A federal grand jury in Maryland has handed up a six-count indictment against Kara DiPietro, a former Columbia business owner once celebrated as the state's Small Business Person of the Year, accusing her of bank fraud tied to loan applications for her now-defunct companies. The charges follow the collapse of her millwork fabrication business and years of bankruptcy proceedings that left creditors claiming more than $18 million.
According to the Maryland Daily Record, DiPietro submitted about two dozen small-business loan applications tied to her companies and received roughly one-third of the amount she requested, per the indictment. Prosecutors allege she used some of that money for house renovations and other impermissible expenses, and that she certified on multiple occasions she would not pursue additional Paycheck Protection Program loans even as she continued seeking more. The indictment also alleges she made false statements about company taxes and payroll on PPP applications and failed to disclose prior PPP applications filed for the same companies.
Prosecutors say DiPietro sought more than $7.5 million in forgivable Paycheck Protection Program loans for her businesses, part of the roughly $800 billion congressional effort to support small businesses during the coronavirus pandemic. If convicted, she faces a maximum penalty of a $1 million fine and up to 30 years in federal prison per count. DiPietro had no defense attorney listed in her criminal case and could not be reached for comment Wednesday, the outlet reported.
From Family Millwork Shop to Bankruptcy Court
DiPietro's path to federal court began decades earlier. Her father started H.M.C. Inc. in 1989, and DiPietro purchased the Columbia-based millwork fabrication business in 2015, becoming its president and sole owner. In 2017, the U.S. Small Business Administration honored her as Maryland's Small Business Person of the Year. She later created Holdings Management Company, which absorbed H.M.C.'s operations in 2020.
The business began unraveling after a string of setbacks starting in 2017, which DiPietro and her attorney attributed to the loss of H.M.C.'s largest client that year, embezzlement and tax fraud committed by the company's controller, and misconduct by an IRS revenue officer, according to the Daily Record's account. H.M.C. Inc. and Holdings Management Company filed jointly for bankruptcy in 2023, reporting more than $6.4 million in debt, and DiPietro filed for individual bankruptcy the same year. Joseph M. Selba, who served as her attorney in the bankruptcy proceedings, did not return requests for comment, per the outlet.
Creditors ultimately asserted more than $18 million in claims for unpaid invoices, back taxes and defaulted loans, according to court records cited by the newspaper. DiPietro and her companies entered Chapter 7 liquidation, with the bankruptcy cases closed in 2024, though disputes over outstanding judgments and liens reportedly remain ongoing. DiPietro had personally guaranteed most of the loans issued to her business, the Daily Record reported.
Conflicting Signals From the Bankruptcy Docket
Among the lenders involved was the State Employees Credit Union of Maryland, which issued a $400,000 line of credit to Holdings Management Company in 2021. The Daily Record's reporting states that a bankruptcy judge in Baltimore found in September that DiPietro had intentionally inflated assets and deflated liabilities in financial reporting to SECU, and that U.S. Bankruptcy Judge Nancy V. Alquist found SECU knew or should have known DiPietro was reporting unreliable financial information.
However, a separate docket entry for the related Maryland Bankruptcy Court case, State Employees Credit Union of Maryland, Inc. v. DiPietro, lists a memorandum order awarding judgment for the defendant, according to pacermonitor.com. That case concerns dischargeability under 11 U.S.C. §523(a)(2), covering allegations of false pretenses, false representation and actual fraud. The available docket record does not explain how that judgment relates to the findings described in the Daily Record's reporting, leaving the two accounts in tension.
Part of a Broader Pattern of Legal Disputes
DiPietro's business dealings have surfaced in other court records over the years. A separate federal case in New York identified DiPietro and H.M.C. Inc. as defendants, with CDS Business Services Inc. and Newtek Business Credit named as plaintiffs, according to govinfo.gov. A New York Supreme Court case in Kings County involving DiPietro, H.M.C. Inc. and Cash Crunch Capital LLC produced an ex parte motion dated August 7, 2018, according to court filings reviewed by trellis.law.
DiPietro's case also lands amid wider federal scrutiny of pandemic-era lending. The U.S. Department of Justice recently announced a separate case in which a defendant named Jamie Gray was charged with wire fraud and money laundering over PPP and Economic Injury Disaster Loan applications that allegedly claimed ownership of dozens of operating businesses, part of a broader federal enforcement push described by the U.S. Department of Justice. The effort involved more than 40 U.S. Attorney’s Offices, over 160 criminal defendants, and approximately $245 million in intended loss.
