2022.12.01 "We Are Not the Fraud Police": How Fintechs Facilitated Fraud in the Paycheck Protection Program

Summary

Exhibit L, filed January 7, 2025 as Document 1-14 in Case 1:25-cv-00117-FB-CHK. It reproduces a staff report of the Select Subcommittee on the Coronavirus Crisis on the role of financial technology companies in facilitating fraudulent and ineligible Paycheck Protection Program loans. The report states that Womply and Blueacorn together facilitated nearly one in every three PPP loans funded in 2021 without systems capable of detecting ineligible applications, and that the established fintechs Kabbage and Bluevine also faced difficulties. It states that Blueacorn received over $1 billion in processing fees while spending $8.6 million on fraud prevention, and that lenders paid Womply over $2 billion in fees for its PPP Fast Lane screening. Footnotes cite internal Celtic Bank and BlueVine emails and SBA Office of Inspector General reports. The exhibit runs to 131 pages.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 156

Filed 01/07/25

EXHIBIT L

Page 1 of 131 PageID


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 157

Filed 01/07/25

Page 2 of 131 PageID


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 158

Filed 01/07/25

Page 3 of 131 PageID


Case 1:25-cv-00117-FB-CHK

I.

Document 1-14
#: 159

Filed 01/07/25

Page 4 of 131 PageID

EXECUTIVE SUMMARY

This staff report presents findings from an investigation conducted by the Select
Subcommittee on the Coronavirus Crisis into the role of financial technology companies
(fintechs) in facilitating a disproportionately high rate of fraudulent and otherwise ineligible
loans through the Paycheck Protection Program (PPP). The Select Subcommittee initiated this
investigation following reports that fintechs participating in the PPP approved a high volume of
fraudulent PPP loan applications. While the PPP delivered vital relief to millions of eligible
small businesses, at least tens of billions of dollars in PPP funds were likely disbursed to
ineligible or fraudulent applicants, often with the involvement of fintechs, causing tremendous
harm to taxpayers.
The Select Subcommittee’s investigation found that fintechs were given extraordinary
responsibility in administering the nation’s largest pandemic relief program—a responsibility
that some of the fintechs that facilitated the highest volumes of loans were either unable or
unwilling to fulfill. Despite fintechs’ claims that their use of technology and innovation would
allow them to better administer the PPP than traditional financial institutions, many of these
companies appear to have failed to stop obvious and preventable fraud, leading to the needless
loss of taxpayer dollars. The Select Subcommittee’s investigation found that many fintechs,
largely existing outside of the regulatory structure governing traditional financial institutions and
with little to no oversight from lenders, took billions in fees from taxpayers while becoming easy
targets for those who sought to defraud the PPP.
The investigation found that two unvetted and unregulated fintechs that, together,
facilitated nearly one in every three PPP loans funded in 2021—Womply and Blueacorn—failed
to implement systems capable of consistently detecting and preventing fraudulent and otherwise
ineligible PPP applications. Their lending partners, who were tasked with supervising the
activities of these fintechs, often did little to oversee the activities of the companies to which
they delegated their responsibilities.
The Select Subcommittee investigation found that established fintechs Kabbage and
Bluevine also faced challenges in properly administering the program. Internal Kabbage
documents show that the fintech missed clear signs of fraud in a number of PPP applications,
including loans given to fake farms. Internal communications show that Kabbage’s staff
expressed confusion and concern with the fintech’s fraud prevention processes. After Kabbage’s
acquisition by American Express in October 2020, PPP borrowers were left at the mercy of an
underfunded and understaffed spin-off company that failed to properly service their loans and
would later file for bankruptcy.
Although initially observing high levels of fraud, Bluevine appears to have adapted to
ongoing fraud threats better than Kabbage, Womply, and Blueacorn, likely due to its longestablished partnership with a traditional financial institution that pressed the fintech to make
appropriate investments in fraud controls and to comply with Small Business Administration
(SBA) standards.

1


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 160

Filed 01/07/25

Page 5 of 131 PageID

Specifically, the Select Subcommittee’s investigation found:
Fintechs and Lenders Observed Significant Fraud in the PPP, Which They Attributed to
Program Mismanagement as They Sought to Evade Responsibility
•

Internal emails obtained by the Select Subcommittee show that PPP lenders and
fintechs saw high rates of fraudulent PPP loans and that fraud associated with the
PPP strained the financial crime resources of even the more established fintechs and
lenders. In a November 2020 internal email, PPP lender Celtic Bank noted that its
participation in the PPP led to “an uptick in fraudulent and money laundering
activities.” A Celtic Bank financial crime manager wrote in a March 2021 email to
Bluevine that “the surge in fraud associated with PPP has strained all of our
resources.”

•

Fintechs and lenders blamed the Trump Administration’s mismanagement of the
PPP for the high volume of fraud. In a September 2020 email, Kabbage’s head of
policy wrote: “At the end of the day, it’s the SBA’s shitty rules that created fraud,
not [Kabbage].” In response to an August 2020 SBA email announcing a webinar on
preventing PPP fraud, Celtic Bank’s president called the Trump Administration’s action
“a bit late,” remarking that the “horse has been out of the barn for a while now” with
respect to PPP fraud.

•

Fintechs and lenders sought to avoid taking responsibility for taxpayer money that
was lost to fraud. In an internal email obtained by the Select Subcommittee, the Chief
Executive Officer (CEO) of Celtic Bank wrote that “the industry should push hard to
make sure the SBA accepts the fraud risk.”

Blueacorn Took Only Minimal Steps to Prevent Fraud in Its Facilitation of Billions of
Dollars in PPP Loans, While Abusing the Program to Enrich Its Owners
•

Blueacorn received over $1 billion in taxpayer-funded processing fees but spent
little on fraud prevention and eligibility verification. Blueacorn received over $700
million in fees from Prestamos and over $385 million in fees from Capital Plus for their
underwriting and other PPP facilitation services. Blueacorn gave nearly $300 million
in profits to its ownership while only spending $8.6 million—less than one percent of
the fees it received for its PPP work—on its fraud prevention program. Blueacorn
also gave approximately $666 million to a marketing firm controlled by members of its
senior leadership—almost 50 times more than the $13.7 million the fintech spent on
eligibility verification.

•

Despite promising to use “high-quality, proprietary lending software and fraud
detection tools,” Blueacorn relied on off-the-shelf fraud screening software and
manual human reviews largely managed by an inexperienced company, Elev8
Advisors, run by a member of Blueacorn’s senior leadership. For the 1.7 million
loans reviewed, Blueacorn had only “one direct employee who assisted with
processing PPP loan applications.” To conduct these reviews, the fintech “almost
2


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 161

Filed 01/07/25

Page 6 of 131 PageID

exclusively relied on third-party companies and contractors” to process PPP loan
applications—including contractors hired by consultancy Elev8 Advisors. According to
a former employee, Elev8 Advisors “hired at least 30 of [the owner’s] closest friends and
family to work as underwriters submitting PPP loans to the SBA through Blueacorn.” In
a text message obtained by the Select Subcommittee, Elev8 Advisor’s owner, Kristen
Spencer, made her motivation clear: “We are doing this for the people we hired to
make money. Our friends and family. That is where the money is going. And it
will be life changing money for anyone who does it.”
•

Blueacorn loan reviewers, who spoke to the Select Subcommittee on condition of
anonymity, reported receiving poor training and of being pressured to “push
through” PPP loans, even if the reviewers doubted the authenticity of the loan’s
supporting documentation. A former Blueacorn loan reviewer reported that the
company’s reviewers were “submitting PPP loans to the SBA the first minute of the
first day” of their employment despite having “no formal or informal training on loan
underwriting, as well as no training on how to properly identify and report fake
government identification such as a driver’s license.” The reviewers were told “the
faster the better” and that each loan application review “should take you less than 30
seconds.”

•

Blueacorn gave priority and less scrutiny to high dollar loans and those loan
applications identified as “VIPPP” by Blueacorn’s founder, and improperly
charged some PPP applicants for loan processing services. Blueacorn’s ownership
directed reviewers to prioritize “monster loans [that] will get everyone paid” and
created an exclusive category of PPP loans, called “VIPPP” loans. Blueacorn’s
ownership directed loan reviewers “to prioritize and submit large [“VIPPP”] loans
without following protocols that [loan reviewers] had been trained to complete.” While
prioritizing “VIPPP” loans, Blueacorn’s owners were dismissive of other loans, writing
“delete them,” “who fucking cares,” and “[w]e’re not the first bank to decline [PPP]
borrowers who deserve to be funded … they go elsehwere [sic].” In addition,
according to their former business partners, Blueacorn founders Nathan Reis and
Stephanie Hockridge attempted to directly charge some applicants a 10 percent fee for
successfully procuring PPP loans—in violation of SBA rules.

•

Blueacorn’s founders arranged PPP loans for themselves through Blueacorn, some
of which show signs of potential fraud. In addition to likely taking over $120 million
in taxpayer-funded PPP processing fees, Mr. Reis and Ms. Hockridge received nearly
$300,000 in PPP loans, some of which were facilitated by their own company:
Blueacorn. A review of these loans—some of which Blueacorn lending partner Capital
Plus later demanded be repaid—identified supporting documentation with suspicious
elements. In one application, Mr. Reis falsely claimed to be an African American and
a veteran. Other applications contain questionable information that merits further
investigation. The Select Subcommittee discovered that, after participating in the PPP
and getting many of their PPP loans forgiven, Mr. Reis and Ms. Hockridge relocated to
Puerto Rico, where they apparently founded another lender service consultancy.

3


Case 1:25-cv-00117-FB-CHK

•

Document 1-14
#: 162

Filed 01/07/25

Page 7 of 131 PageID

Elev8 Advisors—Blueacorn’s primary eligibility verification and compliance
consultants—received PPP loans for themselves, their businesses, and their family
members through Blueacorn’s lending partners. Elev8 Advisors owners’ Adam
Spencer and Kristen Spencer used Blueacorn to secure at least $200,000 in PPP loans for
themselves, their companies, and family members. Around the time that they applied for
forgiveness for these loans, they also purchased—in cash—an $8 million mansion, and
acquired multiple luxury cars. A review of the Spencers’ loan applications revealed
suspicious elements, including companies with suspiciously high profit margins and
claims of income that appear unsupported by the documentation that they provided. In
one such case, Ms. Spencer received a PPP loan based on a claim that she was paid six
figures for “interior architect” services at the office of her husband’s company, which
seems unlikely since Ms. Spencer appears to have had no experience as an “interior
architect” and her husband’s company offices are located at a WeWork shared office
space. Separately, according to a whistleblower, Mr. Spencer directed at least one family
member—who also served as a Blueacorn PPP loan reviewer—to fraudulently apply for a
PPP loan for an ineligible or non-existent business through Blueacorn.

Womply’s PPP Fraud Screenings Failed to Prevent “Rampant Fraud”—and Were
Accompanied by Questionable Business Practices—Despite Generating Over a Billion in
Profits
•

Lenders paid Womply over $2 billion in processing fees for Womply’s “PPP Fast
Lane” program to screen PPP loans for fraud and eligibility. In the first round of the
PPP, Womply provided referral services to lenders, receiving just $3 million from lenders
for its services. Womply later rebranded itself as a “technology service provider” that,
according to its lending partners, was responsible for handling eligibility and fraud
verification for over a million PPP loans through their “PPP Fast Lane” product,
taking billions more in fees. Harvest Small Business Finance—which received more than
800,000 PPP loan applications from Womply—told the Select Subcommittee that
“Womply assured Harvest that it would only refer to Harvest complete applications
that Womply’s platform had confirmed were for eligible borrowers.”

•

Multiple Womply lending partners criticized Womply’s fraud prevention practices,
describing its systems as “put together with duct tape and gum” and accusing
Womply of allowing “rampant fraud” to infiltrate the PPP. Womply’s PPP lending
partners determined that the fintech often failed in its duty to detect PPP fraud and
exclude otherwise ineligible applicants. PPP lender DreamSpring warned Womply that it
was referring PPP applications containing “obvious fraudulent information.”
Lendistry, a fintech also involved in PPP lending, told Womply that it “noticed a
meaningful increase in the number of third-party and other inquiries related to
fraud” in connection with batches of applications associated with Womply. Benworth,
which issued $4.6 billion in PPP loans in 2021, warned Womply that “the services
promised by Womply, have not only not been provided, but have also placed our
company in a very bad predicament due to the high likelihood of fraud involved in
many of the referred loans from your company.”

