A former Small Business Administration (SBA) employee from Miami, Malaina Chapman, 38, was sentenced on June 13 to 54 months in prison, followed by three years of supervised release, for fraudulently obtaining COVID-19 relief funds and spending them on luxury items. She was also ordered by United States District Judge Rodolfo A. Ruiz II to pay $1,297,178 in restitution.
Chapman worked as a Disaster Relief Specialist with the SBA from September 28, 2020, to March 18, 2021. During that time, she engaged in multiple schemes to defraud the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) program, local credit unions, and state and local COVID-19 relief programs.
Court documents reveal that on February 10, 2021, Chapman submitted a fraudulent loan application in the name of Upscale Credit Lounge, LLC. She falsified a Schedule C (Form 1040), claiming $103,674 in gross revenues and $81,860 in profits for 2020. This led to the approval of a loan for $17,052.50.
Nine days later, on February 19, 2021, Chapman filed another false PPP loan application for DA TRAP, LLC, claiming four employees and a monthly payroll of $14,191. She submitted a fraudulent Employer’s Quarterly Tax Return (Form 941) to support this. The lender approved a loan for $35,477.50 based on her claims.
In total, Chapman obtained $230,246 through loans she applied for on her own behalf. She also conspired with others in submitting false PPP applications, resulting in losses totaling $837,716 attributed to her.
Additionally, Chapman exploited Florida’s and Miami’s COVID-19 Emergency Rental Assistance Programs.
Authorities uncovered that Chapman spent the stolen funds on luxury purchases from Louis Vuitton, Nordstrom, Goyard, Chanel, Fendi, as well as on a designer teacup puppy and a $7,500 stay at a Key Largo luxury resort.
The investigation was led by the U.S. Postal Service Office of Inspector General (USPS OIG), SBA Office of Inspector General (SBA OIG), and Department of Labor Office of Inspector General (DOL-OIG).
U.S. Attorney Hayden P. O’Byrne and special agents from these agencies announced the sentencing. Assistant U.S. Attorney Daniel Bernstein prosecuted the case, with asset forfeiture handled by Assistant U.S. Attorney Gabrielle Charest-Turken.
The CARES Act, enacted in March 2020, provided emergency financial assistance to individuals and businesses affected by the COVID-19 pandemic, including through SBA-administered EIDLs and PPP loans. Chapman’s fraud undermined this critical relief effort.
