SBA Award Winner, Par Funding Witness, Now a PPP Fraud Defendant

Quick Take: Kara DiPietro, 49, of Towson, Maryland, was indicted on six counts of bank fraud over more than 20 allegedly fraudulent PPP applications that sought $7.5 million and delivered more than $2.5 million. She is a former SBA Maryland Small Business Person of the Year and a former Par Funding borrower who later became a government witness. She is presumed innocent.

In 2017, the Small Business Administration named Kara DiPietro Maryland's Small Business Person of the Year. She promoted the award for years afterward, and it was a reasonable thing to be proud of. She had bought her father's Columbia woodworking company, H.M.C. Inc., in 2015, twenty-six years after he founded it. That is the kind of story the SBA exists to celebrate.

On October 20, the U.S. Attorney for the District of Maryland announced that a federal grand jury had indicted her on six counts of bank fraud.

What sits between those two dates is a near-complete tour of every way a small business in this country can raise money, and then run out of it.

The Par Funding chapter

Here is the detail that moves this out of the Baltimore news cycle and into ours.

Somewhere along the way, DiPietro became a borrower from Par Funding.

Readers of this publication need no introduction to that name. Complete Business Solutions Group, doing business as Par Funding, was the merchant cash advance operation run by Joseph LaForte, who concealed his control of the company behind his wife as nominee, used the alias "Joe Mack," and hid a prior felony financial fraud conviction from investors. The SEC moved on the company in July 2020 and it has been in receivership since. Prosecutors described more than $100 million in illegal proceeds taken from investors, many of them in the Philadelphia region.

The collections operation is the part the industry remembers. Joseph's brother James handled sales and collections, and in September 2024 pleaded guilty to extortionate collection of credit, obstruction of justice, and retaliating against government witnesses. In February 2023 he assaulted a receivership attorney on a Center City sidewalk in broad daylight, causing serious bodily injury. Joseph pleaded guilty the same day to racketeering conspiracy, securities fraud, tax crimes, perjury, and obstruction.

According to the Baltimore Brew, DiPietro was one of the merchants on the other end of that machine. She later served as a government witness. In 2024, the Brew reports, she was threatened over an unpaid loan, with a warning to "split your head open."

So the woman now facing a federal fraud indictment is also, by the account of the reporting, someone the federal government relied on to help convict the men who ran one of the most predatory operations this industry has produced.

Both things appear to be true. Neither cancels the other.

What the indictment alleges

Prosecutors allege that between April 2020 and May 2021, DiPietro submitted or caused the submission of more than 20 fraudulent PPP applications.

The entities named are H.M.C., Holdings Management Company Inc. and Kinetic Capital LLC, along with similarly named or similarly spelled entities. DiPietro was allegedly president and CEO of all of them. Holdings Management was created in 2019 to absorb H.M.C.'s operations and employees. Kinetic Capital was founded the same year to lend money to small businesses, which means that for a period she sat on the funding side of this industry as well as the borrowing side.

The alleged defects in the applications are specific and, taken together, deliberate-looking. Employer Identification Numbers that the IRS had never assigned to the listed entities. A failure to disclose prior PPP applications tied to DiPietro or to entities she owned, controlled, created or used, which program rules required. Certifications on some applications stating the business had not received a First Draw loan, and on others that it had not received a Second Draw loan.

The applications sought more than $7.5 million. Eight were funded. More than $2.5 million landed in accounts prosecutors say she controlled. Some of it allegedly paid for things the program did not permit, including renovations to her home.

An indictment is not a finding of guilt. DiPietro is presumed innocent.

The part that is harder to write about

By 2023 it was over. H.M.C. and Kinetic went into bankruptcy that August, owing suppliers and multiple lenders. DiPietro had filed personal bankruptcy three months earlier. A lawyer for SECU has alleged in litigation that she manipulated her asset and liability figures to obtain a $400,000 loan in 2021.

Look at the sequence, and it is difficult not to see a capital stack collapsing in slow motion. A family manufacturer bought at the top. An award. Then bank debt, then high-rate advances from an operation that turned out to be a Ponzi scheme, then the largest federal relief program in American history arriving in April 2020 with almost no front-end controls.

There are two readings of that sequence, and we are not in a position to choose between them. One is a business owner crushed by predatory debt who reached for a lifeline and crossed a line. The other is someone who pursued capital through every channel available and misrepresented facts to several of them. A jury may eventually sort it out. The reporting alone cannot.

What is not in dispute is where she landed. In April 2025, Baltimore City hired her as deputy chief for fleet management at the Department of General Services, at $130,000 a year, overseeing a division with a $96 million budget, more than 5,000 municipal vehicles, and the contracts that service them. She has since been promoted. As of October 20, nearly two weeks after the grand jury returned the indictment, the city still employed her, and the Mayor's Office declined to comment.

Her trial is ahead of her. The award is still on her résumé.