4


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 163

Filed 01/07/25

Page 8 of 131 PageID

•

Womply had a windfall 2021 net revenue of over $2 billion, largely thanks to
taxpayer-funded PPP processing fees, and took over $5 million in PPP loans for
itself, which the SBA later determined it was ineligible to receive. In 2021, Womply
secured a gross profit of $1.8 billion and gross profit margin of nearly 90 percent. Yet,
Womply received over $5 million in PPP loans from its largest partner, Harvest
Small Business Finance, and asked forgiveness for these loans in 2021. After reviewing
Womply’s application for PPP loan forgiveness, the SBA determined that Womply was
ineligible for the loans that Harvest approved for them—and required the fintech to
repay them in full. Both Womply’s CEO and its President also received PPP loans for
themselves, despite earning over $400,000 in salary in 2021 and likely taking tens of
millions in taxpayer-funded PPP processing fees as personal profits.

•

Womply CEO Toby Scammell—who was convicted of insider trading in 2014 and
has been permanently barred from participating in the securities industry—led
Womply’s fraud prevention efforts and instructed his company not to cooperate
with federal PPP fraud investigators. Womply not only failed to detect fraud on the
front end, but also resisted helping investigators catch fraud on the back end as well.
Despite telling its lending partners that Womply was working closely with the SBA and
the SBA Office of Inspector General (OIG), Mr. Scammell resisted providing
information to federal investigators conducting PPP fraud investigations. The SBA OIG
and Fountainhead, one of Womply’s lending partners, made multiple requests for
information from Womply “so that the SBA can investigate potential fraudulent loan
activity carried out by PPP borrowers.” Womply refused. Ultimately, Fountainhead
was forced to get “a temporary restraining order against [Womply], so they can’t
destroy these [PPP loan] documents.”

•

Womply may have transferred the sensitive personal and financial data of hundreds
of thousands of PPP borrowers to a new business. In May 2022, Womply updated its
privacy agreement to notify its customers—likely including PPP applicants—that the
company claimed the right to transfer “over 2 [million] tax documents, over 1.5
[million] bank accounts from applicants” to its new company, Solo Global, Inc.
Womply refused to tell the Select Subcommittee whether it has transferred sensitive PPP
applicant personal and financial data to this new company, how it is using sensitive PPP
applicant data, and whether it is using this data to generate profits for their new company.

Fintechs Such as Womply and Blueacorn Were the “Paths of Least Resistance” for
Criminal Gangs and Fraudsters Looking for PPP Loans
•

Criminals specifically targeted Blueacorn, Womply, and other fintechs to commit
PPP fraud. Fraudsters discovered that Blueacorn and Womply were among the easiest
companies to apply for fraudulent PPP loans due to the ease of securing a loan through
either company. Members of drug gangs in Florida that were involved in PPP fraud were
recorded by police discussing Womply and Blueacorn. One gang member asked
another to “show me Blueacorn” while another described Womply as “the website
that[’s] [] really hittin…’” and that “everybody in the hood” was using Womply.

5


Case 1:25-cv-00117-FB-CHK

Document 1-14
#: 164

Filed 01/07/25

Page 9 of 131 PageID

Investigators believe the PPP loans obtained by these gang members were then used to
finance their criminal enterprises, including the purchase of guns and drugs.
Capital Plus, Harvest, and Other Fintech-Partnered Lenders Conducted Little Oversight
Over Womply and Blueacorn’s Activities, Allowing Fraud to Infiltrate the PPP
•

In the course of the Select Subcommittee’s investigation, multiple PPP lenders
admitted to having no formal program to monitor their fintech partners or to detect
fraud in the PPP loans that they submitted. Nearly every lender investigated by the
Select Subcommittee admitted to delegating their fraud prevention and eligibility
verification responsibilities to their fintech partners. Yet, few lenders appear to have
conducted close and proactive oversight of their fintech partners. Multiple lenders
described their oversight as being limited to “spot checks” conducted at random on
a small percentage of fintech-referred application files. In one case, lender Capital
Plus approved dubious loans to Blueacorn’s founders but claimed not to have been aware
that it issued these loans until months later. Despite this lack of oversight, multiple forprofit lenders—including Capital Plus and Harvest—reported windfall profits as a
result of their participation in the program.

Kabbage’s Activities in the PPP Illustrate the Lack of Sufficient Incentives in the PPP’s
Structure for Fintechs to Implement Strong Fraud Prevention Controls or Appropriate
Borrower Servicing
•

Kabbage, which facilitated over 310,000 PPP loans, implemented a system that
confused and concerned employees and financial institutions. Multiple employees
expressed concern about Kabbage’s loan review process, with one employee informing
her supervisor that she was “really uncomfortable with the review procedures” for
loans and expressing her belief that “the level of fraud we’re reviewing is wildly
underestimated.” A bank working with Kabbage expressed “concern[] about the
significant increase in the fraudulent transactions confirmed by Kabbage” during the
first round of the PPP.

•

Kabbage approved loans with clear indicators of likely fraud, partly because the
program imposed minimal risk on lenders who approved questionable applications.
In one exchange, a Kabbage risk manager supervising fraud specialists told his team that
“a fundamental difference” between the level of diligence applied in the PPP, as opposed
to normal lending by Kabbage, was that “the risk here is not ours – it is SBA’s risk.”

•

As fraud surged in the program, Kabbage reduced its full-time fraud prevention
staff. Between May and June of 2020, during the height of the PPP, Kabbage reduced its
risk and account review teams, which were primarily responsible for fraud reviews, by
approximately half. After American Express acquired the majority of Kabbage’s assets
in October 2020, the PPP loan portfolio was transferred to a minimally-resourced spin-off
entity. That company continued to fund tens of thousands of loans while retaining only
one full-time anti-fraud employee.

6


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 165

Page 10 of 131 PageID

Bluevine Initially Faced Significant Fraud Rates, But Its Longstanding Partners
Intervened to Improve Fraud Prevention Over the Course of the Program
•

Federally regulated bank partners successfully pushed Bluevine to improve its
controls during the PPP, likely reducing fraud. In contrast to the other fintechs and
lenders examined by the Select Subcommittee, Bluevine’s lending partner Celtic Bank
conducted continuous oversight of Bluevine’s anti-fraud controls and prompted Bluevine
to introduce new software and manual review processes. These changes were followed
by a steep decline in fraud incidents.

•

However, overwhelmed by fraud despite improved controls, Bluevine faced
difficulties in facilitating timely reporting of fraud to law enforcement. Delays at
Bluevine caused Celtic Bank to submit late Suspicious Activity Reports (SARs), in
violation of applicable banking regulations and to the possible detriment of law
enforcement efforts to address ongoing fraud. These issues raise concerns about
adequate and full reporting of PPP fraud by other third-party service providers—
especially those lacking experience in filing SARs—who were facing the same fraud
threats but received less rigorous oversight from lending partners.

The Track Record of the Most Prolific Fintechs Involved in the PPP Should Prompt
Caution When Allowing Lightly Regulated and Unregulated Entities to Administer Federal
Lending Programs
•

Fintechs—many of whom were newly-established or new to small business
lending—were delegated many of the most important aspects of the PPP. These
fintechs largely operated without strong oversight and many had never previously been
subject to anti-money laundering (AML) and Bank Secrecy Act (BSA) requirements.
This allowed actors with little experience and overstated technological capabilities, such
as Blueacorn and Womply, to facilitate millions of loans and allow large-scale fraud to
occur.

•

Based on these findings, Congress and the SBA should consider carefully whether
unregulated businesses such as fintechs, many of which are not subject to the same
regulations as financial institutions, should be permitted to play a leading role in
future federal lending programs. The SBA and SBA OIG should continue to
investigate fraud in the PPP to establish the extent of taxpayer losses and identify
misconduct by PPP participants. In addition to requiring stricter oversight during
emergency programs, the experience of the PPP should inform the SBA’s ongoing
activities. Any expansion of SBA programs to unregulated lenders or agents must be
accompanied by greater oversight by the agency.

7


Case 1:25-cv-00117-FB-CHK

II.

Document 1-14 Filed 01/07/25
#: 166

Page 11 of 131 PageID

BACKGROUND
A.

The Paycheck Protection Program Provided Support to Millions of Small
Businesses Affected by the Pandemic

The Coronavirus Preparedness and Response Supplemental Appropriations Act and the
Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted into law on March 27,
2020 amid severe economic dislocation caused by the coronavirus pandemic, provided more than
$2 trillion in emergency funds.1 The CARES Act created the Paycheck Protection Program
(PPP), which provided forgivable, uncollateralized, low-interest loans of up to $10 million to
sole proprietors and businesses with fewer than 500 employees.2
By its conclusion in May 2021, the PPP provided nearly $800 billion dollars in
forgivable loans to small businesses.3 The PPP cost taxpayers as much as the three rounds of
Economic Impact Payments and approximately the same amount as the federal pandemic
unemployment benefits programs.4 Only slightly smaller in scale than the entire American
Recovery and Reinvestment Act of 2009,5 the PPP was the largest small business support
program in American history.6
B.

The PPP Was Administered by Private Lenders as Part of the Small Business
Administration’s Pre-Existing 7(a) Small Business Lending Program

1.

In Addition to the Existing 7(a) Lenders, the SBA Allowed New Entities to Take
Crucial Roles in Administering the PPP

The CARES Act created the PPP under the 7(a) program, the SBA’s most common loan
program that provides financial help for small businesses with special requirements.7 All
existing SBA-certified 7(a) lenders were given delegated authority to process PPP loans, and all
federally insured depository institutions, federally insured credit unions, and non-bank and noninsured depository institutions lenders were eligible to make PPP loans once approved and
enrolled in the program by the SBA.8
Immediately following the passage of the CARES Act, Trump Administration SBA
Administrator Jovita Carranza emphasized the crucial role that private lenders would have in the
PPP, describing it as an “unprecedented public-private partnership.”9 She stated that the Trump
Administration’s “goal [was] to position lenders as the single point-of-contact for small
businesses—the application, loan processing, and disbursement of funds will all be administered
at the community level.”10 Accordingly, nearly 5,500 lenders ultimately participated in the
PPP.11
2.

Lenders Were Responsible for Processing and Underwriting PPP Loans

PPP lenders were responsible for processing and underwriting PPP loans.12 Given the
unique emergency nature of the PPP, the underwriting requirements for PPP loans differed
greatly from those of traditional 7(a) loan programs. Normally, under SBA Standard Operating

8


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 167

Page 12 of 131 PageID

Procedures (SOP) and regulations, lender underwriting and lending criteria are focused on a
borrower’s creditworthiness and ability to repay the loan with earnings from their business.13
In contrast, the PPP underwriting process did not include a check for creditworthiness,
instead specifying a program-specific set of underwriting requirements.14 Under the rules of the
PPP, lenders were required to underwrite PPP loans by (1) confirming receipt of borrower
certifications; (2) confirming receipt of information demonstrating that a borrower had
employees for whom the borrower paid salaries and payroll taxes on or around February 15,
2020; (3) confirming the dollar amount of average monthly payroll costs; and (4) following
applicable Bank Secrecy Act (BSA) requirements.15
3.

Lenders Frequently Used Third-Party Companies (Agents) to Process and Service
PPP Loans

PPP lenders turned to a variety of third parties, usually described as “agents” by the SBA,
to conduct certain activities on their behalf. Two types of agents were important to the execution
of the PPP: referral agents and lender service providers (LSPs). A referral agent is a person or
entity that identifies and refers an applicant to a lender or a lender to an applicant.16 An LSP, as
defined by the SBA, is an entity “who carries out lender functions in originating, disbursing,
servicing, or liquidating a specific SBA business loan or loan portfolio for compensation from
the lender.”17 The SBA describes an LSP as including individuals or entities that “[p]erform any
pre-qualification review based on SBA’s eligibility and credit criteria or the 7(a) Lender’s
internal policies prior to submitting the Applicant’s information to the 7(a) Lender” or “[p]rovide
to the 7(a) Lender an underwritten application, whether through the use of technology or
otherwise.”18 According to the SBA OIG, LSPs are “deeply involved in all phases of the loan
life cycle.”19
As LSPs and other agents are delegated many lender functions, under SBA regulations, a
lender “must be able to demonstrate that it exercises day-to-day responsibility for evaluating,
processing, closing, disbursing, servicing, liquidating and litigating its SBA portfolio.”20 As
participants in a 7(a) program, lenders, referral agents, and LSPs involved in the PPP were all
subject to SBA rules governing their conduct, and the SBA could have, for good cause,
suspended or revoked the privilege of any agent to participate in the PPP.21
4.

