borrow money based on the equity of her three homes and use it to pay for an attorney.
Federal prosecutor Dan Bernstein urged the judge to require her to show that if she’s allowed to borrow money under this scenario, it can only be used for her legal defense.
“This is a multimilion-dollar fraud case,” Bernstein told Torres. “She defrauded every imaginable COVID-19 loan program.”
Chapman, who was arrested on conspiracy, wire fraud and bank fraud charges, faces a grand jury indictment and arraignment at the end of July.
Since Congress adopted the pandemic relief program run by the SBA, South Florida has been a hotbed of PPP loan fraud committed by hundreds of business people, law enforcement officers and others like Chapman charged with stealing millions from the government program by falsifying loan applications for their companies, including falsified employee, revenue, income and tax records. Several used their ill-gotten loans to buy expensive Lamborghini, Tesla, Porsche, Mercedes-Benz and Bentley vehicles.
According to a criminal complaint and affidavit, Chapman was employed as a Disaster Relief Specialist with the Small Business Administration from Sept. 28, 2020, through her resignation on March 18, 2021. During her employment, Chapman engaged in schemes to defraud the Paycheck Protection Program and Economic Injury Disaster Loan program as well credit unions and pandemic-related rental programs, the U.S. Postal Service complaint says.
Chapman is accused of helping a Miami-Dade ring of six people, including alleged leader Raisha Kelly, with providing falsified tax forms for at least 10 PPP loan applications that led to disbursements of hundreds of thousands of dollars in 2021 by private lenders backed by the SBA. Most of the members of that ring, who were indicted earlier this year on charges of fraudulently receiving more than $800,000 in PPP loans, have agreed to plead guilty to fraud charges, court records show.
Then on Feb. 10, 2021, Chapman submitted a PPP loan application in the name of her company, Upscale Credit Lounge, which included a falsified tax form that reported revenue of $103,674 and a profit of $81,860. Eleven days later, a private lender approved another loan for $17,052, according to the complaint.
On Feb. 19, 2021, Chapman, again while still employed by the SBA, submitted another PPP loan application for her business, DA TRAP. In her application, Chapman claimed that she had four employees and an average monthly payroll of $14,191. As backup material, Chapman submitted four IRS Employers Quarterly Tax Return forms, which documented the wages paid by DA TRAP. A week later, a private lender approved a loan for $35,477.
All of the information in her application was fabricated, the complaint says.
In a similar manner, on April 10, 2021, Chapman submitted another PPP loan application for a property management business, falsely claiming on a tax form that it generated revenue of $123,950 with profits of $78,187, according to the complaint. Five days later, a private lender approved her loan for $20,833.
In addition to defrauding the PPP program, Chapman is also accused of exploiting the State of Florida and the City of Miami’s Covid-19 Emergency Rental Assistance Programs.
On Oct. 13, 2021, Chapman began the process of applying for benefits under Florida’s Emergency Rental Assistance program. Chapman pretended to be a tenant at a residence in Miami, according to the criminal complaint. She submitted information and documents through an online portal set up to distribute benefits.
On Jan. 20, 2022, Chapman submitted a written document titled “3-day notice to pay rent or quit,” the criminal complaint says. These documents were dated Dec. 7, 2021, showing they were signed by Chapman’s mother. But her mother died the previous year on May 25, 2020.
Nonetheless, the state accepted Chapman’s misrepresentations and approved payments totaling $15,000. They were made into her bank account, according to the complaint.
This story was originally published July 11, 2024 at 7:00 AM.
