Court filing

Memorandum in Support of Motion to Dismiss Count One — U.S. v. Reis & Hockridge (N.D. Tex.)

Filed March 31, 2025 in Reis Hockridge; one of 9 filings from this case.

Record facts

Court	U.S. District Court for the Northern District of Texas (Fort Worth Division)
Filed	2025-03-31

U.S. District Court for the Northern District of Texas (Fort Worth Division) · No. 4:24-cr-00287-O · Doc. 92 · 2025-03-31 · Docket on CourtListener

Full text

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION

UNITED STATES OF AMERICA,
§

Plaintiff,

§
v.

§
Case No. 4:24 CR-00287-O

§
NATHAN REIS and

§
(01)

STEPHANIE HOCKRIDGE, a/k/a

§
(02)
STEPHANIE REIS,

Defendants.

DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR
JOINT OPPOSED MOTION TO DISMISS COUNT ONE OF THE INDICTMENT

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TABLE OF CONTENTS

TABLE OF AUTHORITIES .............................................................................................................. 3
SUMMARY AND INTRODUCTION ................................................................................................... 4
DISCUSSION ................................................................................................................................... 8
I.
Count One of the Indictment Alleges at Least Two Separate Conspiracies
Concerning Separate Phases of the PPP Program ..................................................................... 8
A.
Count One Alleges an Initial, Narrow Conspiracy from April to August 2020, During
the PPP Program’s Initial Phases ............................................................................................ 9
B.
Count One Also Duplicitously Describes a Second Conspiracy That Aligns with PPP
Phase 3................................................................................................................................... 10
C.
A Count Is Subject to Dismissal for Duplicity When It Charges More Than One Crime,
Including More Than One Conspiracy .................................................................................. 12
D.
Count One Alleges (at Least) Two Conspiracies and Is Therefore Duplicitous .......... 15
1.
The Two Conspiracies Alleged in Count One Occurred at Different Times ........... 16
2.
The Two Conspiracies Alleged in Count One Had Different Objects ..................... 16
3.
The Two Conspiracies Alleged in Count One Are Alleged to Have Employed
Distinct Manners and Means ............................................................................................. 16
4.
The Two Conspiracies Alleged in Count I Are Alleged to Have Involved
Different Participants ....................................................................................................... 17
5.
The Scale of the Two Conspiracies Alleged in Count One Is Markedly
Different ............................................................................................................................. 18
6.
The Anticipated Proof Regarding Each Alleged Conspiracy Differs Drastically ... 18
II. In Light of Its Duplicity, This Court Must Dismiss Count One of the Indictment .......... 20
CONCLUSION ............................................................................................................................... 21

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TABLE OF AUTHORITIES
Page(s)
Cases

Brooks v. United States,
164 F.2d 142 (5th Cir. 1947) ..................................................................................................... 11
Kotteakos v. United States,
328 U.S. 750 (1946) ........................................................................................................... Passim
United States v. Adan,
913 F. Supp. 2d 555 (D. Tenn. 2012) ........................................................................................ 13
United States v. Elliot,
571 F.2d 880 (5th Cir. 1978) ..................................................................................................... 12
United States v. Fahra,
643 F. App’x 480 (6th Cir. 2016) .............................................................................................. 12
United States v. Guerra-Marez,
928 F.2d 665 (5th Cir. 1991) ..................................................................................................... 12
United States v. Gunselman,
643 F. App’x 348 (5th Cir. 2016) .............................................................................................. 19
United States v. Hinton,
127 F. Supp. 2d 548 (D.N.J. 2000) ...................................................................................... 10, 19
United States v. Sapyta,
390 F. Supp. 2d 563 (W.D. Tex. 2005) ............................................................................... 10, 19
United States v. Starks,
515 F.2d 112 (3d Cir. 1975) ................................................................................................ 11, 19
United States v. Swafford,
512 F.3d 833 (6th Cir. 2008) ............................................................................................... 11, 12
Unites States v. Jones,
733 F. 3d 574 (5th Cir. 2013) .................................................................................................... 12

Rules

Fed. R. Crim. P. 12(b)(3)(B)(i) ..................................................................................................... 10
Federal Rule of Evidence 801 ....................................................................................................... 20

