Two founders of financial technology company Blueacorn indicted in wide-ranging case Paycheck Protection Plan fraud scheme in the Northern District of Texas, the Justice Department announced Friday.
Stephanie Hockridgea former news anchor from Arizona, was summoned for a court appearance scheduled for Monday, and her husband Nathan Reis was arrested Thursday in Puerto Rico.
The unsealed indictment alleges that the two men submitted false and fraudulent PPP loan applications for themselves, earning thousands of dollars, and facilitated false and fraudulent PPP loan applications through Blueacorn.
According to the indictment, after submitting a PPP loan application, Hockridge sent Reis a text message saying, “We’re the ones trying to ask for free money – when we’re not there.” eligible. lol.”
Reis and Hockridge were each charged with one count of conspiracy to commit wire fraud and four counts of wire fraud. Each count carries a maximum prison sentence of 20 years if convicted. Attempts by several routes to reach Reis, Hockridge and Blueacorn were unsuccessful.
When the federal government launched the Paycheck Protection Plan in response to the COVID-19 pandemic in 2020, lenders favored established borrowers who were looking for larger loan amounts. That prompted Congress to raise lender fees for small loans to incentivize banks to help previously left-behind small businesses.
Blueacorn, founded in Arizona in 2020, seized this opportunity and provided services to lenders, processing thousands upon thousands of small business and individual loan applications on behalf of partner lenders. Lenders would then give Blueacorn a reduction in fees collected through the PPP program. The New York Times calculated that Blueacorn earned over $1 billion in 2021 from this deal.
The problem: Many of those requests contained false and fraudulent information, according to the indictment. An article published by researchers at the UT Austin McCombs School of Business In 2022, it was first identified that financial technology companies like Blueacorn could facilitate PPP fraud. Congress subsequently issued a reportultimately recommending that the DOJ investigate Blueacorn and several other companies for fraud. The report also reveals that Blueacorn owners profited over $300 million.
“Reis, Hockridge and their co-conspirators fabricated tax documents, falsified bank statements and made other false statements in order to deceive lenders and (the Small Business Administration) into making loans in amounts that the applicants did not ‘were ineligible,’ the indictment alleges.
They also “imposed bribes on borrowers…even though they knew that borrowers were prohibited from using PPP loan proceeds to make such payments.”
Four bank transactions involving fraudulently acquired PPP funds sent from a bank in the Northern District of Texas are named in the indictment. The case is being prosecuted by the Fraud Section of the Justice Department’s Criminal Division, which has seized more than $78 million in more than 130 other PPP fraud cases, according to the Justice Department.
UT Austin’s 2022 study identified more than 1.8 million PPP loans that showed signs of fraud, totaling $76 billion, or nearly 10% of the total money awarded under the PPP program . Nearly a million of those loans, worth $21 billion, were made through fintech companies like Blueacorn.