Indictment — US v. Reis & Hockridge (Blueacorn PPP Fraud)

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UNITED STATES OF AMERICA

NATHAN REIS (01)
STEPHANIE HOCKRIDGE (02) 4 - Z24CR-287-0
a/k/a STEPHANIE REIS

INDICTMENT

The Grand Jury charges:
At all times material to this Indictment:

Background
1. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was a
federal law enacted in or around March 2020 and designed to provide emergency
financial assistance to the millions of Americans who were suffering the economic effects
caused by the COVID-19 pandemic. One source of relief provided by the CARES Act
was the authorization of forgivable loans to small businesses for job retention and certain
other expenses, through a program called the Paycheck Protection Program (“PPP”).
2. In order to obtain a PPP loan, a qualifying business submitted a PPP loan
application, which was signed by an authorized representative of the business. The PPP
loan application required the business (through its authorized representative) to
acknowledge the program rules and make certain affirmative certifications in order to be

eligible to obtain the PPP loan. In the PPP loan application (Small Business

Indictment - Page 1
Administration (“SBA”) Form 2483), the small business (through its authorized
representative) was required to provide, among other things, its: (a) average monthly
payroll expenses; and (b) number of employees. These figures were used to calculate the
amount of money the small business was eligible to receive under the PPP. In addition,
businesses applying for a PPP loan were required to provide documentation confirming
their payroll expenses.

3. A PPP loan application was processed by a participating lender. While it was the
participating lender that funded the loan, the loan was 100 percent guaranteed by the
SBA. Data from the loan application, including information about the borrower, the total
amount of the loan, and the listed number of employees, was transmitted by the lender to
the SBA in the course of processing the loan. In return for processing PPP loans, the SBA
paid lenders a processing fee.

4. PPP loan proceeds were required to be used by the business on certain permissible
expenses, such as payroll costs, interest on mortgages, rent, and utilities. The PPP
allowed the interest and principal on the PPP loan to be entirely forgiven if the business
spent the loan proceeds on these expense items within a designated period of time and
used a defined portion of the PPP loan proceeds on payroll expenses.

The Defendants, Related Entities, and Individuals

5. Lender-1 was a Community Development Financial Institution (“CDFT’)
headquartered in Phoenix, Arizona and a PPP lender.

6. Lender-2 was a CDFI headquartered in Bedford, Texas and a PPP lender.

Indictment - Page 2
7. Bank-1 was a financial institution headquartered in Happy, Texas whose deposits
were insured by the Federal Deposit Insurance Corporation. Bank-1’s computer servers
that stored records of bank transactions were located in the Northern District of Texas. In
2021, Bank-1 received funds sent from the Federal Reserve Bank into an account held by
Lender-2, which was then disbursed to fund PPP loans.

8. Blueacorn refers to a number of entities that were used by the defendants in 2020
and 2021 to process PPP loans. Beginning in 2021, Blueacorn collected and reviewed
PPP loan applications as a lender service provider on behalf of Lender-1 and Lender-2.
9. Nathan Reis lived in Arizona and co-founded and co-owned Blueacorn. He sold
his ownership interest in 2021. He was also, at times, the Chief Executive Officer of
Blueacorn. Reis also owned other companies, including Juuice Inc. and Juuice LLC.

10. Stephanie Hockridge a.k.a. Stephanie Reis lived in Arizona and co-founded and
co-owned Blueacorn. She sold her ownership interest in 2021. She also owned a
company called Body Politix LLC. Hockridge and Reis were married.

11. Michael Cota was a separately charged coconspirator who lived in Arizona and
co-owned a company called Qualytics.

12. Vivian Arriaga was a separately charged coconspirator who lived in Arizona and
co-owned Qualytics.

13. | Coconspirator-1 lived in Arizona and was a business partner of Reis, Hockridge,
Cota, and Arriaga.

14. | Coconspirator-2 was an entrepreneur who knew Reis.