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SUMMARY AND INTRODUCTION
During the Phase 1 and PPP programs that lasted from April 3, 2020, through August 8,
2020, the Defendants (principally Mr. Reis) are alleged to have worked directly with four
borrowers to assist them in putting together loan applications that contained false information.
During the Phase 3 PPP program, which lasted from January 12, 2021, through May 31, 2021, the
Defendants’ company took on a new role as a lender service provider to two different banks,
earning fees not from borrowers, but from the lenders themselves. Also as a part of that latter phase
of PPP fund distribution, Ms. Hockridge created a program called “VIPPP,” which gave
personalized service to certain individuals in applying for loans by identifying and recruiting
referral agents to identify borrowers in need of assistance. Through their company’s lender service
provider business model and the VIPPP program, the Defendants helped hundreds of thousands of
eligible borrowers gain access to PPP funds.
On August 8, 2020, Phase 2 of the Paycheck Protection Program (PPP), established by the
CARES Act, came to a close. At that point, by definition, any conspiracy that the Defendants are
alleged to have engaged in had ended. Prior to that time, the Defendants are alleged to have worked
directly with borrowers to assist them with preparing their PPP loan applications. But as of August
8, 2020, there were no more applications to submit, no more loans to be funded, and no indication
as to whether or when any additional PPP funds would be made available. To the extent that the
Defendants received payments for their work, they received them by the end of that time period.
Thus, if there had been a conspiracy as the Indictment alleges, its objects would have been achieved
(or not), and all of the alleged coconspirators would have exited whatever conspiracy they were
engaged in. In short, whatever conspiracy the Defendants might have allegedly participated up
until that time came to an end, at the latest, on August 8, 2020.
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It was not until months later, on January 11, 2021, that Phase 3 of the PPP program began
as established and governed by the Economic Aid Act, which set forth new guidelines and
processes for obtaining new government-backed loans. According to the Indictment, it was in the
lead up to that program that the Defendants “expanded [their] operations through . . . lender service
provider agreement[s]” they entered into in October 2020 and April 2021. However, the
Defendants did not simply “expand” their operations; they started entirely new companies
organized or incorporated in various states including Wyoming, Arizona, and Delaware.
Defendants managed operations across several entities and acted on behalf of multiple lenders to
originate, process, service, and submit loan applications to the SBA from qualified PPP applicants.
Under the lender service provider agreements described in the indictment, Defendants’ company
was now entitled to receive payments from lenders for processing borrower applications. The
Defendants are also alleged during this time period to have created a program known as the “VIPPP”
program (which did not exist during the earlier phases of the PPP program) whereby borrowers
were offered a “personalized service” and dedicated support to help navigate the brand new and
often daunting PPP loan submission process. See Indictment (Doc. #3) 18(e).
Despite Phase 2 and 3 of the PPP program being separated in both time and nature—as
well as rapidly evolving conditions and changing regulations and guidance in the midst of a global
pandemic—the Government has attempted to lump together the Defendants’ alleged conduct
during those two disparate phases into a single conspiracy in order to artificially reduce its burden
of proof. Doing so is not only improper as a technical matter of pleading—here, it also carries the
very real risk that the jury could return a nonunanimous verdict regarding supposed criminal
conduct regarding two separate and distinct government programs. And not only are the manner
and means of each of those two alleged conspiracies alleged to be different in the Indictment itself,
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but the nature of the allegations against the two defendants in each conspiracy are fundamentally
distinct as well.
In the first conspiracy, Mr. Reis is alleged to have directly provided advice and
encouragement to three specific borrowers who submitted loan applications containing
purportedly false information, without any specific allegation of what knowledge or involvement
Ms. Hockridge had with respect to any falsehoods in any of their applications. In the second
conspiracy, by the Government’s telling, Ms. Hockridge was allegedly the prime mover, being
principally in charge of the VIPPP Program, a separate program that provided a “personalized
service” to loan applicants in exchange for a fee, and which, according to the Indictment, involved
the recruitment of “conspirators to work as VIPPP referral agents and coach borrowers on how to
submit false PPP loan application.” Indictment Doc. (#3) ¶ 18(e).1 Mr. Reis is not specified as
having performed any acts in furtherance of the alleged VIPPP Program fraud and, as the evidence
will show, he had little to no involvement in that program. Instead, Mr. Reis was focused at that
time on scaling Blueacorn’s broader business, which ultimately helped hundreds of thousands of
borrowers gain access to desperately needed funding in the midst of nationwide shutdowns and
unprecedented economic uncertainty. And for the overwhelming majority of the loans processed
by Blueacorn during that latter time period, the Government does not allege any fraud by the
Defendants whatsoever.
The nature of the Government’s evidence in each of the two conspiracies alleged in Count
One is also markedly different. In the first conspiracy, the Government evidently intends to
introduce evidence of specific communications between borrowers and Mr. Reis (not Ms.

1 Unless otherwise indicated, all paragraph references (¶) contained herein refer to the
paragraphs of the Indictment (Doc. #3).
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Hockridge) that had allegedly put him on notice of the falsity of certain representations made by
those borrowers. In the second conspiracy, the Government evidently intends to introduce
evidence that Ms. Hockridge conspired with a new individual, Eric Karnezis, who was not
involved in the first alleged conspiracy, to submit fraudulent loan applications through the VIPPP
program, although the Government does not allege that either Defendant had actual knowledge of
the falsity of any application submitted by borrowers working with Mr. Karnezis.2 In the first
conspiracy, the Indictment identifies only a few allegedly fraudulent loans, with a combined
principal of less than $500,000. In the second conspiracy, the Government has identified more
than 400 loans it claims were fraudulently submitted through the VIPPP program, with a total loan
principal exceeding $60 million (more than 100 times the principal of the loans the Indictment
alleges as part of the first conspiracy). Thus, the two conspiracies alleged in Count One are
markedly different in terms of their alleged timeframe, objects, manner, means, scale, participants,
and proof.

