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ProfileCompany or group

MBE Capital Partners

Lender or loan platform

PPP · PPPLF
Type
Company or group
Role
Lender or loan platform
Programs
PPP, PPPLF
Updated

The profile

Individuals and companies whose conduct was challenged or called into question during or after the pandemic. See sources: DOJ plea release, March 23, 2023 DOJ sentencing release, July 27, 2023

  • Type: Non-bank SBA-approved PPP lender of record.
  • Legal entities: MBE Capital Partners, LLC ("MBE"): New York LLC, formed March 2015. Republic Group, LLC (a/k/a Republic Group Parts, LLC): Rafael Martinez's holding company for MBE; MBE's own PPP loan was made to "Republic Group d/b/a MBE."
  • HQ: New York, NY (per Federal Reserve PPPLF records). MBE's websites (2020–2022) gave 1 Bridge Plaza, Fort Lee, New Jersey.
  • CEO / primary owner: Rafael Martinez, of Franklin Lakes, New Jersey. Pleaded guilty March 23, 2023 to conspiracy to commit wire fraud; sentenced July 27, 2023 to 54 months in prison.
  • Role: SBA-approved nonbank lender that originated 36,633 PPP loans worth about $823 million and collected roughly $70 million in lender fees. Martinez pleaded guilty to conspiring to commit wire fraud in connection with MBE's PPP loan and lender applications; according to DOJ, he used false representations and documents to win MBE's lender approval and PPP capital, and a tax preparer's forged signature to obtain the company's own PPP loan.

In the archive

Pandemic-role map

  • Reader shorthand: the PPP lender whose CEO went to prison for how the lender got its license.
  • What MBE did for borrowers: funded PPP loans under its own SBA nonbank-lender approval, marketed toward minority- and women-owned small businesses.
  • Where the funding came from: $100 million from a life insurance company (wired May 13, 2020), pledged as collateral for advances from the Federal Reserve Bank of San Francisco's PPP Liquidity Facility.
  • Where responsibility sat: MBE was lender of record on all 36,633 loans and collected the SBA processing fee on each.

Before the pandemic (2015 – early 2020)

MBE Capital Partners, LLC was formed in New York in March 2015 (case summary). Prosecutors said the financial statements Martinez later submitted to the SBA as audited were fabricated, and that in early 2020 MBE had at most four employees and no more than about $25,000 in average monthly payroll (DOJ releases and superseding information).

During the pandemic (April 2020 – May 2021)

Ten days in April 2020

The scheme Martinez pleaded guilty to began with three filings in ten days, the overt acts of the (S2) superseding information:

  • April 5, 2020: Martinez applied to an FDIC-insured bank for a PPP loan for Republic Group d/b/a MBE, claiming as many as 15 employees and roughly $119,390 in average monthly 2019 payroll. Prosecutors put the real figures at no more than four employees and $25,000. The loan came through at approximately $283,764, most of which the government says was not spent on payroll or other business expenses. SBA data list a $283,764 loan to Republic Group Parts, approved May 1, 2020, with Bank of America as lender and 9 jobs reported.
  • April 9, 2020: four days later, Martinez applied to the SBA for MBE to become a non-bank PPP lender, representing that MBE had originated and serviced more than $3.8 billion in loans or receivables from 2017 through 2019 and attaching financial statements he claimed were audited.
  • April 15, 2020: in support of the company's own PPP loan, Martinez submitted IRS Forms 941 bearing the forged signature of MBE's tax preparer, who had not prepared or signed them.

What the company told borrowers, and what the data show

MBE Capital Partners made 15,957 PPP loans in 2020 and 20,676 more in 2021.1 Prosecutors said Martinez won its SBA lender approval with fabricated audited financial statements.2 Its homepage in May 2020 carried a quotation signed "R. Martinez": "We don't judge your past, We finance your future."3

The SBA paid the lender a processing fee on every PPP loan; under the April 2020 rule it was 5 percent of any loan up to $350,000.4 MBE's PPP page put it from the borrower's side: "5 year term, 1% interest, no fees."5 The fees on MBE's 36,633 loans come to an estimated $69.8 million, paid by the SBA.6

The company's own accounts of its size moved around. In January 2021 its PPP page said it had first "partnered with Earvin 'Magic' Johnson, majority owner of EquiTrust, to distribute $100 million of PPP loans," then "went on to provide 13,000 borrowers with over $350,000,000."5 A second MBE site of the same month said it had "Funded $309M loans in PPP 1.0" and "Processed 13,000 PPP 1.0 applications."7 SBA data record 15,957 MBE loans approved in 2020, $348.7 million at approval and $324.4 million after later reductions.1 The Justice Department's plea and sentencing releases call the $100 million funder "a life insurance company" and do not name it.2

The same site said that "In 2019, MBECP financed over $1.7 billion."7 According to prosecutors, the lender application Martinez filed with the SBA represented that MBE had originated and serviced more than $3.8 billion in loans or receivables from 2017 through 2019. They said that from April 2018 to April 2020 MBE had at most four employees.2 By March 2022 the site described "over 20 years" in supply-chain finance and "over $2.1 billion" financed in 2020.8 MBE was formed in New York in or about March 2015.2