Lenders and Their Agents Received Tens of Billions in Processing Fees from the
SBA

As participants in the PPP, lenders—and, by extension, LSPs and other agents who were
used by the lenders—were paid a “substantial processing fee from the SBA” so that they had
“ample inducement…to participate in the PPP.”22 The structure and parameters of this
compensation changed over the course of the program.
Under the PPP, agent fees could only be paid by the lender out of a lender’s SBA
processing fees, as agents were expressly prohibited by the SBA from collecting any fees from a
PPP applicant.23 Under the PPP’s initial rules, lenders earned a five percent fee on loans of
$350,000 or less, a three percent fee on loans of more than $350,000 and less than $2 million,
9


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 168

Page 13 of 131 PageID

and a one percent fee on loans of $2 million and above.24 This fee structure proved extremely
profitable for lenders. According to an analysis by the Miami Herald and McClatchy, PPPparticipating banks received nearly $18.2 billion in fees in the 2020 rounds of the program.25
On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act made changes to the PPP.26 Pursuant to these changes, the SBA issued an updated
procedural notice regarding PPP processing fees.27 While the fees for loans of more than
$50,000 remained unchanged, the fee associated with loans of $50,000 or less changed from a
flat fee of five percent of the loan amount to the lesser of 50 percent of the loan amount or
$2,500—a significant increase in small-loan profitability.28 According to one analysis, under the
first PPP processing fee structure, lenders of loans of $50,000 or less received approximately
$3.14 billion in fees during the first round of PPP lending.29 Under the revised fee structure, first
round lenders would have received nearly three times as much in SBA fees for approving the
same type and number of loans.30
C.

Experts Warned the Trump Administration that the PPP Could Be Highly
Vulnerable to Fraud

1.

The Trump Administration Did Not Heed Early SBA OIG Warnings That the
PPP’s Structure Would Lead to Fraudulent and Otherwise Ineligible Applications

While the CARES Act was being debated, congressional Democrats advocated for the
inclusion of strong oversight and accountability provisions. Congressional Republicans
ultimately agreed to establish the Pandemic Response Accountability Committee (PRAC),
comprised of Inspectors General across the federal government charged with overseeing funds
disbursed by the entire bill; the Congressional Oversight Commission, four congressional
leadership appointees charged with activities of the Treasury Department and Federal Reserve;
and the Special Inspector General for Pandemic Recovery, a presidential appointee charged with
overseeing the $500 billion fund for large businesses administered by the Treasury Department.31
Given the significant discretion provided to Executive Branch officials, Democrats
advocated for “multiple layers of strict oversight.”32 However, rather than adding oversight
mechanisms, President Trump, despite being warned that the PPP could lead to “the biggest
fraud in the history of our country,” fired the chair of the PRAC one week after his appointment
while criticizing and limiting oversight of various CARES Act programs.33
On the day that the SBA began issuing PPP loans, the SBA OIG warned that the
program’s structure—specifically, requiring limited documentation from loan applicants—had
resulted in inappropriate or unsupported loan approvals in past SBA programs.34 OIG urged the
SBA to implement proper controls before disbursing funds, such as having clear requirements
and timely communications with lending partners, establishing and monitoring performance
measures, developing internal controls, and establishing a plan to prevent and detect improper
payments.35
In June 2020, Treasury Secretary Steve Mnuchin announced that he would not allow the
names of PPP recipients to become public, after claiming for months that such data would be
10


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 169

Page 14 of 131 PageID

disclosed.36 A week after that announcement, a letter submitted by various Inspectors General to
Congress revealed that the Trump Administration had issued legal rulings curtailing independent
oversight of CARES Act funding. The Inspectors General wrote that Trump Administration
attorneys determined that the Administration did not have to provide the PRAC with information
regarding the beneficiaries of programs created by the CARES Act’s “Division A,” which
included the PPP and another large SBA program, Economic Injury Disaster Loans (EIDL). In
response to public pressure, the Treasury Department and the SBA agreed to disclose details
concerning small business loan recipients in June 2020.37
Republican opposition to oversight continued throughout the program. Congressional
Republicans opposed the Small Business Transparency and Reporting for the Underbanked and
Taxpayers at Home (TRUTH) Act, which would have required the SBA to disclose, explain, and
justify disbursements of relief funds under the PPP.38 A Republican Congressman serving on the
Congressional Oversight Commission called the bill “redundant” and stated that “this whole PPP
program is already burdened with tremendous paperwork” requirements—notwithstanding the
fact that the public could not obtain basic information such as which businesses were receiving
PPP loans.39
That same month, Senate Republicans opposed a unanimous consent vote on a bill to
require daily and weekly public reporting on SBA lending programs, broken down by
geography, demographics, and types of industry. A Republican Senator—who later incorrectly
claimed that the PPP fraud rate was 0.76 percent40—stated that such transparency requirements
were not the “right approach” and dismissed fraud concerns, stating that the PPP “by far … has
been the most successful part of the CARES Act.”41
The SBA OIG would later determine that the SBA under the Trump Administration did
not heed their early warnings. In a report issued in May 2022, the SBA OIG summarized its
findings by stating:
SBA did not have an organizational structure with clearly defined roles, responsibilities,
and processes to manage and handle potentially fraudulent PPP loans across the program.
In addition, the agency did not establish a centralized entity to design, lead, and manage
fraud risk. This problem occurred because the agency did not establish a sufficient fraud
risk framework at the start of and throughout PPP implementation.42
2.

The Government Accountability Office Repeatedly Warned That the Trump
Administration’s Management of the PPP Left It Needlessly Vulnerable to Fraud

In June 2020—just two months into the program—the Government Accountability Office
(GAO) released a report warning of “a significant risk that some fraudulent or inflated
applications were approved,” in part because of the program’s “limited safeguards.”43 GAO
attributed the lack of safeguards to the SBA’s program management.44 While the CARES Act
imposed good faith certification requirements on borrowers, the SBA had “streamline[d] the
process” by “requir[ing] minimal loan underwriting from lenders.”45 GAO cautioned that these
Trump Administration SBA decisions made the program “more susceptible to fraudulent
applications.”46 GAO also observed that borrowers and lenders experienced ongoing “questions
11


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 170

Page 15 of 131 PageID

and confusion” about the SBA’s and Treasury’s various iterations of rules and frequently asked
questions.47
In the same report, GAO expressed concern that the Trump Administration’s SBA had
not developed concrete plans for “crucial” “ongoing oversight” of PPP applications to mitigate
those risks.48 The SBA had failed to explain how it would review high value loans and provided
no information on “any specific oversight plans for . . . loans of less than $2 million”—which
made up the vast majority of the PPP loans issued, and would become the primary focus of
fintechs.49 The report concluded that the SBA’s “limited safeguards and lack of timely and
complete guidance and oversight planning have increased the likelihood that borrowers may
misuse or improperly receive loan proceeds.”50
Warnings regarding weaknesses in the program continued. In September 2020, after
conducting its own analysis of loan-level PPP data from the first round of the program, the Select
Subcommittee recommended specific controls for loan forgiveness, improvements in audit plans
for loans, and increased cooperation with oversight bodies.51 In November 2020, GAO
recommended that the SBA expeditiously review and estimate improper PPP loans and error
rates, due to “concerns about the possibility that improper payments, including those resulting
from fraudulent activity, could be widespread.”52 In January 2021, GAO expressed concern that
27 of its 31 previous recommendations concerning the Trump Administration’s pandemic
response “remained unimplemented.”53 GAO’s report singled out the SBA, which—under the
Trump Administration—had yet to implement recommendations concerning fraud controls and
improper payment testing for the PPP, as “fall[ing] far short of transparency and accountability
expectations” and “creat[ing] risk of considerable improper payments.”54
In contrast, the SBA made progress on these issues under the Biden Administration’s
leadership. In July 2021, GAO reviewed the SBA again and determined that the agency had
implemented compliance checks for applications submitted in 2021 and had plans to conduct a
fraud risk assessment. GAO noted, however, that the SBA needed to provide further guidance
on loan forgiveness processes.55
D.

Multiple Indicators Pointed to Massive PPP Fraud

1.

The SBA OIG Reported an Unprecedented Increase in Hotline Complaints, and
Banks Filed a Record Number of Suspicious Activity Reports

SBA Inspector General Hannibal Ware reported a 10,000 percent increase in
hotline complaints after the passage of the CARES Act—an indicator that the PPP had triggered
a potentially large volume of fraud.56 He further described the SBA OIG as being “inundated
with contacts to our investigative field offices across the nation from financial institutions across
the nation.”57
According to a Bloomberg report, banks filed an abnormally high number of reports of
suspected business loan fraud in July 2020, shortly after the start of the PPP and other pandemic
relief programs.58 According to their analysis, the number of SARs in June 2020 was more than
triple the average monthly number and was the second-highest monthly number of SARs for
12


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 171

Page 16 of 131 PageID

suspected business loan fraud in history.59 There were 1,044 SARs filed in July 2020, nearly
seven times the average number of monthly reports of suspected business loan fraud and the
highest monthly number of SARs for suspected business loan fraud since reporting requirements
began.60
2.

The SBA Flagged Millions of PPP Loans for Further Review

According to information obtained by the Project on Government Oversight (POGO), the
SBA also determined that a large number of PPP loans had indicators of suspicious activity or
potential fraud.61 POGO’s reporting found that internal SBA data showed that the agency
flagged nearly 2.3 million PPP loans worth at least $189 billion—about a quarter of all PPP
dollars disbursed—for further review between August 2020 and September 2021.62
POGO’s analysis of SBA data also revealed that the agency issued 4.3 million flags—
each signifying concerns that a loan was potentially fraudulent, the recipient was possibly
ineligible, or the loans in question merited closer examination for some other reason. The SBA
issued a flag on nearly 800,000 loans indicating that the recipient businesses did not exist prior to
February 15, 2020, and therefore were not eligible to receive loans. SBA also noted that nearly
240,000 loan recipients had an “inactive business.”63
Although a flagged PPP loan does not necessarily mean that the loan was fraudulent or
the recipient ineligible, a large number of flags could be indicative of a large number of improper
payments in the program.64
3.

Researchers Estimated That 1.4 Million PPP Loans—Totaling Over $64 Billion—
Had at Least One Indicator of Potential Fraud

In August 2021, after the conclusion of the program, researchers at the McCombs School
of Business at the University of Texas analyzed PPP loans for indicators of potential fraud by
borrowers. Using these indicators, the researchers estimated that more than 11 percent of PPP
loans, totaling $64.2 billion—at least 1.41 million of the 11.5 million total loans analyzed—had
at least one indicator of potential fraud.65 The researchers also found that fintech-facilitated or
issued loans were over three times as likely to have at least one primary indicator of misreporting
compared to traditional loans. Of loans with a primary indicator of fraud, those that were
fintech-facilitated were 6.5 times as likely to also have a secondary fraud indicator.66

13


Case 1:25-cv-00117-FB-CHK

4.

Document 1-14 Filed 01/07/25
#: 172

Page 17 of 131 PageID

U.S. Attorneys’ Offices Have Brought Over 1,000 Cases of PPP Fraud—Totaling
Over $1.5 Billion in Alleged Actual Loss to Taxpayers

The first federal fraud charges related to the PPP came just a month after the program
began.67 Since then, law enforcement has used tips from the public, SARs, and other
information to prosecute those who defrauded the PPP. As of October 2022, the Fraud Section
of the Criminal Division of the Department of Justice (DOJ) has charged approximately 235
defendants in pandemic fraud related matters in 162 cases, with actual loss totals of
approximately $336 million.68 U.S. Attorneys’ Offices have charged an additional 1,616
defendants in 1,050 cases with a total of over $1.284 billion in alleged actual loss.69
E.