Mr. Reis and Ms. Hockridge are husband and wife. But that does not make them jointly
and severally liable for one another’s alleged criminal activity. If Count One is permitted to be
tried as a single count, there is a genuine risk that the jury might be invited to convict both
defendants without reaching unanimity as to which of the two distinct conspiracies each defendant
participated in (or whether either conspiracy existed in the first place). This Court must therefore
dismiss Count One for improperly lumping together the alleged conspiracy during the first two
phases of the PPP, which could have ended no later than August 8, 2020, and the separate

2 Notably, Mr. Karnezis has recently pled guilty in a separate case out of the District or
Oregon for his role in a conspiracy with others to submit fraudulent loans, after he confessed to
the Government that he submitted knowingly false information for potentially hundreds of
borrowers, a fact he deliberately concealed from Ms. Hockridge and the VIPPP team.
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conspiracy alleged to have occurred during the PPP program’s third phase, which did not begin
until January 12, 2021.
DISCUSSION
I.
Count One of the Indictment Alleges at Least Two Separate Conspiracies Concerning
Separate Phases of the PPP Program

The Indictment’s Count One purports to allege a single conspiracy to submit, and cause
the submission of, false and fraudulent applications for PPP loans. Indictment (Doc. #3) ¶ 16. But
as outlined above, the allegations in the Indictment in fact describe multiple conspiracies,
rendering Count One impermissibly duplicitous. One alleged conspiracy occurred during Phases
1 and 2 of the PPP program, which ran from April to August 2020. See Ex. A (U.S. Government
Accountability Office, “Paycheck Protection Program: Program Changes Increased Lending to the
Smallest Businesses and in Underserved Locations” (Sep. 21, 2021)) (describing three phases of
the PPP program). During that conspiracy, Mr. Reis allegedly acted as a consultant to borrowers,
assisting individuals and businesses applying for PPP loans. Indictment (Doc. #3) ¶ 18(a)–(c).
Because the PPP program stopped issuing loans to borrowers on August 8, 2020, any alleged
conspiracy relating to that program necessarily concluded on or before that date.
The second conspiracy is alleged to have begun in or around October 2020 and continued
into 2021, aligning with PPP Phase 3, which created a new process for compensating lenders to
incentivize lending to smaller borrowers. Id. ¶ 18(d)–(e). During that second conspiracy,
Defendants and unnamed “others” allegedly signed new contracts with lenders to facilitate PPP
loan applications, developed a new system for helping borrowers apply for loans online, and
developed a new VIPPP program to help borrowers obtain PPP loans. See id.
Allowing the Government to pursue the two separate conspiracies described in the
Indictment under a single count at trial will unfairly prejudice Defendants. Among other problems,
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the Government’s attempt to conflate two separate programs that existed in two distinct time
periods poses the “danger[] of transference of guilt from one to another across the lines separating
conspiracies, subconsciously or otherwise.” Kotteakos v. United States, 328 U.S. 750, 774 (1946).
Defendants therefore respectfully request that the Court dismiss Count One of the Indictment.
A. Count One Alleges an Initial, Narrow Conspiracy from April to August 2020, During
the PPP Program’s Initial Phases
The Indictment identifies an alleged conspiracy that began in April 2020, when the first
phase of the PPP program began, and continued through the second phase of PPP (which continued
from April 27 to August 8, 2020). See Ex. A (describing PPP program phases). That alleged
conspiracy was extremely limited: it allegedly involved submitting applications for PPP loans only
for the Defendants and four acquaintances the Indictment describes as coconspirators—not vast
swaths of the borrowing public. Indictment ¶ 18(a) (“Beginning in or around April 2020, Reis,
Hockridge, and their coconspirators began submitting fraudulent applications for PPP loans for
themselves and their businesses.”); see id. ¶¶ 18(a)–(c), 19(a)–(c), (e)–(h).
More specifically, in this first, limited conspiracy, the Indictment alleges fraudulent acts
by only Mr. Reis and Ms. Hockridge in submissions for Juuice Inc. and Body Politix LLC, two
businesses owned by them separately. Indictment (Doc. #3) ¶¶ 19(a)–(d). The Indictment then
alleges fraudulent acts by Mr. Reis, Mr. Flores, and Mr. Cota (not Ms. Hockridge) in a single
submission for Mr. Flores’s sole proprietorship, ¶ 19(e); fraudulent acts by Mr. Reis and Mr. Cota
(not Ms. Hockridge) in a single submission for Mr. Cota’s sole proprietorship, ¶ 19(f); fraudulent
acts by Mr. Reis and Ms. Arriaga (not Ms. Hockridge) in a single submission for Arriaga’s sole
proprietorship, ¶ 19(g), and fraudulent acts by Mr. Reis, Ms. Hockridge, and Mr. Hochberg in a
single submission based on Mr. Hochberg’s sole proprietorship, ¶ 19(h).
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It is not clear from the way even this first conspiracy is alleged that there are not separate
conspiracies contained within this conspiracy, most of which are not even alleged to have anything
to do with Ms. Hockridge. For example, according to the Indictment, it is only Mr. Reis who
allegedly conspired with Mr. Flores and Mr. Cota on Mr. Flores’s application, ¶ 19(e), only Mr.
Reis who allegedly conspired with Mr. Cota on Mr. Cota’s application, ¶ 19(f); and only Mr. Reis
who allegedly conspired with Ms. Arriaga on Ms. Arriaga’s application, ¶ 19(g). And although
there is a general allegation that Ms. Hockridge participated with Mr. Reis in conspiring with
Coconspirator-2 for his application for a non-existent business, only Mr. Reis and Coconspirator-
2 are identified as actually taking an act in furtherance for that application. See Indictment (Doc.
#3) ¶ 19(h).
All of the acts described above are alleged to have occurred between April and August of
2020, and for good reason—as of August 8, 2020, the second phase of PPP had ended, and any
object of the alleged conspiracy therefore had either been achieved, or not.
B. Count One Also Duplicitously Describes a Second Conspiracy That Aligns with PPP
Phase 3
But Count One’s allegations also embrace an alleged conspiracy in connection with an
entirely separate phase of the PPP program established by an entirely different federal law, which
was passed on December 27, 2020, that created an opportunity for borrowers a new round of PPP
funding starting in January 2021. “Phase 3” differed in significant respects from the two initial
phases of the PPP—as did the alleged manner and means of any alleged conspiracy with respect
to that third phase of the program. Importantly, during the first two PPP phases described above,
lenders earned fees based on a percentage of the loan amount. See Ex. B (SBA Procedural Notice
re: “Second Updated Paycheck Protection Program Lender Processing Fee Payment and 1502
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Reporting Process,” (Feb. 8, 2021)). As a result, lenders were incentivized to focus primarily on
large loans, to the unfortunate exclusion of loans for many of the country’s small businesses.
Recognizing that perverse incentive and seeing that many small businesses were unable to
obtain loans during Phases 1 and 2 of the PPP, the SBA revised the program and created a new
Phase 3, which lasted from January 12, 2021, through June 30, 2021. See Ex. B. In light of many
small businesses’ inability to obtain loans in Phases 1 and 2 of the PPP due to flawed incentives,
Congress, with the help of the SBA, overhauled the program by passing the Economic Aid Act,
which launched Phase 3 of the PPP from January 12, 2021 to (effectively) June 30, 2021. The SBA
issued new regulations under which lenders were entitled to a minimum fee regardless of the size
of the loan for processing loan applications, thus incentivizing banks to prioritize making loans to
smaller borrowers. See Ex. B.
As described in the Indictment, after learning of the new regulations that would be
applicable to PPP Phase 3, Defendants each took new and unprecedented steps to help meet the
long-underprioritized demand for loans among smaller, potentially less sophisticated borrowers.
Mr. Reis developed a financial technology platform to not only originate loans, but also to scale
operations, which helped lenders process PPP applications within the narrow two-and-a-half
month window set by Congress. Defendants created a new lender-service-provider business model
that provided a straightforward, on-line application process for potential borrowers to use in
obtaining loans, at no cost to the borrower. See Indictment (Doc. #3) ¶ 18(d).
Although the Government identifies the development of Blueacorn’s new lender-service-
provider business model as among the “manner and means” of the (second) alleged conspiracy,
the Government has not made any allegation that any actions the Defendants took in developing
the new business model were fraudulent in any respect. Indeed, as the evidence will show,
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Blueacorn processed more than 750,000 applications for small businesses and others through its
lender-service-provider platform, and the Indictment only identifies six borrowers that the
Government even claims were known by Defendants to have submitted fraudulent applications.3
Also during PPP Phase 3, Ms. Hockridge separately created the “VIPPP” program to
provide additional assistance to certain individuals and businesses who sought more personalized
service in connection with preparing their loan applications. See Indictment (Doc. #3) ¶ 18(e). As
part of that program, Count One alleges that Ms. Hockridge and Mr. Reis recruited others “to work
as VIPPP referral agents” (which Ms. Hockridge readily admits) and to “coach borrowers on how
to submit false PPP loan applications” (which she categorically denies). Id.
C. A Count Is Subject to Dismissal for Duplicity When It Charges More Than One
Crime, Including More Than One Conspiracy

“An indictment is duplicitous when two separate offenses are charged in a single count.”
United States v. Sapyta, 390 F. Supp. 2d 563, 566 (W.D. Tex. 2005); Fed. R. Crim. P.
12(b)(3)(B)(i). A duplicitous indictment “compromises a defendant’s Sixth Amendment right to
know the charges against him.” United States v. Hinton, 127 F. Supp. 2d 548, 553 (D.N.J. 2000).
But more than merely posing notice problems for a defendant, duplicity risks injecting ambiguity
into a jury’s verdict, not to mention the danger of a nonunanimous verdict. A general verdict
against the defendant on one count that contains more than one crime “does not reveal whether the
jury found him guilty of one crime[,] or not guilty [or guilty] of both”; as a result, the verdict will
not show whether the jury was unanimous as to two crimes contained in the single count. United
States v. Starks, 515 F.2d 112, 116 (3d Cir. 1975).