Indictment - Page 3
Count One
Conspiracy to Commit Wire Fraud
(Violation of 18 U.S.C. § 1349 (18 U.S.C. § 1343))

15. Paragraphs | through 14 of this indictment are realleged and incorporated.

16. From in or about April 2020, through in or about May 2021, in the Fort Worth
Division of the Northern District of Texas and elsewhere, defendants Nathan Reis and
Stephanie Hockridge, along with others known and unknown, did knowingly and
willfully combine, conspire, confederate, and agree to commit wire fraud, that is, to
devise and intend to devise a scheme and artifice to defraud and to obtain money and
property by means of materially false and fraudulent pretenses, representations, and
promises, and for the purpose of executing the scheme and artifice and attempting to do
so, caused to be transmitted by means of wire communications in interstate and foreign
commerce, writings, signs, signals, pictures, and sounds, in violation of 18 U.S.C.

§ 1343.

Purpose of the Conspiracy

17. The purpose of the conspiracy was for the defendants and their coconspirators to
unlawfully enrich themselves by submitting and causing the submission of false and
fraudulent applications for forgivable PPP loans.

Manner and Means of the Conspiracy and Scheme to Defraud

18. The manner and means by which Reis, Hockridge, and their coconspirators
sought to accomplish the object and purpose of the conspiracy included, among other

things, the following:

Indictment ~ Page 4
a. Beginning in or around April 2020, Reis, Hockridge, and their
coconspirators began submitting fraudulent applications for PPP loans for
themselves and their businesses. Reis, Hockridge, and their coconspirators
fabricated tax documents, doctored bank statements, and made other
material misrepresentations in order to deceive lenders and the SBA into
issuing loans in amounts for which applicants were not eligible.

b. Beginning in or around April 2020, Reis, Hockridge, and others founded
Blueacorn, purportedly to assist small businesses and individuals in
obtaining PPP loans. In order to obtain larger loans for certain PPP
applicants, Reis and other coconspirators fabricated documents, including
payroll records, tax documentation, and bank statements.

c. In 2020, Reis and Hockridge submitted and facilitated the submission of
PPP loan applications through various lenders, including Lender-1. Reis
and Hockridge charged borrowers kickbacks based on a percentage of their
loans that were funded, despite knowing that borrowers were prohibited
from using PPP loan proceeds to make such payments.

d. Beginning in or around October 2020, Reis, Hockridge, and others
expanded Blueacorn’s operations through a lender service provider
agreement (“LSPA”) with Lender-2. Under the LSPA, Blueacorn collected
and reviewed applications from potential borrowers on behalf of Lender-2

and worked with Lender-2 to submit applications to the SBA. In or around

Indictment ~ Page 5
April 2021, Blueacorn entered a similar LSPA with Lender-1. Under these
agreements, Blueacorn received a percentage of the fees the SBA paid to
Lender-1 and Lender-2 for approved PPP loans. Reis, Hockridge, and their
coconspirators submitted and caused to be submitted PPP loan applications
that they knew contained materially false information in order to make
more money.
e. Reis, Hockridge, and their coconspirators also made money through a

Blueacorn program called “VIPPP” in which Hockridge and others offered
a personalized service to help potential borrowers complete PPP loan
applications. Reis and Hockridge recruited coconspirators to work as
VIPPP referral agents and coach borrowers on how to submit false PPP
loan applications. In exchange for their service, Reis, Hockridge, and their
coconspirators charged VIPPP borrowers kickbacks based on a percentage
of their loans that were funded, despite knowing that borrowers were
prohibited from using PPP loan proceeds to make such payments. In order
to obtain a greater volume of kickbacks from borrowers and fees from the
SBA, Reis, Hockridge, and their coconspirators submitted PPP loan
applications that they knew contained materially false information.

19. Reis, Hockridge, and their coconspirators also took the following steps, among

others, to carry out their conspiracy and scheme to defraud:

Indictment - Page 6
a. Beginning in or about April 2020, Reis created and submitted PPP loan
applications at multiple potential lenders containing fabricated tax
documents that falsely represented payroll that Juuice Inc. paid employees,
including Reis and Hockridge. The day after one application had been
submitted, Hockridge sent Reis a text message that said, “This is us trying
to apply for free money—when we don’t quite qualify. lol.” Based on their
misrepresentations, Reis and Hockridge obtained a PPP loan of around
$69,870 on behalf of Juuice Inc. from one of the lenders.

b. In or about June 2020, Reis submitted a materially false PPP loan
application on behalf of Juuice LLC. As part of this application, Reis
fabricated a tax document falsely claiming that Juuice LLC made over
$118,000 in profit in 2019. In fact, several months later, Reis stated in an
email that Juuice LLC did not file taxes in 2019 because “Juuice LLC was
not active in 2019.” Based on this and other misrepresentations, Reis
obtained a loan of around $20,832 on behalf of Juuice LLC.

c. In or about June 2020, Hockridge, with the help of Reis, submitted a
materially false PPP loan application for Body Politix LLC (“Body
Politix”). The application falsely stated that Body Politix was a software
company and had a net profit of $110,470 in 2019. Based on this and other
misrepresentations, Hockridge obtained a loan of $19,832 on behalf of

Body Politix.

