Blueacorn Founders Indicted for Facilitating PPP Fraud & Illegal Kickbacks – Fraud Friday

November 29, 2024

Delaney Sexton
Contributing Editor

Blueacorn Founders Indicted for Facilitating PPP Fraud & Illegal Kickbacks – Fraud Friday

Two years after a scathing congressional report, the Department of Justice handed down charges to Blueacorn founders Nathan Reis and former ABC news anchor Stephanie Hockridge. They have pleaded not guilty to five counts of fraud in connection to the PPP operations of Blueacorn and using false information to obtain PPP loans for themselves.

In April 2020, Reis and Hockridge founded Blueacorn to assist small businesses with obtaining PPP loans. Of the many accusations, the duo was said to have knowingly fabricated documents to help certain PPP applicants obtain larger PPP loans than they were eligible for. Borrowers who were seeking high dollar loans were considered “VIPPP.” The VIPPP loan applications were prioritized and put through less scrutiny than other applications.

Larger PPP loans being approved resulted in a greater payout for Reis and Hockridge because they allegedly charged borrowers kickbacks based on a percentage of the loan funds. According to the 2022 report, they would directly charge some applicants a 10% fee. Using PPP loan proceeds to make such payments was strictly prohibited.

Not all the fees earned were from illegal kickbacks. Blueacorn had a lender service provider agreement with two lenders, so they received a percentage of the lender fees. With this in mind, Reis and Hockridge allegedly allowed PPP applications that contained materially false information to be submitted in order to earn more fees. The 2022 congressional report suggests that Reis and Hockridge likely took home more than $120 million in PPP processing fees.

Also in April 2020, Reis and Hockridge allegedly started submitting PPP loan applications for themselves and their businesses. Their loan applications contained fabricated tax documents, doctored bank statements, and payroll records. Several co-conspirators were involved with some of the fraudulent PPP loan applications. Altogether, they were able to obtain hundreds of thousands of dollars in PPP loans.

Reis and Hockridge were charged with one count of conspiracy to commit wire fraud and four counts of wire fraud.

Sources:
Indictment
Select Subcommittee on the Coronavirus Crisis Report