3 The Defendants are even not alleged to have had actual knowledge that the loan
applications alleged to be fraudulently submitted by Eric Karnezis through VIPPP borrowers were
false.
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An indictment that combines multiple conspiracies into one count is likewise
duplicitous—and duplicity on a conspiracy charge poses even greater dangers. See generally
Kotteakos, 328 U.S. at 774 (explaining that lumping multiple conspiracies into one count violates
the requirement for “separate statement[s] in different counts of related but distinct ‘acts or
transactions of the same class of crimes or offenses’”); cf. Brooks v. United States, 164 F.2d 142,
143 (5th Cir. 1947) (holding that a trial “was conducted too much . . . on the assumption that it
was immaterial whether the proof showed one conspiracy with which all of the defendants were
connected, or separate conspiracies with which some, but not all, of them were” (citation omitted)).
Allowing the Government to proceed on an erroneous single-conspiracy theory when the
Indictment actually alleges multiple conspiracies risks “imput[ing] to each defendant the acts and
statements of the others” (and of other supposed coconspirators) “without reference to whether
they related to one of the schemes proven or another, and to find an overt act affecting all in
conduct which admittedly could have affected only some.” Kotteakos, 328 U.S. at 771; cf. United
States v. Swafford, 512 F.3d 833, 843 (6th Cir. 2008) (“[I]nstead of having to prove each of the
multiple conspiracies, which was necessary due to the failure to demonstrate a single conspiracy,
the government offered evidence only as to the alleged single enterprise. Consequently, the jury
could simply seize upon the most significant [inculpatory transactions] . . . and the most suspicious
behavior exhibited by [the defendant] and then apply the evidence against the defendant vis-à-vis
each of the alleged co-conspirators.”); cf. Brooks, 164 F.2d at 143 (holding that, when the
government charges a single conspiracy, “due process as to each defendant require[s] for a
conviction that the evidence be strong enough to exclude every other reasonable hypothesis than
guilt of that defendant on the precise conspiracy charged” (emphasis added)).
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In short, as the Supreme Court has held, the Indictment’s duplicitous approach poses the
“danger[] of transference of guilt from one to another across the line separating conspiracies,
subconsciously or otherwise”—here, a defined temporal line based on the structure of the PPP
programs themselves, shaped by the PPP’s own established framework. Kotteakos, 328 U.S. at
774; see also United States v. Fahra, 643 F. App’x 480, 493 (6th Cir. 2016) (recognizing that
allowing the government to rely on evidence of multiple conspiracies with many conspirators, but
assert only one conspiracy charge, may mislead “the jury into assuming a union of criminal intent,
an agreement to cooperate, and an increase degree of culpability, thereby causing significant
prejudice”).

Multiple factors determine whether a course of conduct represents one, or rather multiple,
conspiracies. An allegedly single conspiracy may in fact be two separate conspiracies if they occur
at separate times, as well as if the “manner and means” of the conspiracies differ. Fahra, 643 F.
App’x at 492–93 (holding that proving multiple conspiracies to support a single-conspiracy count
is an impermissible variance). So too when the supposed conspirators do not share a single goal,
are “not truly interdependent or where the various activities sought to be tied together cannot
reasonably be said to constitute a unified scheme.” United States v. Elliot, 571 F.2d 880, 901 (5th
Cir. 1978); Swafford, 512 F.3d at 842 (“The government failed to prove that the methamphetamine
cooks were acting in furtherance of a common goal or that there was any significant
interdependence among them.”); see generally Unites States v. Jones, 733 F. 3d 574, 580–81 (5th
Cir. 2013) (identifying factors for identifying multiple conspiracy for purposes of double
jeopardy); United States v. Guerra-Marez, 928 F.2d 665, 671 (5th Cir. 1991) (holding that
conspiracies were separate based on an analysis of common goals, nature of the schemes, and
whether participants overlapped); United States v. Adan, 913 F. Supp. 2d 555, 565 (D. Tenn. 2012)
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(“[W]hile a single conspiracy does not become multiple conspiracies simply because each member
of the conspiracy does not know every other member, it is necessary to show that each alleged
member agreed to participate in what he knew to be a collective venture directed to a common
goal.” (cleaned up)).