Fintechs Eagerly Stepped Forward to Participate in the PPP, Claiming That
They Were More Capable of Quickly Issuing PPP Loans Than Government
Agencies and Traditional Banks

1.

Unregulated or Lightly-Regulated Fintechs Increased Their Reach in the Years
Before the Pandemic, and Expanded Further During the Crisis

Fintechs are involved in a wide range of financial services, ranging from online or mobile
checking accounts to mortgages, insurance, investing, payment processing, and
cryptocurrencies.70 Due to the broad range of services that fintechs offer, there is no single
licensing or regulatory agency that oversees all of these companies.71 Those fintechs that are
licensed or supervised often interact with local, state, or federal regulators on a functional, or
activity-based, basis.72 However, some fintechs, based on their activities, may face little or no
regulatory oversight.73
The fintech industry was growing steadily prior to the pandemic.74 In addition to the
inherent convenience of online and mobile financial services, fintechs have held out the promise
of technology-driven operational efficiencies that would decrease costs and facilitate the
inclusion of underserved customers traditionally left out of the banking sector.75 In addition to
attracting consumers, fintechs also partner with financial institutions as they increasingly
delegate many of their functions to fintechs through complex partnerships.76 The demand for
fintech services increased at an even higher rate during the coronavirus crisis.77
2.

Fintech Industry Groups Sought to Be Included in the Administration of
Pandemic Relief Programs, Claiming to Be Better Positioned Than Traditional
Financial Institutions

Multiple fintech industry groups advocated for the inclusion of fintechs in the
administration of pandemic relief programs. Before the passage of the CARES Act, a fintech
industry group submitted a letter to Congress asking that Treasury be directed to permit online
non-bank lenders to disburse pandemic relief funds, alone and through partnerships with nonfintech financial institutions.78 The industry group claimed that fintechs had the “payment
processing data and other technologies” and “digital infrastructure to move money rapidly” to
small businesses in need of relief.79

14


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 173

Page 18 of 131 PageID

Another fintech industry group specifically advocated for the inclusion of fintechs in
pandemic relief targeting small businesses, claiming that “government agencies are ill-equipped
to handle the volume of small businesses that are going to need emergency financing and, even
in the best of times, could not supply businesses with the funding they will need quickly
enough.”80 Fintech industry groups promoted fintechs as a solution to these limitations,
promising that “innovative financial technology companies [could] handle that [large] amount of
data and underwriting quickly” as “both service providers that work on behalf of banks that
already partner with SBA as well as non-bank lenders providing emergency credit with an SBA
guarantee or as an emergency conduit for SBA originated credit.”81 The head of the fintech
industry group claimed that, if allowed to help facilitate small business lending, they would
“[underwrite] loans using algorithms at speed and scale.”82
Lawmakers and regulators ultimately allowed fintechs to participate in the PPP as lenders
and agents. The first fintechs were approved to participate in the PPP in mid-April 2020, and
soon others—including PayPal, Square, Intuit, Lendistry, MBE Capital Partners, LLC (MBE
Capital), Bluevine, and Kabbage (along with Kabbage and Bluevine’s partners, Celtic Bank and
Cross River Bank)—also became participants.83 In early 2021, following the change in the PPP
fee structure, newer and less experienced fintechs, including Womply and Blueacorn, entered the
program and took leading roles.84
3.

Once Included in the PPP, Fintechs Took a Leading Role in the Program

Fintechs, acting as both lenders and LSPs, became prominent in the PPP. By the end of
2021, the vast majority of the largest PPP lenders, by both value and volume (nine out of ten),
were fintechs or fintech-partnered lenders.85 Although the SBA states that fintechs (and other
state regulated lenders) approved over 1.2 million PPP loans, totaling nearly $22 billion, in just
12 months,86 this figure is likely a significant undercount, as it does not include the billions of
dollars in PPP loans that were issued by lenders that partnered with fintechs to issue loans.87
According to a fintech industry group, fintechs “served more than double the small
businesses” as Community Development Financial Institutions (CDFIs).88 In a June 24, 2021,
opinion article, the CEO of a fintech industry group claimed that 41 fintechs were “collectively
the third largest facilitators of PPP based on the number of loans (18 percent) and loan dollars
(eight percent) distributed by lender type.”89 He wrote: “policymakers and the media have been
disproportionately focused on a very small percentage of fraud that took place in the program.”90
F.

Analysis Indicated that Fintechs Likely Facilitated a Disproportionately
High Number of Fraudulent and Otherwise Ineligible PPP Loans

1.

Early DOJ Prosecutions of PPP Fraud Cases Disproportionately Involved
Fintechs

An SBA OIG official tasked with investigating PPP fraud described fintechs as “the paths
of least resistance” for bad actors seeking a PPP loan.91 Multiple analytical projects based on
PPP fraud prosecutions lend credence to this opinion and indicate that fintechs were
disproportionately linked to PPP fraud. In October 2020, a Bloomberg analysis found that
15


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 174

Page 19 of 131 PageID

fintechs handled 75 percent of the approved PPP loans that had been connected to fraud by DOJ,
despite arranging just 15 percent of PPP loans overall at that point.92 An October 2020 analysis
conducted by POGO found that nearly half of the approved PPP loans in the first 56 PPP fraud
cases involved just seven fintechs and fintech-partnered banks.93
2.

Experts Found That Fintechs and Fintech-Partnered Lenders “Specialized in
Dubious Loans”

Researchers at the McCombs School of Business at the University of Texas found that
fintechs and fintech-partnered financial institutions were the PPP lenders most closely associated
with potentially fraudulent loans. According to media reports, the researchers found that certain
fintech-partnered lenders appeared to “specialize in dubious loans,” with the analysts concluding
that fintechs made around 32 percent of PPP loans but accounted for more than 60 percent of all
suspicious PPP loans originated.94 Their findings indicated that “replacing traditional lending
with FinTech lending amplified misreporting problems.”95
The study also found that “the four largest FinTech lenders, Cross River [Bank],
Prestamos [affiliated with Blueacorn], Harvest [affiliated with Womply], and Capital Plus
[affiliated with Blueacorn] exhibited high rates of misreporting and large lending volume
growth” and that they did not get better over time, as “[fintech] lenders often doubled or tripled
their potential misreporting rates in round 3 compared to rounds 1 and 2.”96 The researchers
asserted that “not all [fintech] lenders have high misreporting rates,” citing low rates at fintechs
Square and Intuit and concluding that “online lending in and of itself does not appear to be the
problem.” 97 However, the study’s authors concluded that:
[T]he increasing scale of [fintech] misreporting through time indicates that current
penalty and enforcement systems are not effective. If the system is not changed for
future programs, the most likely outcome is even more of the same.98
Ultimately, the study concluded that some “established FinTech lenders persistently have
low rates of misreporting, indicating that [fintech] lending need not be substandard” and that
“incentives in the PPP appear misaligned in that [fintech] lenders with widespread indicators of
misreporting made billions of dollars dispersing loans with apparently lax oversight
procedures.”99
G.

The Select Subcommittee’s Investigation into Fintechs’ Handling of
Fraudulent and Otherwise Ineligible PPP Loans

On May 27, 2021, the Select Subcommittee requested documents and information from
four companies—Kabbage, Bluevine, Cross River Bank (Cross River), and Celtic Bank
(Celtic)—after public reports alleged that these fintechs and bank partners failed to adequately
screen PPP loan applications for fraud.100 On November 23, 2021, the Select Subcommittee
expanded its investigation to include Blueacorn and Womply after researchers at McCombs
School of Business at the University of Texas issued a study indicating that these highly prolific
fintechs may have also been disproportionally linked to financial crime in the PPP.101

16


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 175

Page 20 of 131 PageID

The Select Subcommittee also obtained information from Harvest, Capital Plus,
Prestamos, American Express, Fountainhead, Benworth, Wells Fargo, Bank of America, and
CDC Small Business Finance. In the course of the investigation, Select Subcommittee staff
reviewed more than 83,000 pages of internal documents and had multiple briefings and
conversations with former fintech employees and others with knowledge of fintech activities.
The Select Subcommittee also was briefed by staff of the SBA and the SBA OIG.
III.

INVESTIGATIVE FINDINGS
A.

Fintechs and Lenders Observed Significant Fraud in the PPP, Which They
Attributed to Program Mismanagement as They Sought to Evade
Responsibility

1.

Fintechs and Lenders Observed Large-Scale PPP Fraud

Internal communications obtained by the Select Subcommittee show that fintechs and
their lending partners both anticipated and observed high levels of fraud in the PPP. As early as
April 2020, Cross River’s Chief Risk Officer warned in an internal email that “there will be
fraud rings going after these [PPP] funds.”102 Months later, in an October 2020 email, the CEO
of Celtic Bank wrote that “[t]he [PPP] fraud is definitely getting up there,” noting that the level
of fraud was “not surprising given the program guidelines.”103
Eight months after the start of the PPP, it was clear to some lenders that the fraud they
had predicted was occurring and was not well controlled. In an internal November 2020 email, a
Celtic Bank compliance manager noted that the company’s involvement in the PPP had led to
increased fraud:
While Celtic’s Bank’s participation in the Paycheck Protection Program provided
emergency funding to small businesses throughout the Country [sic], we have also seen
an uptick in fraudulent and money laundering activities identified across the Bank and
our Strategic Lending Partnerships.104
This high level of fraud taxed the financial crime compliance capabilities of PPP lenders.
In March 2021, a full year into the PPP program, a Celtic Bank financial crime manager again
observed that the high levels of fraud related to the PPP continued, telling a Bluevine financial
crime manager that “the surge in fraud associated with [the] PPP has strained all of our
resources.”105

17


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 176

Page 21 of 131 PageID

While observing that the rate of fraud was high and noting that their capabilities to detect
and respond to this fraud were under strain, lenders struggled to determine exactly how much
taxpayer money was being lost to PPP fraud. In an August 12, 2020, email obtained by the
Select Subcommittee, Celtic Bank’s President and Chief Operating Officer estimated that
potential fraud losses in the PPP could have already reached “over $10 billion” and described
potential overall taxpayer losses to PPP fraud as a “helluva lot of money.”106 On July 18, 2020, a
senior Kabbage official wrote that “Experian data services reports 4.5 [percent] [PPP fraud rate]
in their network.”107 In a September 8, 2020 email, a Kabbage executive claimed that consumer
credit reporting agency Equifax was “seeing confirmed [PPP] fraud between 4 and 10
[percent],”108 which would amount to as much as $80 billion in fraudulent loans across the entire
life of the program, if the rate was consistent.

2.

Fintechs and Lenders Sought to Shift Risks of Fraud Losses to the Taxpayer and
Criticized Trump Administration Mismanagement

Internal emails obtained by the Select Subcommittee show that PPP lenders expressed
concern that they would be held accountable for taxpayer losses if and when the extent of PPP
18


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 177

Page 22 of 131 PageID

fraud became publicly known. At the working level, in response to an analyst’s question about
flagging potentially fraudulent applications, a Kabbage risk manager told his team:
I do think we should not look at fraud here from a kabbage [sic] lending perspective. … a
fundamental difference is the risk here is not ours - it is SBAs [sic] risk.109
In response, a Kabbage risk management employee wrote:
I understand that[.] I think I personally am just concerned something will come back at
us. Can we be included in any discussions regarding the SBAs [sic] feelings about our
reviews? I personally would like to know if we’re under heat from the gov [sic] for
fraudsters robbing the gov [sic].110
At the executive level, lending executives involved in the PPP who witnessed fraud rates
increase at their institutions expressed trepidation not only about potential reputational harm, but
also that their institutions would be held financially liable for the taxpayer losses. In an internal
email obtained by the Select Subcommittee, the CEO of Celtic Bank wrote that “the industry
should push hard to make sure the SBA accepts the fraud risk”—presumably so that the
consequences of the fraud would fall upon taxpayers, not the lenders.111 The CEO of
Benworth—a top PPP lender—suggested that he was concerned about the amount of PPP fraud
that their fintech partner failed to detect, writing in an internal email: “When the party is over
and the lights turn on, we will be the only ones at the party (and it seems standing naked).”112

Fintechs and their lending partners recognized that high fraud rates resulted from the
Trump Administration’s mismanagement of the PPP. In a September 30, 2020 email, Kabbage’s
head of policy wrote: “At the end of the day[,] it’s the SBA’s shitty rules that created fraud, not
[Kabbage].”113 Another bank executive pointed out that the Trump Administration was too slow
to provide guidance on how to identify and prevent PPP fraud. In response to an August 2020
SBA email announcing a webinar on preventing PPP fraud, Celtic Bank’s President called the
Trump Administration’s action “a bit late,” remarking that the “horse has been out of the barn for
a while now” with respect to PPP fraud.114

19


Case 1:25-cv-00117-FB-CHK

B.