MBE's own loan, and its bank

SBA data show a PPP loan of $283,764 to "Republic Group Parts Limited Liability" of New York, approved May 1, 2020, with Bank of America as lender. It reports 9 jobs and a status of "Paid in Full," with no forgiveness recorded.1 Republic Group, LLC, also known as Republic Group Parts, LLC, is Martinez's holding company for MBE, and the amount matches the approximately $283,764 loan that prosecutors said MBE obtained with false employee and wage figures.2 According to the companies' own complaint as recited by the court, Bank of America began refusing checks and electronic payments on or about May 20, 2020, nineteen days after that approval, on the Republic account where they had deposited about $100 million.9

Approvals, repayment and PPPLF balances

MBE's 2020 approvals ran from May through August, peaking at 6,950 in August. Its 2021 approvals, January through June, included 9,804 second-draw loans.1 The SBA file lists 7,470 of the 2020 loans, or 46.8 percent, as sole proprietorships and 2,342 more as self-employed individuals or independent contractors; the company's site said "50% of loans went to Sole Proprietors."17 In September 2021, Carver Bancorp's annual-meeting presentation, filed with the SEC, said Carver was "working with organizations such as MBE Capital Partners" in Harlem.10

As of the SBA's September 2024 data, 29,176 of MBE's loans were paid in full, 2,984 were charged off and 4,473 carried a withheld status ("Exemption 4"). Forgiveness totaled $634.5 million on 28,318 loans. The servicer of record on 5,839 loans is "Lendistry-Federal Reserve (MBE) Contract."1

The DOJ's "approximately $832 million" PPPLF figure matches the Federal Reserve's disclosure file of January 11, 2022: as of December 31, 2021 it listed 121 MBE advances with original amounts totaling $832,593,237.92, of which $262,536,755.94 was still outstanding.11 The balance was $149,425,450.20 at the end of 2023.12 As of February 28, 2026, the Fed listed 78 MBE advances with $8,297,794.32 still outstanding.13

Notes

  1. SBA PPP FOIA loan-level data, release through September 30, 2024 (13 files); loan 9187167301. Measured 2026-09-26. ↩
  2. DOJ sentencing release, July 27, 2023; plea release: DOJ plea release, March 23, 2023. ↩
  3. MBECP Paycheck Protection Loans, home page (May 19, 2020) — original: https://www.mbecp.com/ ↩
  4. SBA, Paycheck Protection Program interim final rule, 85 Fed. Reg. 20811 (April 15, 2020), "What fees will lenders be paid?" ↩
  5. Paycheck Protection Program — MBECP (January 17, 2021) — original: https://www.mbecp.com/paycheck-protection-program ↩
  6. Estimate from the SBA PPP loan-level data at the program's fee schedules (method: PPP processing-fee schedules by vintage); the profile's lender-fee table, $69,826,320.99. ↩
  7. MBEPPP.COM home page (January 13, 2021) — original: MBEPPP.COM (original: mbeppp.com) ↩
  8. MBEPPP.COM home page (March 9, 2022) — original: https://www.mbeppp.com/ ↩
  9. Republic Group, LLC v. Bank of America, N.A., No. 2:20-cv-12081 (D.N.J. Feb. 1, 2021), opinion. ↩
  10. Carver Bancorp, Inc., Annual Meeting of Shareholders presentation (September 17, 2021), Form 8-K Exhibit 99.1 — original: https://www.sec.gov/Archives/edgar/data/1016178/000110465921118675/tm2128288d1_ex99-1.htm ↩
  11. Federal Reserve, PPPLF transaction-specific disclosures, January 11, 2022 — original: https://www.federalreserve.gov/publications/files/ppplf-transaction-specific-disclosures-01-11-22.xlsx ↩
  12. Federal Reserve, PPPLF transaction-specific disclosures, January 11, 2024 — original: https://www.federalreserve.gov/publications/files/ppplf-transaction-specific-disclosures-01-11-24.xlsx ↩
  13. Federal Reserve, PPPLF transaction-specific disclosures, March 11, 2026 — original: https://www.federalreserve.gov/publications/files/ppplf-transaction-specific-disclosures-03-11-26.xlsx ↩

The insurer's $100 million and the Fed's advances

On April 27, 2020, Martinez sent the same fraudulent "audited" financials to a life insurance company as part of a pitch to fund PPP loans for minority- and women-owned small businesses. The insurer wired MBE $100 million on May 13, 2020. MBE pledged that capital and its growing loan book to borrow from the Federal Reserve's PPP Liquidity Facility. Federal Reserve PPPLF transaction data show 128 advances between 2020-06-19 and 2021-07-22, totaling $850.8 million gross, with peak outstanding of $728.6 million on 2021-07-13 (88.6% of MBE's origination volume) at the facility's 0.35% rate. Those data rank MBE 34 among PPPLF borrowers by gross advances. The DOJ releases put the PPPLF borrowing at approximately $832 million; the arrest release's "$932 million in capital" figure appears to add the insurer's $100 million.