In Kotteakos, for example, the Government charged multiple defendants with one
conspiracy to “induce various financial institutions to grant credit, with the intent that the loans or
advances would then be offered to the Federal Housing Administration for insurance upon
applications containing false and fraudulent information.” 328 U.S. at 752. The alleged conspiracy
was “executed through a common key figure, Simon Brown,” who “undertook to act as a broker
in placing for others loans for modernization and renovation, charging a five percent commission
for his services.” Id. at 752–53. He allegedly knew “when he obtained the loans, that the proceeds
were not to be used for the purposes stated in the applications.” Id. The Court held that alleged
conduct represented “not . . . a single conspiracy, but . . . several, notwithstanding only one was
charged in the indictment,” explaining that “no connection was shown between” the alleged
conspirators who had “transacted business with Brown relating to National Housing Act Loans,”
except that “Brown had been the instrument in each instance for obtaining the loans.” Id. at 754–
55.
D. Count One Alleges (at Least) Two Conspiracies and Is Therefore Duplicitous
As outlined above and detailed further below, Count One alleges at least two conspiracies
in a single count and is thus duplicitous. Most problematically, it impermissibly melds together a
conspiracy to obtain fraudulent loans during the first and second phases of the PPP program—
which conspiracy, as a sheer matter of logic, cannot have continued past August 8, 2020, when
those programs ended—and the third phase of the PPP program, which did not begin until more
than four months after the second phase of the program had concluded. The disunity between the
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two alleged conspiracies is apparent from their timeframe, objects, manner, means, participants,
scale, and proof.
1. The Two Conspiracies Alleged in Count One Occurred at Different Times
The first conspiracy alleged in Count One occurred during PPP Phases 1 and 2, which
stretched from April 3, 2020, through August 8, 2020. See Ex. A (describing PPP program phases)
at 1; Indictment (Doc. #3) ¶¶ 18(a), 19(a)–(c), (e)–(h). The second conspiracy occurred thereafter,
overlapping with PPP phase 3, when Congress passed a new to allow lenders to obtain a minimum
fee regardless of the size of the loan, thus incentivizing loans to smaller borrowers. See Ex. B at 1
(explaining that lender fees for the smallest loans were the lesser of 50% of the loan or a $2,500
flat fee) at 1–2; Indictment (Doc. #3) ¶¶ 18(d)–(e).
2. The Two Conspiracies Alleged in Count One Had Different Objects
During the first conspiracy, the Defendants allegedly obtained fraudulent loans for
themselves and four individuals (whom the Indictment identifies as co-conspirators) in order to
obtain payments for their services directly from those borrowers, who paid Mr. Reis (not Ms.
Hockridge) for his consulting services. E.g., Indictment (Doc. #3) ¶¶ 19(a), (b), (c), (e), (f), (g),
(h). In the second conspiracy, Defendants and “others” are alleged to have committed fraud in
order to collect fees paid by lenders for their work as lender service providers, as well as to collect
fees from borrowers who participated in the VIPPP program. Id. ¶ 18(d)–(e).
3. The Two Conspiracies Alleged in Count One Are Alleged to Have Employed
Distinct Manners and Means
As part of the first conspiracy alleged during PPP Phases 1 and 2, the Defendants (in most
cases, Count One identifies Mr. Reis alone) and co-conspirators allegedly falsified or helped falsify
loan-application documents for borrowers with whom they had direct contact. See Indictment (Doc.
#3) ¶¶ 19(a)–(c), (e)–(h). As a result, the Defendants understand from their counsel’s conferences
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with the Government, the Government intends to prove that the Defendants had direct knowledge
that the borrowers’ representations were actually false.
In the second conspiracy during PPP Phase 3, by contrast, the Defendants are alleged to
have worked with others at Blueacorn to “collect[] and review[] applications from potential
borrowers” under lender service provider agreements. Id. ¶¶ 8, 18(d). Although the Indictment
does not say so, it is undisputed that applications were sent to Blueacorn through an online portal.
The Defendants almost never had any contact with borrowers who submitted their application
directly through that portal and therefore would not have had actual knowledge of any false
representations in such loans where they never had contact with the borrowers in question.
Separately as part of the second conspiracy, Ms. Hockridge is alleged to have operated the
VIPPP program that “offered a personalized services to help potential borrowers complete PPP
loan applications” and “recruited coconspirators to work as VIPPP referral agents and coach
borrowers on how to submit false PPP loan applications.” Id. ¶ 18(e). With regard to that aspect
of the second conspiracy, the Government apparently contends that Ms. Hockridge was wilfully
blind to borrowers’ fraudulent applications, but not that she had actual knowledge as to the
fraudulent nature of any particular loan application the alleged recruiters assisted applicants in
submitting. (No similar allegations of recruitment or coaching of recruiters are alleged as part of
the first conspiracy—nor could they be, since the VIPPP program did not even exist at the time of
the first conspiracy.)
4. The Two Conspiracies Alleged in Count I Are Alleged to Have Involved Different
Participants
In the first conspiracy, Mr. Reis was allegedly the prime mover. Indeed, Count One’s
allegations through August 2020 repeatedly focus primarily on him, to the exclusion of Ms.
Hockridge: “Reis created,” ¶ 19(a), “Reis submitted,” ¶ 19(b), “Reis, Coconspirator-1, and Cota
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submitted,” ¶ 19(e), “Reis and Cota submitted,” ¶ 19(f), “Reis helped submit,” ¶ 19(g). And only