Document 1-14 Filed 01/07/25
#: 178

Page 23 of 131 PageID

Blueacorn Took Only Minimal Steps to Prevent Fraud in Its Facilitation of
Billions of Dollars in PPP Loans, While Abusing the Program to Enrich Its
Owners

Blueacorn, a fintech startup, was founded by a group of Arizona entrepreneurs in April
2020 specifically to facilitate PPP loans.115 To support the company in facilitating PPP loans,
Blueacorn hired Arizona-based consultancy Elev8 Advisors to advise it on compliance with
relevant laws and regulations related to the PPP and to assist with responding to subpoenas and
other requests for records.116 Elev8 Advisors also provided applicant “verification services” to
Blueacorn and hired contractors to review PPP applications on the fintech’s behalf for eligibility
and to flag potentially fraudulent applications.117 In presentations to lending partners, Blueacorn
included one of the owners of Elev8 Advisors as part of their leadership team.118
In 2021, Blueacorn was involved in the processing of nearly all of the loans facilitated by
the top two PPP lenders that year by loan volume—Capital Plus and Prestamos.119 Blueacorn’s
partner lenders together facilitated almost three times as many PPP loans in 2021 than JPMorgan
Chase and Bank of America combined.120

Figure 1: Chart showing the top PPP lenders by number of loans approved in 2021, indicating that
entities partnering with Blueacorn (Prestamos and Capital Plus) and with Womply (Harvest and
Benworth) approved the highest number of PPP loans. 121

Blueacorn provided fraud prevention, eligibility verification, customer support, and other
services for Capital Plus and Prestamos. Both lenders told the Select Subcommittee that they
largely delegated their fraud prevention and eligibility verification functions to Blueacorn and
relied on the fintech to screen applications.122 For its work, Blueacorn received over $1 billion in
taxpayer dollars from Prestamos and Capital Plus.123
The scale of Blueacorn’s involvement in the PPP amplifies concerns about their failures
and potential misconduct. In a conversation with Select Subcommittee staff, an SBA OIG
20


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 179

Page 24 of 131 PageID

employee involved in PPP fraud described fintechs, including Blueacorn specifically, as “paths
of least resistance” for those looking to commit PPP fraud, as discussed in Section D below.124
DOJ prosecutions of multiple borrowers that received PPP loans from Blueacorn’s lending
partners appear to support this assessment.125 In addition to concerns over Blueacorn’s handling
of financial crime prevention, public allegations of poor borrower support have also plagued the
fintech. A ProPublica article described the dissatisfaction that multiple PPP applicants felt
towards Blueacorn.126 A review of Blueacorn’s social media accounts show that the company
received thousands of customer complaints, more than they were able to respond to at the
time.127 Despite these failings, by the beginning of 2022, Blueacorn had disbursed to its
ownership as profits over $250 million of the funds that they were given in 2021 to facilitate the
PPP.128
As detailed below, the Select Subcommittee’s investigation found that Blueacorn spent
less than one percent of its budget on fraud prevention efforts. In addition to spending little on
this function, multiple former Blueacorn employees told the Select Subcommittee that they were
both poorly trained and pressured by Blueacorn leadership to approve potentially fraudulent
loans. The Select Subcommittee’s investigation also found examples of potential misconduct by
Blueacorn and its leadership. Internal communications and statements made by Blueacorn
insiders indicate that Blueacorn—which claimed to be focused on the underserved—both
prioritized and gave less scrutiny to high dollar loans. Most troublingly, the Select
Subcommittee’s investigation found that Blueacorn’s leadership—including those tasked with
preventing fraud in the PPP—may have themselves committed PPP fraud or used their company
to improperly obtain PPP loans.
1.

Blueacorn Processed a High Volume of PPP Loans, Despite Lacking Adequate
Preparation or Expertise

a.

Blueacorn Processed $12.5 Billion in PPP Loans in 2021, Becoming One of the
PPP’s Most Significant Participants

Blueacorn was founded in April 2020 with “the singular purpose” of facilitating PPP
loans for small businesses.129 The initial Blueacorn leadership team consisted of cell phone
accessory merchant and former Lehman Brothers subprime derivative salesman Nathan “Nate”
Reis (Co-Founder and former Chief Executive Officer), his wife and former television
newscaster Stephanie Hockridge (Co-Founder and former Customer Service Lead), technology
entrepreneur Noah Spirakus (Co-Founder and Chief Technology Officer), and other Arizonabased entrepreneurs.130 In January 2021, Blueacorn turned to Elev8 Advisors, an Arizona-based
consultancy, as a compliance consultant and marketing partner.131 Elev8 Advisors was founded
in March 2018 by Adam Spencer, a former payments processing executive, and his wife, Kristen
Spencer, who previously worked at a retail branch of a bank and sold insurance.132
Blueacorn, a self-described “fintech lender service provider,” stated that it “facilitate[d]
the application for and fulfillment of PPP loans predominantly for businesses and workers who
qualified as independent contractors, self-employed individuals, freelancers, and gig workers.”133
Blueacorn claimed that it “ultimately support[ed] 808,000 small business owners / sole
proprietors via disbursement of $12.5 billion in SBA PPP funds.”134 As such, Blueacorn was
21


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 180

Page 25 of 131 PageID

involved in the disbursement of more PPP funds in 2021 than America’s largest bank, JP Morgan
Chase.135 Blueacorn’s participation in the PPP was also significant in terms of number of loans
approved. According to Blueacorn, out of the over 1.7 million loan applications that were
formally submitted by potential borrowers (after completing initial screening), the fintech
approved and sent to lenders 739,282 PPP loan applications for funding in 2021.136
Blueacorn, with the assistance of Elev8 Advisors, facilitated PPP loans through lenders
Capital Plus and Prestamos. In January 2021, Blueacorn entered into an LSP agreement with
Capital Plus, under which Blueacorn was to provide “staff services” to Capital Plus “to carry out
certain functions related to the PPP Loan Portfolio rather than hiring employees directly for those
same staff functions.”137 According to that agreement, this arrangement was meant to “be more
economical and [] result in a higher level of service and expertise to provide better delivery to
the small business concerns.”138 On April 14, 2021, Prestamos and Blueacorn signed a similar
LSP agreement under which Blueacorn would engage “in the origination, marketing,
underwriting, and funding of loans” for Prestamos.139
In its partnerships, Blueacorn promised to provide crucial underwriting activities that
were required as part of the PPP, including gathering and verifying business information, loan
eligibility information, and applicant-supplied tax documents.140 In a presentation obtained by
the Select Subcommittee, Blueacorn promised Capital Plus that it would “process[],
underwrite[], approve[] & fund[] loans that qualify for the PPP.”141 Blueacorn claimed to have a
“proprietary document intake engine [that] allows our team to process certain types of [PPP]
applications in 5 minutes.”142
Blueacorn also touted its underwriting expertise and claimed to “have contracted a trusted
partner to provide highly trained, skilled, and vertically focused underwriters who have come
from various walks of the Financial Services industry including small business services, lending,
and payments.”143 In a marketing presentation given to Prestamos, Blueacorn promised to
provide “technology and financial expertise to streamline the [PPP] application process,”144 and
stated that the fintech had an “extensive vetting and approval process.”145 Prestamos told Select
Subcommittee staff that, under their arrangement with the fintech, “the majority of the [PPP
processing] workflow was going to go through [Blueacorn].”146
b.

Blueacorn Advertised “Free Money” and Loan Qualification in “Less Than 30
Seconds,” Attracting Millions of PPP Applicants

According to company data, over 4.1 million applicants completed Blueacorn’s online
eligibility questionnaire and started a PPP application.147 Blueacorn used targeted internet
advertisements, referral agreements, billboards, radio commercials, and other traditional
marketing mediums to attract prospective applicants to its website with promises of easy loan
qualification.148
In one promotional appearance, Ms. Hockridge described the PPP as “$100 billion dollars
of free money,” directing applicants to Blueacorn’s website to “find out in less than 30 seconds”
whether they qualified for a PPP loan.149 Ms. Hockridge promised potential applicants that, “if
you end up making it to the [Blueacorn] log-in page, you qualify” for a PPP loan.150 In
22


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 181

Page 26 of 131 PageID

Facebook advertisements, Blueacorn reportedly told prospective borrowers that the loans were
“100% forgivable, meaning you don’t need to pay anything back” and offered approval in one to
two days.151
c.

Blueacorn Received Over $1 Billion in Taxpayer-Funded Fees for Its PPP
Services

Blueacorn received over $1.08 billion from its lending partners as fees for its PPP
services in 2021.152 According to internal financial information obtained by the Select
Subcommittee, Prestamos paid Blueacorn $700 million and Capital Plus paid Blueacorn $386
million in PPP processing fees.153 Under their LSP agreements, Capital Plus and Prestamos gave
Blueacorn the majority—up to 70 percent—of the processing fees that they received from the
SBA.154 In communications obtained by Select Subcommittee staff, Mr. Reis remarked on
Blueacorn’s success, bragging that his company had made nearly $1.5 billion dollars in less than
half a year and that the company’s accounts held $750 million in cash.155
d.

Despite Becoming an LSP a Year into the PPP, Blueacorn Admitted to Being
Unprepared for the Role It Took in the Program

Unlike the fintechs and lenders that were faced with the challenge of reviewing PPP loans
in the uncertain environment at the start of the program in April 2020, by 2021, Blueacorn’s
operators had a year to observe the program and to formulate strong systems before entering the
LSP market. Despite this, Blueacorn executives admitted that the fintech’s services were hastily
assembled.
Ms. Hockridge described Blueacorn’s operation as “building the parachute after we
jumped out of the plane.”156 In an interview posted to Medium, CEO Barry Calhoun described
Blueacorn as “a fly-by-seat-of-the-pants sort of environment.”157 In an April 2020 Twitter
message, another Blueacorn co-founder wrote that Blueacorn’s founders “built a Fintech airplane
while falling from the sky, in three minutes (weeks, but who’s counting).”158
e.

Blueacorn’s Eligibility Verification and Fraud Investigations Leadership Lacked
Significant High-Level Experience in Financial Crime Prevention and Fraud
Investigations

Blueacorn Chief Operating Officer Matt Yahes and another Blueacorn employee who
served as underwriting manager were identified by Ms. Spencer as being the Blueacorn
leadership members who supervised the fintech’s eligibility verification processes.159 According
to conversations with former Blueacorn employees and discussions with Blueacorn, the fintech
primarily relied on three senior staffers—an operations manager, the aforementioned
underwriting manager, and an investigations manager—to develop Blueacorn’s fraud detection
process, produce PPP loan review guidance documents, supervise fraud investigations, and
answer questions related to fraud and eligibility by loan reviewers.160
Despite drafting Blueacorn’s primary guidance document for verifying eligibility and
identifying fraud, neither Blueacorn’s underwriting manager nor its operations manager appear
23


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 182

Page 27 of 131 PageID

to have had any prior training or experience in developing institution-wide policies for
identifying or preventing fraud in large volume lending programs.161 Yet, in its promotional
material, Blueacorn prominently mentioned that its underwriting manager “came from Silicon
Valley Bank and underwrote loans in PPP Round 1.”162 This is an apparent reference to an
individual who appears to have spent just 17 months at Silicon Valley Bank in a relatively junior
underwriting position and had less than three years total of banking experience when he joined
Blueacorn.163 According to multiple Blueacorn reviewers who spoke to Select Subcommittee
staff on condition of anonymity, this underwriting manager was relied on to train reviewers and
to answer their questions regarding fraud and eligibility.164
Blueacorn’s operations manager also appears to have had little experience in banking and
virtually no experience in fraud detection or financial crime compliance before managing the
review of hundreds of thousands of taxpayer-backed PPP loans. Describing his role in the
fintech, the operations manager claimed to have “built a [Blueacorn] department from the ground
up” that “managed a team of 200+ and processed over 1 million PPP applications for
borrowers.”165 Blueacorn’s operations manager, who was 25 years old and appears to have had
four years of experience with financial entities, authored the primary eligibility review and fraud
detection documents used by Blueacorn application reviewers as their primary resource guide.166
Similarly, Blueacorn’s investigations manager supervised the company’s dedicated fraud
investigations team for the duration of the fintech’s involvement in the PPP.167 Despite
supervising Blueacorn’s crucial fraud investigation function, this manager appears to have had
no prior professional experience in investigations, financial crime compliance, banking, or fraud
prevention, having previously worked in the areas of health care analysis and marketing.168
f.