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d. In or about February 2021, Hockridge submitted a materially false second
draw PPP loan application for Body Politix. The application falsely stated
that Body Politix experienced a 25 percent reduction in gross receipts
between the second quarter of 2019 and the second quarter of 2020, a
reduction from $27,618 in 2019 to $17,950 in 2020. Based on this and other
misrepresentations, Hockridge obtained a loan of around $20,832 on
behalf of Body Politix. To fund this loan, Lender-2 received funds into its
account at Bank-1, and Bank-1 then transferred the funds electronically
using interstate wires to Hockridge’s bank account, as described in Count
Four.

e. In or about July 2020, Reis, Coconspirator-1, and Cota submitted a
materially false PPP loan application for Coconspirator-1 as a sole
proprietor. As part of the application, Cota doctored a bank statement to
misrepresent that Coconspirator-1 had a sole proprietorship apart from the |
company that Coconspirator-1 owned. Reis knew the bank statement was
doctored, texting Cota, “Can you send me the routing info and account
number for the Statement you’re cooking up for [Coconspirator-1].” Reis
also created a fake tax document purporting to show that a company paid
Coconspirator-1 over $106,000 in 2019. This loan was not funded.

f. In or about August 2020, Reis and Cota submitted a materially false PPP

loan application for Cota as a sole proprietor. For example, Reis created a

Indictment - Page 8
fake tax document purporting to show that Cota earned over $100,000 in net
profit in 2019. Reis and Cota knew that this document was false. Based on
this and other misrepresentations, Cota obtained a loan of around $20,800 in
his own name.

g. In or about August 2020, Reis helped submit a materially false PPP loan
application for Vivian Arriaga as a sole proprietor. For example, Reis
created fake tax documents purporting to show that Arriaga had earned over
$87,000 in net profit in 2019. Reis and Arriaga knew that these documents
were false. Based on this and other misrepresentations, Arriaga obtained a
loan of around $18,200 in her own name.

h. In or about August 2020, Reis and Hockridge helped Coconspirator-2
submit a materially false PPP loan application. Although Coconspirator-2
told Reis that Coconspirator-2 did not operate a sole proprietorship, Reis
told Coconspirator-2 that they would state on the application that
Coconspirator-2 would earn $100,000 in 2020. Based on this and other
misrepresentations, Coconspirator-2 obtained a loan of around $20,832 in
his own name.

i. From in or about January 2021 through in or about March 2021, Reis and
Hockridge helped Coconspirator-2 submit three materially false PPP
applications to Lender-2, through which Coconspirator-2 obtained loans

totaling over $300,000. In one of the applications, Coconspirator-2 obtained

Indictment ~ Page 9
a loan of over $136,000 for a nonexistent entity. Reis sent Coconspirator-2 a
template of a payroll report and told Coconspirator-2 to fill it in with the
names of Coconspirator-2’s friends, knowing that they were not real
employees. Reis told Coconspirator-2 to falsely claim that each “employee”
earned over $100,000.

j. Similarly, in a second application for a different entity, Reis and
Coconspirator-2 obtained a loan of over $145,000 by falsely stating that
entity had employees.

k. Ina third application, Reis and Coconspirator-2 obtained a loan of around
$20,832 by falsely stating that Coconspirator-2 had an Amazon business that
earned over $100,000 in 2020.

1. To fund these three loans for Coconspirator-2, Lender-2 received funds into
its account at Bank-1, and Bank-1 then transferred the funds electronically
using interstate wires to Coconspirator-2’s bank account, as described in
Counts Two, Three, and Five.

All in violation of 18 U.S.C. § 1349 (18 U.S.C. § 1343).