the first conspiracy appears to involve Mr. Cota, Ms. Arriaga, and Coconspirator-1. See id. ¶¶ 19(e),
(f), (g).
On the other hand, Count One (and, more explicitly, the Government’s discussions with
the undersigned) suggests that Ms. Hockridge was the prime mover in the second conspiracy,
particularly the VIPPP program. See id. ¶ 18(e) (“Hockridge and others offered a personalized
service to help potential borrowers . . . .”). Moreover, the second conspiracy alone involved
Lender-2, as well as unspecified “others” and “referral agents.” Id. ¶ 18(d)–(e),
5. The Scale of the Two Conspiracies Alleged in Count One Is Markedly Different
The first conspiracy concerns Defendants (primarily Mr. Reis) and conspirators submitting
allegedly fraudulent loan applications for themselves. The second conspiracy concerns a larger
alleged enterprise: an arrangement with two lenders to help process borrower applications, and a
VIPPP network of referral agents to help coach borrowers on applying for loans. In the first
conspiracy, the total loan principal the Government contends was fraudulent was not even
$500,000; in the second conspiracy, the loans alleged to be fraudulent by the Government total to
more than $60 million. And in the first conspiracy, the Indictment identifies only six allegedly
fraudulent loans; in the second, the Government has identified more than 400.
6. The Anticipated Proof Regarding Each Alleged Conspiracy Differs Drastically
With respect to the first conspiracy, the Government’s anticipated proof is relatively
straightforward: the Government evidently seeks to introduce written communications and witness
testimony from particular borrowers, as well as financial records of the Defendants themselves, in
an effort to establish that the Phase 1/2 loans alleged to be fraudulent were known by the
Defendants (and primarily, Mr. Reis) to contain materially false information. Thus, the likely
evidence presented by both parties with respect to the first conspiracy will likely focus on the
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Defendants’ direct knowledge (or lack thereof) of the truth or falsity of specific statements in a
relatively small universe of loan applications.
The anticipated evidence with regard to the second conspiracy, however, bears little to no
resemblance to the expected proof of the first conspiracy. With regard to the second conspiracy,
the Government does not allege either Defendant had actual knowledge of the falsity of statements
in any of the loan applications that were processed during Phase 3 of the PPP, but that they (or at
least Ms. Hockridge) encouraged a single referral agent, Eric Karnezis, to falsify information in
applications prepared on behalf of borrowers he was referring in order to allow them to obtain
loans they would not otherwise qualify for. The conversations in question were not recorded or
reproduced in writing; instead, whether they occurred or not depends almost entirely on the say-
so of Mr. Karnezis. In other words, proof of the second conspiracy will rely almost entirely on
uncorroborated witness testimony to establish whether any unlawful agreement even existed. And
importantly, Mr. Reis is not even alleged by the Government to have been a part of any such
conversation. By alleging the two conspiracies as one, the Government hopes to impermissibly
bootstrap the alleged criminal intent of the Defendants with respect loans they are alleged to have
directly discussed with borrowers to shore up the unsubstantiated claims of Mr. Karnezis as to
instructions allegedly given to him Ms. Hockridge (again, not Mr. Reis) during the second
conspiracy.
While all of the distinctions detailed above demonstrate the critical difference between the
two conspiracies duplicitously charged in Count One, the night-and-day distinction in the proof is
perhaps the most pernicious. Ms. Hockridge is alleged to have had almost nothing to do with the
first conspiracy, and Mr. Reis is alleged to have almost nothing to do with the second. Disproving
the Government’s allegations of the first conspiracy will simply require the Defendants to show
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that they were not aware of any falsity in the applications they assisted others in submitting; in the
second, such evidence would be no defense. Instead, to disprove the Government’s allegations in
the second conspiracy, the Defendants will have to persuade the jury that Mr. Karnezis’s claims
of having received direction from Ms. Hockridge on how to “coach” borrowers into submitting
fraudulent applications are not to be believed.
The conflation of the two conspiracies alleged in Count One therefore has the potential to
cause substantial prejudice to the Defendants and confusion for the jury. Imagine that Jurors 1
through 6 do not believe that either of the Defendants knew of any false information in any
application submitted during the first conspiracy, but Jurors 7 through 12 do. Now imagine that
Jurors 7 through 12 do not believe Mr. Karnezis’s self-serving (and late coming) efforts to
implicate Ms. Hockridge and think the Defendants did not know of any fraud in the VIPPP—but
Jurors 1 through 6 find Mr. Karnezis’s story to be credible. If the two conspiracies had been
properly pled as separate counts, the jury would hang on each of them—but because of the
Government’s effort to lump to the two distinct phases of the PPP program together, the jury might
nonetheless convict.
There are many more hypotheticals that could be invented, each more problematic than the
last. Under any of them, the potential prejudice to the Defendants is extreme. But there is no
prejudice to the Government whatsoever from requiring the jury to return separate verdicts on the
two distinct conspiracies alleged in Counts One and Two, thereby ensuring that their verdict—
whether to convict or to acquit—will be unanimous.
II.
In Light of Its Duplicity, This Court Must Dismiss Count One of the Indictment