Elev8 Advisors’ Co-Owners, Unqualified to Review PPP Loan Applications for
Fraud and Eligibility, Hired Similarly Unqualified Friends and Family to
Perform These Tasks

Blueacorn told the Select Subcommittee that it had only “one direct employee who
assisted with processing PPP loan applications.”169 The company explained that it “almost
exclusively relied on third-party companies and contractors” to process PPP loan applications.170
As noted above, Blueacorn relied heavily upon Elev8 Advisors—a small Arizona-based payment
consultancy owned by husband and wife entrepreneurs Adam and Kristen Spencer—to review
Blueacorn’s hundreds of thousands of PPP loans.171 Despite being involved in the review of
hundreds of thousands of PPP applications, Elev8 Advisors had just a single employee,
according to an August 2021 PPP loan forgiveness application.172
Elev8 Advisors informed the Select Subcommittee that it “performed significant advisory
services, including those relating to banking as a service, . . . for very sophisticated financial
service clients that we can’t reveal because of confidentiality.”173 In response to requests from
the Select Subcommittee, Elev8 Advisors declined to furnish specific examples of prior
experience that was similar to or would otherwise have prepared the consultancy for the role that
it played with respect to Blueacorn and the PPP. Citing confidentiality obligations, the company
declined to identify a single company for which it had provided loan underwriting consultancy or

24


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 183

Page 28 of 131 PageID

Know Your Customer (KYC), Anti-Money Laundering (AML), Bank Secrecy Act (BSA)
compliance, fraud prevention, and compliance auditing consulting services prior to the PPP.174
Ms. Spencer was herself a key supervisor in Blueacorn’s eligibility verification and fraud
prevention program, managing a group of contractors who worked as eligibility verifiers and
document processors for Blueacorn.175 Ms. Spencer, who personally reviewed PPP application
for signs of fraud, also received escalation of potential fraud from the reviewers under her
company’s supervision, and was responsible for directing these escalations to Blueacorn senior
staff.176 One Blueacorn PPP application reviewer told Select Subcommittee staff that Ms.
Spencer played a central role in the fintech’s fraud prevention processes: “At one point I
contacted Kristen Spencer to ask what the fraud department was and she said that she was the
fraud department.”177
Ms. Spencer had no prior experience leading or performing fraud prevention or
underwriting services for multibillion-dollar federal programs.178 Her most recent experience
prior to her work with Elev8 Advisors was as the owner of an online clothing shop.179 Prior to
that, Ms. Spencer worked in retail banking and insurance sales until 2006.180 According to a
former Elev8 Advisors contractor who spoke to Select Subcommittee staff on condition of
anonymity, Ms. Spencer quickly became overwhelmed by her role as the recipient of
applications potentially flagged for fraud and sought to minimize the number of applications that
were being flagged for fraud by those under her supervision.181 The contractor told Select
Subcommittee staff that Ms. Spencer admonished PPP loan application reviewers for sending
“too many loan applications to her for fraud review” and stated that “she could not process this
amount.”182 Slack messages obtained by the Select Subcommittee appear to confirm this
account. In one message to a Blueacorn information technology consultant, Ms. Spencer wrote,
“I was doing a million jobs…I was…the fraud team, plus in charge of [the] processing /
underwriting team.”183

Elev8 Advisors hired its co-owners’ inexperienced friends and relatives, including the
couple’s parents, siblings, and children, to review and underwrite PPP applications in connection
with its fraud-prevention contract with Blueacorn.184 According to a former Blueacorn
contractor:
[Mr. Spencer] hired at least 30 of his closest friends and family to work as underwriters
submitting PPP loans to the SBA through Blueacorn[]. These employees include but are

25


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 184

Page 29 of 131 PageID

not limited to his wife, sons, brother and sisters in law, father in law [sic] and mother in
law [sic], and friends of himself and his sons.185
Documents obtained by the Select Subcommittee confirm that Mr. Spencer’s children
(one of whom had just recently graduated from high school) and other close relatives worked as
PPP application reviewers and loan underwriters.186 These individuals included multiple
professionals from industries with no connection to the financial sector, and with no apparent
experience in financial crime compliance, fraud prevention, or underwriting.187 In a Slack
message sent from Ms. Spencer to Ms. Hockridge, Ms. Spencer called her teenaged son a “really
strong underwriter” and later shared with Ms. Hockridge a picture of him “looking up bank
accounts” as part of reviewing PPP loans.188
2.

Blueacorn Spent Little on Fraud Prevention and Eligibility Verification, While
Directing Hundreds of Millions of Dollars to Its Owners and Executives

Internal Blueacorn financial documents obtained by the Select Subcommittee indicate
that Blueacorn allocated few of its financial resources to fraud prevention, eligibility verification,
or customer support functions—directing a significant majority of the SBA processing fees that
it received to its owners as profit and to a marketing firm owned by Blueacorn’s own strategic
advisors.189 According to these documents, $666 million of the $1.08 billion in taxpayer funded
SBA processing fees that Blueacorn received—well over half of the total—went to Paynerd (also
known as Paynerdier), a marketing company founded and operated by Blueacorn Strategic
Advisor Matt Mandell and Blueacorn Chief Marketing Officer Taylor Hendricksen.190 Nearly
two-thirds of the remaining funds—$258 million—were disbursed to Blueacorn’s owners as
profits.191

Figure 2: Selected expenditures of Blueacorn related to the PPP. The largest expense, and the
bulk of Blueacorn’s PPP proceeds, $666 million, went to Paynerd for marketing. The second largest
expenditure was owner and company profits.192

Blueacorn spent little on eligibility verification, fraud prevention, or technology
compared to the large amount of taxpayer money that went to its owners and a marketing firm
26


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 185

Page 30 of 131 PageID

whose principals were part of Blueacorn’s senior leadership.193 According to internal financial
documents, Blueacorn spent 0.79 percent ($8,682,207) of its total income on fraud prevention,
1.26 percent ($13,713,563) on eligibility verification, and 4.75 percent ($51,597,240) on
technology.194 Similarly, just 0.75 percent of Blueacorn’s total income was spent on customer
service and support, despite the fintech being inundated with complaints from borrowers about
the quality of their customer support.195 By contrast, Blueacorn gave its owners approximately
24 percent of its total income in 2021 as profits and gave a marketing firm controlled by the
fintechs’ senior leadership over 60 percent of its total income in 2021.196
In an email obtained by the Select Subcommittee, Mr. Spencer pitched potential PPP
partnerships to banks as a “new profit center” and “low to no risk fee generator.”197 He also
wrote that the PPP provided an “immediate influx of potential customer growth to cross-sell
other bank products with no Cost of Acquisition.”198 Although the company disclosed its profits
and disbursements, Blueacorn declined to provide the Select Subcommittee with profit
information related to individual owners. However, according to a Blueacorn operating
agreement obtained by the Select Subcommittee, Mr. Spirakus owned a 50 percent interest in
Blueacorn while Mr. Reis and Ms. Hockridge jointly owned the other 50 percent.199 This
ownership stake could have entitled Mr. Spirakus to $129 million, while Mr. Reis and Ms.
Hockridge would have shared the other half. A video created by Mr. Reis and Ms. Hockridge
and obtained by Select Subcommittee staff show Mr. Reis showing off large amounts of cash in
a bar on December 21, 2021.200 According to public records, Mr. Reis relocated to San Juan,
Puerto Rico, which has no capital gains tax, following his work at Blueacorn and has registered
another company, Lender Service Consultants LLC.201 In an October 8, 2021, video obtained
by Select Subcommittee staff—geolocated to San Juan, Puerto Rico—Ms. Hockridge recorded
Mr. Reis on the balcony of a luxury beachfront apartment.202
Messages obtained by the Select Subcommittee made clear that the Spencers saw Elev8
Advisors’ involvement in the PPP as a significant opportunity to enrich themselves and their
family members. In a text message obtained by the Select Subcommittee, Ms. Spencer told
family members, some of whom worked as PPP loan reviewers, that the PPP was a “once in a
lifetime opportunity.”203 Ms. Spencer told family members whom the Spencers had hired to
conduct the PPP review process: “We are doing this for the people we hired to make money.
Our friends and family. That is where the money is going. And it will be life changing money
for anyone who does it.”204 Referring to the money that she and her family would make from the
PPP, she continued, “[a]nd while [money is] not everything--it’s a fucking lot.”205

27


Case 1:25-cv-00117-FB-CHK

3.

Document 1-14 Filed 01/07/25
#: 186

Page 31 of 131 PageID

Blueacorn Application Reviewers Alleged Poor Training and Reported Being
Pressured to “Push Through” Potentially Fraudulent Applications

Multiple staff working for Blueacorn to review PPP applications reported serious
concerns about the company’s processing of PPP loan applications. An SBA OIG complaint
obtained by the Select Subcommittee submitted by a former Blueacorn PPP application reviewer
alleged multiple control weaknesses and poor processes in the fintech’s PPP review program. In
the complaint, the former Blueacorn PPP application reviewer described their lack of training:
I was submitting PPP loans to the SBA the first minute of the first day I started
working….and I was given no formal or informal training on loan underwriting, as well
as no training on how to properly identify and report fake government identification such
as a driver’s license. I was given no training on how to identify fraudulent tax and bank
documents such as Schedule C and bank transaction history.206
The reviewer noted that the lack of training did not slow down Blueacorn’s review
process, writing: “On my first day, without knowing what I was doing, but following instruction
from my superiors, I submitted at least 300 PPP loans to SBA without any training or any
understanding of loan underwriting.”207
The reviewer also alleged that Blueacorn’s application review process “incentivized the
fast and inaccurate submission of PPP loans to the SBA by offering cash bonuses…for
submitting as many PPP loans to the SBA as quickly as possible.”208 The reviewer also reported
that they felt pressure from Blueacorn’s leadership to reduce the number of applications flagged
for fraud, writing:
After several days of trying to accurately perform my job duties and flag potentially
fraudulent applications for further scrutiny, I was contacted by my superiors about what
they considered to be an excessive number of flagged loans. I was subsequently
pressured to submit a higher number of loans to the SBA despite my concerns of the
applications potentially containing fraudulent documents. I was told we were expected to
process at least 30 to 40 application[s] per hour.209
The reviewer also reported that Blueacorn’s leadership disregarded and downplayed the
risk of fraud in the PPP:
When I complained to my superiors that I was uncomfortable identifying potential fraud
and submitting PPP loans to the SBA at this rate, without proper training, I was told on
multiple occasions by [Blueacorn leadership] that “We are not the fraud police. Even if
the applicants are submitting fraudulent documents, we are covered by the applicants[’]
attestation that what they are submitting is truthful, and even fraud will help stimulate the
economy.”210
According to the reviewer, Blueacorn management told them: “We want you to submit.
The more you submit, the more we get paid.”211

