In a significant case of COVID-19 relief fraud, two co-founders of a company that helped small businesses apply for federal loans have been charged with fraud. Nathan Reis, 45, and Stephanie Hockridge, 41, both of Puerto Rico, are accused of using their company, Blueacorn, to illegally obtain millions of dollars in COVID-19 relief funds guaranteed by the U.S. Small Business Administration (SBA).
The couple allegedly manipulated the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program was designed to help small businesses stay afloat during the pandemic by offering government-backed loans. However, Reis and Hockridge took advantage of this program to submit false loan applications and pocketed money that was not meant for them or their businesses.
How Reis and Hockridge Orchestrated the Scheme
Reis and Hockridge co-founded Blueacorn in April 2020, aiming to assist small businesses in applying for PPP loans. At first glance, Blueacorn seemed like a helpful service, offering to help people fill out their applications and submit them to the SBA. But what started as a legitimate business soon turned into a fraudulent operation.
According to the indictment, the couple used their company to submit fake loan applications. They are accused of fabricating essential documents, such as payroll records, tax forms, and bank statements, to make it look like they were eligible for much larger loans. These documents were submitted to both the SBA and lenders, and Reis and Hockridge received kickbacks from borrowers based on a percentage of the loan funds they were able to secure.
The couple didn’t stop there. They also expanded Blueacorn’s operation by entering into agreements with two lenders. Under these agreements, Blueacorn reviewed and submitted PPP loan applications on behalf of borrowers. In return, Blueacorn earned a portion of the fees paid by the SBA to the lenders when loans were approved. This arrangement allowed Blueacorn to collect millions of dollars, much of it from fraudulent applications.
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One of the most concerning parts of the scheme was the VIPPP program. Through this service, Hockridge and her team provided a more personalized service to help borrowers complete their loan applications. But in reality, they were coaching applicants on how to falsify documents in order to qualify for higher loans. Reis and Hockridge also recruited other people to help recruit borrowers and submit false applications.
The couple’s fraudulent activities resulted in millions of dollars in kickbacks and fees. According to the indictment, they knew full well that they were submitting false information and had no intention of following the legal requirements for PPP loans. Instead, they exploited the system to enrich themselves.
The Charges and Consequences
Reis and Hockridge are facing serious legal consequences for their actions. They have been charged with one count of conspiracy to commit wire fraud and four counts of wire fraud. If convicted, they could face up to 20 years in prison for each count of wire fraud.
This case is part of a broader effort by the Justice Department to combat fraud related to COVID-19 relief programs. Since the CARES Act was passed in 2020, the government has been working hard to investigate and prosecute those who have abused the system. In fact, over 200 people have already been charged with similar offenses, and millions of dollars have been seized in connection with fraudulent PPP loans.
In this case, the authorities have been investigating the actions of Reis, Hockridge, and their co-conspirators for months. The FBI, IRS Criminal Investigation Division, and the Small Business Administration Office of Inspector General have all been involved in the investigation. The case has been prosecuted by a team of federal attorneys who are dedicated to holding those responsible for pandemic-related fraud accountable.
This indictment serves as a reminder of the importance of protecting government relief programs and ensuring that the funds go to those who need them the most. Even though the defendants are presumed innocent until proven guilty, their case highlights how some individuals took advantage of the crisis to line their own pockets.