Indictment - Page 10
Counts Two — Five
Wire Fraud
(Violation 18 U.S.C. §§ 1343 and 2)

20. Paragraphs 1-14 of this indictment are realleged and incorporated.

21. Onor about the dates set forth below, in the Northern District of Texas and
elsewhere, the defendants, Nathan Reis and Stephanie Hockridge, along with
Coconspirator-2 and others known and unknown, aiding and abetting each other,
knowingly devised and intended to devise the scheme to defraud described in
paragraphs 17 through 19, and to obtain money and property by means of materially
false and fraudulent pretenses, representations, and promises, and for the purpose of
executing such scheme, caused to be transmitted by means of interstate and foreign

wire, the communications listed below, each constituting a separate count:

Count Date Description of Wire

Bank transaction containing fraudulently acquired PPP funds sent
2 2/17/2021 from Bank-1 in the Northern District of Texas to Coconspirator-2
outside the state of Texas

Bank transaction containing fraudulently acquired PPP funds sent
from Bank-1! in the Northern District of Texas to Coconspirator-2

3 3/1/2021 outside the state of Texas

Bank transaction containing fraudulently acquired PPP funds sent
4 3/3/2021 from Bank-1 in the Northern District of Texas to Hockridge
outside the state of Texas

Bank transaction containing fraudulently acquired PPP funds sent
5 3/10/2021 from Bank-1 in the Northern District of Texas to Coconspirator-2
outside the state of Texas

All in violation of 18 U.S.C. §§ 1343 and 2.

Indictment - Page il
Forfeiture Notice
(18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c))

22. The allegations of this Indictment are hereby realleged and by this reference fuily
incorporated herein for the purpose of alleging forfeiture to the United States of America
of certain property in which the defendants, Nathan Reis and Stephanie Hockridge,
have an interest.
23. Upon conviction of the offenses in violation of Title 18, United States Code,
Sections 1343 and 1349, as alleged in this Indictment, the defendants, Nathan Reis and
Stephanie Hockridge, shall forfeit to the United States of America, pursuant to Title 18,
United States Code, Section 981(a)(1)(C) and Title 28, United States Code, Section
2461(c), any property, real or personal, which constitutes or is derived from proceeds
traceable to the offenses.
24. Ifany of the property described above, as a result of any act or omission of the
defendants:

a. cannot be located upon the exercise of due diligence;

b. has been transferred or sold to, or deposited with, a third party;

c. has been placed beyond the jurisdiction of the court;

d. has been substantially diminished in value; or

e. has been commingled with other property which cannot be divided without

difficulty, |

the United States of America shall be entitled to forfeiture of substitute property pursuant

to Title 21, United States Code, Section 853(p), as incorporated by Title 28, United States

Indictment - Page 12
Code, Section 2461(c).

All pursuant to 18 U.S.C. § 981(a)(1)(C), 21 U.S.C. § 853, and 28 U.S.C.

§ 2461 (c).
A TRUE BILL.
FOREPERSON L
LEIGHA SIMONTON

UNITED STATES ATTORNEY

MAT HEW WEYBRECHT

Assistant United States Attorney

State Bar of Texas No. 24102642
Telephone: 817-252-5200

Fax: 817-252-5455

Email: matthew.weybrecht@usdoj.gov

PHILIP TROUT

Acting Assistant Chief
Fraud Section

U.S. Department of Justice

Ame,

‘EEIZABETH CARR

RYAN MCLAREN

Trial Attorneys

Money Laundering and Asset Recovery Section
U.S. Department of Justice

Indictment - Page 13
Warrant to be Issued for Defendant Reis (01); Summons to be Issued for Defendant
Hockridge (02)

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UNITED STATES tilvann JUDGE
No Criminal Matter Pending

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

PagelD 18

THE UNITED STATES OF AMERICA
Vv.
NATHAN REIS (01)

STEPHANIE HOCKRIDGE (02)
a/k/a “Stephanie Reis”

INDICTMENT

18 U.S.C. § 1349 (18 U.S.C. § 1343)
Conspiracy to Commit Wire Fraud

Count 1

18 U.S.C. §§ 1343 and 2
Wire Fraud
Counts 2 — 5

18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c))
Forfeiture Notice

A true bill rendered

FORT WORTH FOREPERSON

Filed in open court this 14th day of November, 2024. Koby

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