As explained above, the Government gravely erred by charging more than one conspiracy
in Count One. Its decision to do so risks both a nonunanimous verdict as to which Defendant
participated in which conspiracy, as well as the improper transference inferences of guilt across
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the two distinct conspiracies. As a result, the duplicitous indictment warrants dismissing the
offending count, thereby requiring the Government either to obtain a new indictment with the
separate offenses charged separately, or to go to trial on the remaining counts of the Indictment.
See Sapyta, 390 F. Supp. 2d at 566–67; United States v. Gunselman, 643 F. App’x 348, 353 (5th
Cir. 2016); Starks, 515 F.2d at 118; Hinton, 127 F. Supp. 2d at 554. No remedy short of dismissal
will be adequate to protect the Defendants from the unfair prejudice inherent in being tried on
Count One, given its duplicity.
The Government may argue that, instead of providing the remedy required by the above-
cited case law, the Court should instead simply provide a curative jury instruction at the end of
trial. But a jury instruction will be too little, too late. By that time, the jury will have heard the
Government’s arguments and presentation of the evidence, all of which will have been organized
to prove a single conspiracy. After hearing throughout trial that the Defendants engaged in one
conspiracy, the jury will struggle, based on a late-breaking instruction layered on top of many other
instructions, to avoid “transference of guilt from one to another across the line separating
conspiracies, subconsciously or otherwise.” Kotteakos, 328 U.S. at 774. Moreover, during trial the
Government may attempt to introduce coconspirator statements against a Defendant under Federal
Rule of Evidence 801 when the declarant was part of a separate conspiracy that did not involve
that Defendant. For those reasons, a mere curative instruction will not be sufficient to ensure that
the Defendants are not improperly forced to defend against a single charge that impermissibly
seeks to blend two distinct conspiracies together.
CONCLUSION

