A Maryland woman faces indictment for submitting fraudulent applications for millions of dollars in federal loans.
Kara DiPietro, 49, of Towson, faces bank fraud charges for allegedly filing fraudulent applications to obtain Paycheck Protection Program (PPP) loans in the names of multiple businesses.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act — a federal law enacted in March 2020 — provided emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. It authorized up to $659 billion in forgivable loans to small businesses for employee retention and certain business expenses through the Paycheck Protection Program (PPP), which was administered by the U.S. Small Business Administration (SBA). The business needed to use PPP loan proceeds on payroll costs, mortgage interest, rent, and utilities.
According to the six-count indictment, between April 2020 and May 2021, DiPietro, who served as president and CEO of multiple Maryland companies — including H.M.C., Inc., Holdings Management Company Inc., and Kinetic Capital LLC — submitted more than 20 fraudulent PPP applications in the name of HMC, Holdings, Kinetic, and similarly named and/or spelled entities. These applications listed false and fraudulent Employer Identification Numbers (EINs) not assigned by the IRS to the entities listed on the applications. The applications also failed to disclose prior PPP loan applications associated with DiPietro; the applying entity; and/or other entities owned, controlled, created, and/or used by DiPietro as required under PPP rules. DiPietro further caused the submission of PPP applications that falsely certified that the applicant business did not already receive a First Draw PPP loan and other PPP applications that falsely certified that the applicant business did not already receive a Second Draw PPP loan.
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The indictment alleges that, during 2020 and 2021, DiPietro caused the submission of PPP loan applications seeking more than $7.5 million. Eight of these applications were funded. Bank accounts under DiPietro’s control subsequently received more than $2.5 million in PPP funds. DiPietro then caused the transfer of PPP loan proceeds that were used for expenses that are not permissible under the PPP, including renovations to DiPietro’s personal residence.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Kelly O. Hayes, U.S. Attorney for the District of Maryland, announced the indictment with Special Agent in Charge Jimmy Paul, FBI Baltimore Field Office, and Inspector General William W. Kirk, U.S. Small Business Administration – Office of Inspector General (SBA-OIG). This prosecution is part of the Trump administration’s Task Force to Eliminate Fraud.
If convicted, DiPietro faces a maximum sentence of 30 years in federal prison for each of the six counts of bank fraud. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district judge determines sentencing after considering the U.S. Sentencing Guidelines and other statutory factors.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within federal benefit programs.
U.S. Attorney Hayes commended FBI and SBA-OIG for their work in the investigation. Ms. Hayes also thanked Assistant U.S. Attorneys Joseph Wenner and John Mark Mastakas who are prosecuting this federal case, along with Paralegal Specialist Joanna N. Huber, for her valuable assistance.
For more information about the Maryland U.S. Attorney’s Office, its priorities, and resources available to report fraud, please visit justice.gov/usao-md and justice.gov/usao-md/report-fraud.
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