Former SBA Employee Defrauds SBA, State Programs, and Credit Unions – Fraud Friday
July 12, 2024
Delaney Sexton
Contributing Editor
Former SBA Employee Defrauds SBA, State Programs, and Credit Unions – Fraud Friday
“Today’s charges highlight our unwavering commitment to protecting the integrity of SBA programs,” says 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.”
From the end of September 2020 through March 2021, Malaina Chapman was employed at SBA as a Disaster Relief Specialist. During her six-month stint at SBA, she was allegedly involved in PPP and EIDL fraud schemes. She is also being accused of defrauding local credit unions and local and state programs that helped individuals affected by the pandemic pay rent. Chapman is charged with conspiracy to commit wire fraud, wire fraud, and bank fraud. On Wednesday, she made her initial appearance in Miami federal court.
While working at SBA, Chapman allegedly submitted a loan application under the name Upscale Credit Lounge. The application included a Schedule C form that reported gross revenues of $103,674 and a tentative profit of $81,860. There were multiple fraudulent IRS Forms 941 attached as well. The lender approved a loan of just over $17,000.
Nine days later, she submitted a PPP application on behalf of DA TRAP. She claimed that DA TRAP had four employees and an average monthly payroll of $14,191. Along with the application, she submitted four Forms 941 that were revealed to be false and fraudulent during an investigation. The PPP loan was approved for $35,477.50.
The government claims that the PPP fraud did not end at just Chapman, she also conspired with six others in a PPP fraud ring. Her role in the ring was to create false IRS documents and send them to the ringleader. These documents were submitted with the group’s fraudulent PPP applications.
Chapman further took advantage of government funds by allegedly defrauding Florida’s and Miami’s Emergency Rental Assistance Programs. One of the documents she submitted with her application was titled “3-day notice to pay rent or quit.” That document was purportedly signed by the defendant’s mother who had died more a year and a half before the application. Chapman received $15,000 from this program.
“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,” states 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.”