28


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 187

Page 32 of 131 PageID

Select Subcommittee staff spoke with a former Blueacorn eligibility verification
supervisor, on condition of anonymity, who expressed similar concerns. The supervisor, who
managed 15 reviewers that were responsible for reviewing the applications and supporting
documents submitted by PPP applicants as part of their loan applications, told Select
Subcommittee staff that Blueacorn reviewers were originally told to screen applications for
fraud.212 However, according to the supervisor, Blueacorn later de-emphasized fraud screening
in favor of approving more applications. The supervisor stated: “Towards the beginning, they
wanted us to check for fraud and send it to a fraud department if we noticed anything.”
However, according to the supervisor, Blueacorn leadership gave new instructions as the
program progressed. The supervisor told Select Subcommittee staff that “anything we thought
was fraud they still wanted us to push it through, and they informed us the SBA would handle
any fraud we didn’t stop.”213
The Blueacorn supervisor also told Select Subcommittee staff that reviewers frequently
saw applications with signs of fraud, despite those applications having already cleared
Blueacorn’s automated systems. The supervisor informed Select Subcommittee staff that
reviewers told Blueacorn’s management that they saw fraud that the automated checks did not
detect, but that Blueacorn management took no action: “They told us to keep pushing everything
through.”214
Specifically, the supervisor explained that Blueacorn reviewers were told to approve
applications even when “the formatting of the bank statements was just off,” and that reviewers
were told not to reject applications even when their experience indicated that the applications
were likely fraudulent.215 They said: “We learned to notice when the bank statements looked off
and were just pulling info from another company’s bank statement.”216 The supervisor told
Select Subcommittee staff that their staff were instructed to approve applications that “just didn’t
look right.”217
A non-supervisory former Blueacorn application reviewer—who also spoke with Select
Subcommittee staff on condition of anonymity—raised similar issues as those highlighted in the
SBA OIG complaint and relayed to Select Subcommittee staff by the former Blueacorn
supervisor. The former reviewer was responsible for “trying to identify the initial levels of fraud
or inaccurate information on those initial applications.” 218 However, according to the reviewer,
they received little guidance from Blueacorn as to how to verify applicants’ eligibility for a PPP
loan:219
There were a lot of little intricacies with the program or the process that I’m not familiar
with, not having worked in that industry at all. There were a lot of questions that came
up constantly that we’d try to reach out to get answered, and just very seldom could we
get an answer. We were told that the rules were constantly changing on what was and
was not ok.220
The reviewer told Select Subcommittee staff that Blueacorn did little to answer
reviewers’ questions of whether an application was fraudulent or not. The reviewer stated:
“Sometimes questions would get answered, sometimes they wouldn’t. Sometimes they would
just reference a document and say hey it’s in there read it to find the answer to your question.”221
29


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 188

Page 33 of 131 PageID

Another non-supervisory former Blueacorn PPP loan reviewer who also spoke to Select
Subcommittee staff on condition of anonymity stated that they also had concerns about
Blueacorn’s PPP loan review process. This reviewer said that untrained and newly hired
Blueacorn PPP loan reviewers would ask each other whether applications appeared fraudulent.
The reviewer told Select Subcommittee staff: “On a Slack group chat, people would ask whether
something looked fraudulent to anyone else, and people would either say ‘I don’t know, looks
fine to me’ or ‘I don’t know, that looks crazy, send it to fraud.’”222 This informal process was
apparently used to determine which PPP applications would be approved and moved forward in
the process and which PPP applications would be flagged for potential fraud.
Despite their inexperience, reviewers noted that some applications appeared to be
fraudulent. One former reviewer stated that they saw suspicious applications with “the same
backgrounds on ID pictures or something that looked like a stock photo.”223 The reviewer told
Select Subcommittee staff that, in response to questions on how to deal with apparent fraud,
Blueacorn leaderships instructed: “Continue doing what you’re doing. If it’s outright suspicious,
flag it, otherwise push it through.”224
In addition to concerns regarding the handling of PPP application reviews, multiple
former Blueacorn PPP application reviewers told Select Subcommittee staff that they were
concerned with how the company was treating sensitive PPP applicant data. A former Blueacorn
reviewer told Select Subcommittee staff that Blueacorn was “not using encrypted systems when
dealing with personally identifiable information such as Social Security Numbers” and that, on at
least one occasion, they “accidentally download[ed] people’s driver’s licenses onto my
[personal] computer.”225
4.

Internal Blueacorn Documents Show That Reviewers Were Instructed to Ignore
All but “Extremely Obvious Fraud”

The statements of former Blueacorn PPP application review staff are supported by the
internal documentation used by Blueacorn to guide the individuals tasked with determining
whether applicants were eligible for PPP loans. The Select Subcommittee obtained Blueacorn’s
PPP Processing Script, which the company used as “a training document . . . to onboard and
instruct members of the Eligibility Verification team on how to process loan applications” and
which served as the “primary resource for processing loans throughout the project.”226
In one section, the PPP Processing Script warned Blueacorn’s loan reviewers that the
company believed that reviewers were identifying too many fraudulent documents and flagging
too many loans for additional fraud review.227 The PPP Processing Script informed reviewers
that application review process changes were being made “in response to feedback that
[reviewers] were marking too many documents as fraudulent.”228 The document instructed
Blueacorn’s PPP loan application reviewers to accept loans with suspicious supporting
documentation: “if you are doubtful of a document authenticity but are not certain, the rule of
thumb is to accept it.”229

30


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 189

Page 34 of 131 PageID

.
Asked why Blueacorn’s “primary resource for processing loans” warned reviewers to
flag fewer applications for fraud, Blueacorn attempted to blame former strategic advisor and
Paynerd owner Matthew Mandell, telling the Select Subcommittee that it was “likely” Mr.
Mandell who had complained that Blueacorn reviewers were identifying too many potentially
fraudulent documents.230 The company stated that Mr. Mandell “regularly suggested to
Blueacorn leadership that Blueacorn’s increasingly rigorous system was too sensitive.”231
Blueacorn claimed that Mr. Mandell was likely motivated to make these comments to maximize
his personal profits since his “company [Paynerd] was compensated only for marketing leads
that ripened into completed loans.”232
While Blueacorn blamed Mr. Mandell for suggesting that fraud controls be weakened,
evidence appears to indicate that Blueacorn’s leadership did not push back. On the contrary, the
suggestion that PPP application reviewers apply only limited scrutiny to potentially fraudulent
applications was reflected in the company’s primary guidance document.233 Blueacorn’s own
revenue and the compensation of many of its executives was also tied to the number of
applications that ripened into completed loans, meaning that any incentive that Mr. Mandell had
to maximize the number of completed loans was also shared by the company itself.
The PPP Processing Script also instructed Blueacorn’s PPP application reviewers to only
flag applications with “extremely obvious fraud” and to ignore other less blatant attempts to
submit fraudulent identification documents.234 Blueacorn PPP loan reviewers were instructed
not to flag identification documents with strange font alignment, signatures in unusual places, or
incorrect or missing watermarks.235 Instead, Blueacorn asked its reviewers to be on alert for loan
applications with such extremely obvious markers of fraud as applications in the name of
“Ronald McDonald” or with an address of “123 ABC Lane.”236 Blueacorn’s guidance explicitly
told PPP loan reviewers not to check drivers’ licenses received as part of a PPP loan application
against websites with examples of genuine drivers’ licenses.237

31


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 190

Page 35 of 131 PageID

Blueacorn defended its decision to instruct its reviewers not to report indicators of fraud,
informing the Select Subcommittee that “individual reviewers were ill-suited to identify any but
the least sophisticated fake identification documents.”238 Blueacorn argued that other layers of
review, namely an “enhanced due diligence” (which began on June 11, 2021—after the PPP
program ended) and a specialized investigations team, were better equipped to identity fraud.239
However, Blueacorn’s specialized teams only reviewed applications that were already flagged
for fraud by individual reviewers or other sources, meaning that they did not effectively act as a
backstop to the initial review team’s work.240
5.

Elev8 Advisors Encouraged PPP Loan Application Reviewers to Minimize Time
Spent on Application Reviews and to Overlook Fraud Flags

With Blueacorn’s apparent encouragement, Elev8 Advisors encouraged the friends and
family it hired to review applications at a pace that risked compromising the effectiveness of
their reviews. Ms. Spencer pushed reviewers to get through as many applications as possible,
apparently because doing so would maximize Blueacorn’s and Elev8 Advisors’ profits. In a
Slack message obtained by the Select Subcommittee, Ms. Spencer claimed that Blueacorn’s
Chief Operating Officer, Mr. Yahes, instructed her to “do nothing outside of making sure
[eligibility reviewers] get through 5000 files a day.”241 Blueacorn’s information technology
consultant responded, “oy vey, that’s a lot haha.”242 According to internal Blueacorn
communications, Mr. Yahes was one of two Blueacorn employees primarily responsible for
directing their eligibility verification team.243

32


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 191

Page 36 of 131 PageID

A former Elev8 Advisors contractor who conducted PPP loan reviews for Blueacorn
informed Select Subcommittee staff that Elev8 Advisors’ loan reviewers were told “the faster the
better” and that each loan application review “should take you less than 30 seconds.”244 In
another instance, Ms. Spencer told eligibility reviewers that Blueacorn expected reviewers to
complete, at a minimum, one PPP loan application review every two minutes.245 Elev8 Advisors
also assisted Blueacorn in obtaining the services of a publicly-traded company, Business
Warrior, to also conduct PPP loan verification services.246 In a series of emails between the
President of Business Warrior and two top Blueacorn executives, Business Warrior’s President
stated that their loan verification staff would be able to review a PPP application in just 90
seconds and complete 40 applications per hour per reviewer.247 Emails obtained by the Select
Subcommittee show that Blueacorn approved Business Warrior’s proposal and arranged to pay
the company three dollars per PPP application reviewed.248
6.

Blueacorn’s Automated Review Process Used Off-the-Shelf Technology That
Was—on at Least One Occasion—Weakened to Ensure Higher Loan Approval
Rates

Blueacorn claimed that it “simplif[ied] the application processes” for lending programs
by using “high-quality, proprietary lending software and fraud detection tools.”249 Documents
obtained by the Select Subcommittee reveal that Blueacorn largely relied on off-the-shelf fraud
and KYC technology software subscriptions. According to Blueacorn, it relied on four
commonly used third party software products (Plaid, Giact, Onfido, and IDology) to “help
improve our risk posture and mitigate fraud.”250 The Select Subcommittee’s investigation
determined that, at one point, even one of these off-the-shelf technologies was put aside to
decrease the amount of potential fraud flagged and increase the number of applicants receiving
loans (which, by extension, would increase Blueacorn’s profits).
At the end of March 2021, Blueacorn began using IDology, a software that used an
applicant’s social security information to generate a list of multiple-choice questions that only
the applicant should be able to answer (such as which home address in a multiple-choice list was
associated with the applicant).251 In using this tool, Blueacorn determined that IDology
questions were “quite difficult” for many PPP applicants to correctly answer and flagged a large
number of applications as suspicious.252 Beginning in early April 2021, Blueacorn began to use
Onfido as its primary method of identity verification instead of the more rigorous IDology
questions or human reviews.253 Following Blueacorn’s switch to Onfido, applicants were only
directed to the IDology system if they failed Onfido or if their application was subsequently
flagged as suspicious at a later point in the application process.254
7.