The loan book

SBA's PPP loan-level data record 36,633 loans / $822,686,411 in originated principal / an estimated $69,824,846 in SBA processing fees. That is about $1,906 per loan, and about 9.6 cents of fee income per dollar of peak Fed funding. The DOJ releases state the figures as approximately $823 million to approximately 36,600 businesses and $71.3 million in fees.

The case record does not characterize the quality of the borrower book. The charged fraud ran through MBE's own applications (for lender status, for capital, and for its own loan), not through its borrowers'.

Bank of America closes the accounts

Around May 20, 2020, a week after the insurer's wire, Bank of America began refusing to honor checks and electronic payments on the Republic Group account holding the roughly $100 million, telling the companies it could not support their PPP participation. It later closed the business accounts of Republic, MBE, and a related nonprofit along with the Martinez family's personal accounts. That account of events comes from the complaints Martinez's companies later filed, as recited by the court; Bank of America gave no public explanation in the record.

Where the money went

Per the DOJ, Martinez spent proceeds of the scheme on a villa in the Dominican Republic worth more than $10 million, a $3.5 million home in Franklin Lakes, New Jersey, chartered jets, and luxury cars, including the five vehicles later named in the forfeiture: a 2017 Ferrari 488 Spider, a 1962 Mercedes-Benz 190, a 2021 BMW 750, a 2017 Bentley Continental GT, and a 2018 Porsche 911 Turbo.

After the pandemic (mid 2021 – present)

Republic Group v. Bank of America: two suits, both dismissed on the pleadings

Before Martinez was a defendant, his companies were plaintiffs. Republic Group, MBE, Martinez, and his daughter Chelsea Martinez (an officer and account signatory) sued Bank of America twice in the District of New Jersey, alleging the May 2020 account refusals and closures were race discrimination and retaliation under 42 U.S.C. § 1981 and the New Jersey Law Against Discrimination. Judge Susan D. Wigenton dismissed both suits on pleading grounds: the original action (No. 2:20-cv-12081, filed August 31, 2020) on February 1, 2021, and the refiled action (No. 2:21-cv-14634, removed from state court) on January 18, 2022. Each time the court held that the complaints pleaded conclusions rather than facts showing discriminatory intent, and declined to reach the state-law claims. Neither ruling addressed whether the underlying allegations were true. The second dismissal allowed one final amendment within 30 days; whether the plaintiffs took that leave is not shown in the case file.

Six weeks after that second dismissal, Martinez was arrested.

United States v. Martinez (S.D.N.Y. 1:22-cr-00251-LJL)

  • March 1, 2022: arrest on a magistrate complaint (1:22-mj-01988) charging bank fraud, wire fraud, false statements to a bank and to the SBA, and aggravated identity theft. Seizures from MBE's and Martinez's accounts in the following days are recorded on the docket (CourtListener).
  • 2022–2023: indicted and later charged by superseding information; the defense's motion to dismiss the wire-fraud count was denied by Judge Lewis J. Liman (docket; the (S2) information and DOJ releases).
  • March 23, 2023: Martinez pleaded guilty to one count of conspiracy to commit wire fraud (18 U.S.C. § 371) under the (S2) superseding information, waiving indictment.
  • July 27, 2023: sentenced to 54 months in prison and three years of supervised release, with restitution of $71,711,893.07 and forfeiture of $44,546,712.94 plus the New Jersey and Dominican Republic properties and the five vehicles.

The restitution figure slightly exceeds the DOJ's ~$71.3 million lender-fee figure. The conspiracy count names "others known and unknown"; no charge against any other MBE principal appears in the record. MBE the entity was not charged. IRS Criminal Investigation, the SBA Office of Inspector General, and the Office of Inspector General for the Federal Reserve Board and CFPB investigated.

What happened to the company

The case file does not show whether MBE wound down. In the SBA's September 2024 data the servicer of record on 5,839 of its loans is "Lendistry-Federal Reserve (MBE) Contract." The Federal Reserve's disclosures show MBE's PPPLF balance falling from $262,536,755.94 at the end of 2021 to $149,425,450.20 at the end of 2023 and $8,297,794.32 on February 28, 2026.

Where MBE appears in the federal record

  • United States v. Martinez (S.D.N.Y. 1:22-cr-00251-LJL) — the criminal case against its CEO, from arrest (March 2022) through guilty plea (March 2023) to the 54-month sentence (July 2023), with three USAO-SDNY press releases marking each step.
  • Federal Reserve PPPLF transaction data — 128 advances, $850.8 million gross, peak $728.6 million.
  • SBA PPP loan-level data — 36,633 loans as originating lender.
  • Republic Group v. Bank of America (D.N.J. 2:20-cv-12081 and 2:21-cv-14634) — as plaintiff, twice dismissed at the pleading stage.

Where MBE does not appear

  • The House Select Subcommittee's December 1, 2022 fintech-PPP report — MBE is not among its subjects; no Womply- or Blueacorn-style technology channel has been located.
  • The SBA's December 8, 2022 statement naming eight lenders under investigation — MBE is not on that list. Its case ran through a DOJ prosecution instead.
  • Charges against the entity itself — none. The conviction is Martinez's.

Sources

Primary documents in this archive

External references

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