The founders of fintech Blueacorn have been indicted on federal fraud and conspiracy charges in connection with an alleged pandemic-era Paycheck Protection Program fraud scheme that netted them nearly $300 million, according to a congressional report.
The Department of Justice alleged that Nathan Reis and Stephanie Hockridge submitted fraudulent PPP loan applications and facilitated fraudulent loan applications for thousands of other businesses through Blueacorn, which they founded in April 2020, at the height of the COVID-19 pandemic, with an aim to “democratiz[e] access to loan relief” to America’s small businesses and independent contractors.
Under service provider agreements with two lenders, the fintech collected and reviewed PPP loan applications from borrowers, and worked with those lenders to submit applications to the Small Business Administration in exchange for a piece of the fees paid to lenders by the SBA for approved PPP loans.
Additionally, through its VIPPP program, Blueacorn offered personalized service to potential PPP borrowers in which Reis, Hockridge and others allegedly coached borrowers on how to submit false PPP applications.
“In order to obtain a greater volume of kickbacks from borrowers and percentage of lender fees from the SBA, Reis, Hockridge, and their co-conspirators submitted PPP loan applications that they knew contained materially false information,” the DOJ said in a release.
According to Scottsdale, Arizona-based ABC15, where Hockridge was previously employed as a newscaster, the couple has spent the last few years living a “lavish lifestyle” in Puerto Rico, where Reis was arrested last week, a court docket shows.
Hockridge appeared in court Monday. A criminal trial is set for Jan. 6, according to court documents.
Reis and Hockridge have each been charged with four counts of wire fraud and one count of conspiracy to commit wire fraud. Each count carries a maximum of 20 years in prison.
A request for comment submitted via Blueacorn’s still-active website was not returned.
Blueacorn, along with fintech Womply, was barred from working with the SBA in December 2022, after a House subcommittee report identified both firms as among the most lax PPP participants in regard to anti-fraud standards.
Womply — along with Biz2Credit, another fintech — agreed to pay the Federal Trade Commission a collective $59 million in March to settle allegations they deceived small businesses seeking PPP loans.
