Founders of Blueacorn Indicted for $300 Million PPP Fraud Scheme
The founders of the fintech company Blueacorn, Nathan Reis and Stephanie Hockridge, have been indicted on federal fraud and conspiracy charges related to an alleged Paycheck Protection Program (PPP) fraud scheme that reportedly garnered them close to $300 million, according to a recent congressional report.
The Department of Justice (DOJ) alleges that Reis and Hockridge submitted fraudulent PPP loan applications and aided in facilitating false loan applications for thousands of businesses through Blueacorn, which they established in April 2020 during the peak of the COVID-19 pandemic with the intention to “democratize access to loan relief” for American small businesses and independent contractors.
Under agreements with two lenders, Blueacorn collected and evaluated PPP loan applications from borrowers and collaborated with these lenders to submit applications to the Small Business Administration (SBA) in exchange for a share of the fees provided by the SBA for approved loans.
Moreover, through its VIPPP program, Blueacorn provided personalized assistance to potential PPP borrowers, during which Reis, Hockridge, and their associates allegedly coached borrowers on how to submit fraudulent loan applications.
The DOJ claims that to increase their kickbacks from borrowers and increase their share of lender fees from the SBA, Reis, Hockridge, and their co-conspirators submitted loan applications that they were aware contained materially false information.
According to reports from ABC15 in Scottsdale, Arizona, where Hockridge once worked as a newscaster, the couple has allegedly enjoyed a “lavish lifestyle” in Puerto Rico, where Reis was arrested last week, as shown in court documents.
Hockridge made an appearance in court on Monday, and a criminal trial is scheduled to commence on January 6, 2024, as per court documents.
Both Reis and Hockridge face four counts of wire fraud and one count of conspiracy to commit wire fraud, with each count carrying a potential maximum sentence of 20 years in prison.
A request for comment sent to Blueacorn’s active website went unanswered.
In December 2022, Blueacorn, along with fintech company Womply, was prohibited from working with the SBA after a House subcommittee report indicated that both firms had lax anti-fraud measures concerning the PPP.
Womply, alongside another fintech company called Biz2Credit, agreed in March to pay a total of $59 million to the Federal Trade Commission to resolve accusations of misleading small businesses seeking PPP loans.