The Defendants deserve to be convicted or acquitted at trial based upon their own conduct.
But by amalgamating at least two separate conspiracies, with different alleged participants,
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different alleged objects, and different alleged means, each allegedly occurring at different times
under different program rules and regulations, the Government risks obtaining an ambiguous
verdict that will not provide sufficient assurance that the jurors were unanimous in their judgment.
It has further risked the Defendants’ being convicted not based upon the evidence against them
with respect to each separate conspiracy (which, with respect to the first conspiracy, is all but
absent for Ms. Hockridge, and which, with respect to the second, is all but absent for Mr. Reis),
but based merely on their association as husband and wife, which carries with it the unavoidable
implication of unified purpose and privately shared confidences. Such insinuations are unworthy
of a federal criminal case.

Instead, the Court should require Count One to be dismissed in order to ensure that the
Defendants are not wrongly convicted of conspiratorial conduct that, even by the Government’s
own lights, they had little or no involvement in. Doing so will ensure that the jury is properly
instructed to consider the Defendants as the separate individuals they are.
Dated: March 31, 2025
Respectfully submitted,

BOIES SCHILLER FLEXNER LLP

/s/ Blake C. Goebel
BLAKE C. GOEBEL
1401 New York Ave, NW
Washington, DC 20005
Tel: (202) 895-5248
Fax: (202) 237-6131
bgoebel@bsfllp.com

Attorneys for Defendant Nathan Reis

JOHNSON, VAUGH & HEISKELL

/s/ Michael P. Heiskell
Michael P. Heiskell, TX Bar: 09383700
5601 Bridge Street, Suite 220
Case 4:24-cr-00287-O Document 92 Filed 03/31/25 Page 22 of 24 PageID 631

Fort Worth, Texas 76112
Tel: (817) 457-2999
Fax: (817) 496-1102
mheiskell@johnson-vaughn-heiskell.com

Attorneys for Defendant Nathan Reis

BRYAN CAVE LEIGHTON PAISNER LLP

/s/ Richard E. Finneran
RICHARD E. FINNERAN
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Tel: (314) 259-2000
Fax: (314) 259-2020
richard.finneran@bryancave.com

Attorneys for Defendant Stephanie Hockridge

GALLIAN FIRM

/s/ Gregg Gallian
Gregg Gallian, TX Bar: 24085952
3500 Maple Avenue, Suite 1150
Dallas, Texas 75219
Tel: (214) 432-8860
Fax: (972) 433-5835
gregg@gallianfirm.com

Attorneys for Defendant Stephanie Hockridge

Case 4:24-cr-00287-O Document 92 Filed 03/31/25 Page 23 of 24 PageID 632

CERTIFICATE OF SERVICE

I hereby certify that on this 31st day of March, 2025, a true and correct copy of the
foregoing document was served on all counsel of record by operation of the Court’s CM/ECF
system.

Respectfully submitted,

/s/ Richard Finneran
RICHARD E. FINNERAN
Case 4:24-cr-00287-O Document 92 Filed 03/31/25 Page 24 of 24 PageID 633

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Memorandum in Support of Motion to Dismiss Count One — U.S. v. Reis & Hockridge (N.D. Tex.)

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