Blueacorn Prioritized and Gave Less Scrutiny to High Value Loans and
Applicants Deemed “VIPPP”

Contrary to Congress’s clear intent, the Trump Administration and many big banks failed
to prioritize small businesses in underserved markets, including minority and women-owned
businesses.255 As a result, small businesses that were truly in need of financial support during
the economic crisis often faced longer waits and more obstacles to receiving PPP funding than
33


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 192

Page 37 of 131 PageID

larger, wealthier companies.256 The Biden-Harris Administration took steps to reach womenowned, minority-owned, low- and moderate-income, rural, and other underserved communities
through the PPP.257 Blueacorn claimed to support this mission and stated that reaching “[t]iny
businesses, self-employed individuals, and minority communities [that] are left out in the cold”
was their fintech’s “core mission.”258 Despite this proclamation, information uncovered by the
Select Subcommittee indicates that Blueacorn instructed its staff to prioritize—and give less
scrutiny to—high dollar loans that would earn the company higher commissions.
In communications obtained by the Select Subcommittee, Blueacorn’s senior leadership
instructed a Blueacorn contractor to prioritize certain large dollar PPP loan applications for
review and approval over small dollar PPP loans. In one such communication, Ms. Hockridge
reminded Ms. Spencer, who supervised Blueacorn-contracted loan reviewers, that large dollar
PPP loans were more profitable for the company:
I mean…I don’t believe in prioritizing the biggest loans over the smallest…but, there
should be some understanding that as we get started…closing these monster loans will
get everyone paid.259
In the same message, Ms. Hockridge also suggested that Blueacorn’s loan reviewers did
not need to closely review a “monster loan[]” and wrote that it “will take less than 3 minutes to
approve this application,” assuring Ms. Spencer that the loan was “clean.”260

In another Slack message obtained by the Select Subcommittee, Ms. Hockridge
suggested that Blueacorn loan review contractors should prioritize a high dollar PPP loan in the
amount of $1.9 million. Ms. Hockridge wrote:
I have a $1.9M deal that’s been sitting in UW [underwriting] Ready for 5 DAYS!!! I
don’t need to tell you how much Blueacorn makes off that loan alone …261

34


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 193

Page 38 of 131 PageID

In addition to prioritizing large dollar loans over smaller loans, Blueacorn also created an
exclusive category of PPP loans that were tagged with a “VIPPP” code and managed by Ms.
Hockridge outside of the standard Blueacorn workflow.262 Ms. Hockridge appears to have been
eligible to receive an additional commission for each funded VIPPP loan.263 Evidence obtained
by the Select Subcommittee indicates that Ms. Hockridge, on multiple occasions, appeared to
instruct Blueacorn loan reviewers to give loans in her VIPPP channel preferential treatment and
less scrutiny.
In an email between Blueacorn and a PPP loan applicant that were posted to an internet
message board, a Blueacorn employee reporting directly to Ms. Hockridge apologized for delays
that the PPP applicant faced related to their PPP loan.264 In that email, the employee wrote,
“Your loan did not come to us at VIPPP. You may have applied on the website, rather than our
link for VIPPP.”265 The employee attributed the poor service given to this PPP loan applicant to
being “assigned to the regular side of Blueacorn.”266 The employee then promised that she
would “work on getting you assigned to us at VIPPP” and promised that being assigned to the
special VIPPP channel would allow her to “get things moving right away.”267
In at least one instance, Ms. Hockridge instructed a Blueacorn application reviewer to
approve large dollar “VIPPP” loans without following Blueacorn loan review procedures and
without running the applications through Blueacorn’s automated fraud detection software
system.268 Representatives of a Blueacorn contractor told the Select Subcommittee:
In May 2021, [a Blueacorn loan reviewer] was asked to assist Ms. Hockridge in
reviewing these VIPPP loans. [The Blueacorn loan reviewer] informed [her supervisor]
that Ms. Hockridge was asking her to prioritize and submit large loans without following
protocols that [loan reviewers] had been trained to complete.269
In another communication obtained by the Select Subcommittee documenting a separate
incident, Ms. Hockridge instructed that Blueacorn contractors should approve a “VIPPP” PPP
loan application without full review, writing: “no need to put your spot=checker [sic] on it--the
file is good…just needs approval from someone other than me…since it’s in my channel.”270

Ms. Hockridge also instructed subordinates to deprioritize non-VIPPP loans. In Slack
messages obtained by the Select Subcommittee, Ms. Hockridge directed a Blueacorn loan
reviewer to “delete” certain loan applications not affiliated with her VIPPP channel, including
loans that were part of another channel referred to as “QWK.”271 Referring to these loans, Ms.
Hockridge wrote, “FUCK QWK,” “delete them,” and “who fucking cares.”272 Blueacorn’s
35


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 194

Page 39 of 131 PageID

founder made clear that the focus on approving and funding VIPPP loans meant that some nonVIPPP loans might not be funded, but that she did not care about the disruption that it would
cause to regular—non VIPPP—PPP applicants. 273 Ms. Hockridge wrote, “We’re not the first
bank to decline [PPP] borrowers who deserve to be funded … they go elsewehre (sic).”274

8.

Blueacorn Executives Improperly Charged PPP Applicants for Loan Processing

According to PPP program guidance, agent fees could only be paid by the lender from the
fees the lender received from the SBA. PPP rules expressly prohibited loan agents from
collecting fees directly from borrowers or being paid out of PPP loan proceeds.275 However,
according to Blueacorn’s primary compliance consultants, Blueacorn co-founders Mr. Reis and
Ms. Hockridge requested that PPP borrowers directly pay them substantial fees out of the
proceeds of their PPP loans.276 Representatives for the principals of Elev8 Advisors told the
Select Subcommittee that Mr. Reis and Ms. Hockridge attempted to charge multiple PPP
applicants a fee of up to 10 percent of the loan value for PPP application preparation and
processing services, in violation of SBA rules.277
Elev8 Advisors’ representatives also told the Select Subcommittee that Elev8 Advisors’
owners informed Blueacorn’s Chief Operating Officer that Ms. Hockridge had asked PPP
applicants to pay her directly for Blueacorn’s PPP assistance services.278 The representatives of
Elev8 Advisors also told the Select Subcommittee that Mr. Reis asked Elev8 Advisor’s owners
for payments after he helped them get a first round PPP loan approved.279 The Select
Subcommittee could not confirm how many loans Ms. Hockridge may have improperly charged
additional fees for.
9.

Blueacorn Executives Gave PPP Loans to Themselves, Their Businesses, and
Their Business Associates Without Controls to Prevent Conflicts of Interest

The Select Subcommittee’s investigation revealed that individuals with senior leadership
positions at Blueacorn and their close business or family associates—including those affiliated
with Elev8 Advisors—received more than $650,000 in PPP loans.280 Of that amount, Mr. Reis,
Ms. Hockridge, and companies that they owned received nearly $300,000 in PPP loans, nearly
$200,000 of which came through Blueacorn or from Blueacorn’s most important business
partners: Prestamos and Capital Plus.281 A Blueacorn loan review supervisor who spoke with
36


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 195

Page 40 of 131 PageID

Select Subcommittee staff on condition of anonymity said that the fintech had no formal controls
or policies to govern the issuance of loans to insiders.282
In 2021, Mr. Reis received a $20,832 PPP loan for himself as an independent
contractor,283 a separate $20,832 PPP loan for Juuice, LLC (a company in which he is the sole
member and employee),284 and a $62,500 loan for Juuice, Inc. (a separate mobile phone
accessory company that he both owned and claimed to be one of three employees of).285 The
loans for Mr. Reis and Juuice, Inc. were both facilitated by Blueacorn and the loan for Juuice,
LLC was issued by Blueacorn partner Prestamos.286
In 2021, Ms. Hockridge received a $14,427 PPP loan for herself as an independent
contractor287 and a separate $20,832 PPP loan for Body Politix, LLC (a company in which she is
the sole member and employee),288 and likely benefited from the $62,500 PPP loan Mr. Reis
obtained for Juuice, Inc., a company that Ms. Hockridge claimed paid her a six-figure salary.289
Ms. Hockridge and her affiliated companies received nearly $100,000 in PPP loans—each
facilitated by Blueacorn—in the same year that she was leading Blueacorn’s loan processing and
review operations.290

Figure 3: Table of PPP loans received by Blueacorn’s Founders.291

Other Blueacorn owners and executives also received PPP loans that were facilitated by
the company. Blueacorn Co-Founder Michael Cota was linked to two Blueacorn PPP loans.292
Lincoln Jore, another of Mr. Reis’ business partners who was then-president of Juuice, Inc.,
received at least $108,000 in PPP loans through Blueacorn’s lending partners for himself and his
business, Men’s Revival LLC.293
On June 8, 2021, Capital Plus Chief Financial Officer (CFO) Farzana Giga asked
Blueacorn to provide it with a list of PPP loans received by Ms. Hockridge, Mr. Reis, their
affiliated companies, and other Blueacorn insiders.294 Capital Plus did not disclose the reason for
this request or how the lender became aware of the loans, months after they were issued.295 In
37


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 196

Page 41 of 131 PageID

response to Capital Plus’ request, Blueacorn identified 11 loans related to Blueacorn insiders. 296
Much of the paperwork associated with these loans had been signed by Ms. Giga.297
In a June 23, 2021 letter to Capital Plus, Blueacorn claimed that, “[i]n the course of
compiling the list,” the company “developed questions about several of the applications.”298 Ms.
Hockridge and Mr. Reis, at Capital Plus’ request, repaid the PPP loans totaling over $100,000 in
July 2021.299 At least six of the PPP loans (totaling at least $165,124) that Mr. Reis and Ms.
Hockridge received from Blueacorn-partner Prestamos and other lenders were forgiven,
according to public records.300
10.

Blueacorn’s Co-Founders May Have Fraudulently Received PPP Loans

The PPP loan applications for Mr. Reis and Ms. Hockridge contain inconsistencies
indicating that Blueacorn’s owners—who were personally involved in running fraud prevention
and eligibility verification efforts for the fintech—may have themselves committed fraud against
the PPP. In a PPP loan application signed by Mr. Reis on February 5, 2021, Mr. Reis falsely
claimed to be both a military veteran and an African American,301 contradicting other PPP loan
applications where he listed himself as white and a non-veteran.302 Mr. Reis may have falsely
listed himself as an African American veteran in an effort to take advantage of changes made in
early 2021 to prioritize veteran and minority-owned businesses.303
In another example of potentially suspicious activity, Mr. Reis—claiming to be an
independent contractor—was granted a PPP loan on April 27, 2020 based on documentation he
submitted purporting to show that he received $96,000 from Body Politix—a company owned by
his wife, Ms. Hockridge.304 However, a bank statement supplied by Mr. Reis as part of his PPP
application to Capital Plus show no transfers from this company, or any transactions indicating
that he received $96,000 in consulting income.305 Further, in PPP loan applications submitted by
Ms. Hockridge for Body Politix in June 2020 and February 2021, the company did not list the
purported payments to Mr. Reis when providing details on the company’s expenses.306 These
inconsistencies raise concerns that Body Politix did not, in fact, make the payments that Mr. Reis
claimed as the basis of his income in his PPP loan application.
Although the SBA required PPP applicants to disclose as part of their application any
other businesses that they owned, both Mr. Reis and Ms. Hockridge checked the “No” box on
multiple PPP applications to indicate that they did not have any other businesses.307 This is
apparently contradicted by other PPP applications and public records indicating the couple’s
ownership in Juuice, Inc., Juuice, LLC, Body Politix, and Blueacorn. The failure to disclose
ownership in other companies may have been an effort to prevent additional SBA scrutiny of the
multiple streams of PPP funding that they received.
As noted in Section 12 below, Capital Plus informed the Select Subcommittee that it
initiated an investigation into loans that it issued to Mr. Reis, Ms. Hockridge, and their affiliates.
After that investigation, Mr. Reis and Ms. Hockridge repaid some of these loans at Capital Plus’s
request.308 Nevertheless, the inconsistencies and indicators of potential fraud in the PPP
applications of Mr. Reis, Ms. Hockridge, Juuice, Inc., Juuice, LLC, and Body Politix, LLC—in
addition to their approval by Blueacorn—merit further investigation by the SBA OIG and, if
warranted, DOJ.
38


Case 1:25-cv-00117-FB-CHK

11.

Document 1-14 Filed 01/07/25
#: 197

Page 42 of 131 PageID

Elev8 Advisors’ Owners Worked with Blueacorn Leadership to Give Themselves
Dubious PPP Loans Through Blueacorn

On February 15, 2021, days after securing multiple PPP loans for herself and her
company, Ms. Hockridge—who at the time owned Blueacorn and took a leading role in its loan
underwriting operations—sent a message to Ms. Spencer informing her that she would be
“creating applications for Elev8 [Advisors] and Sweet Pea [sic] today.”309 In the same February
15, 2021 message, Ms. Hockridge told Ms. Spencer: “Sorry for the delay – I didn’t realize that
Nate [Reis] had told you we would take care of [your PPP loans]. My bad! I’ll fix that today.”310

One month later, on March 8, 2021, Ms. Hockridge again messaged Ms. Spencer
regarding their personal PPP loans, writing: “Hey Kristen! I never heard back from Adam
[Spencer] on how he wanted to handle your personal PPPs. … I’m just going to send you all of
the info [and] docs we submitted…and you guys can take care of it.”311 Ms. Hockridge also
instructed the Spencers to direct their personal PPP applications to a specific employee of Ms.
Hockridge’s, writing: “Just make sure Jack [Blueacorn’s underwriting manager] underwrites
your applications, since he’s not one of your employees.”312 Communications obtained by the
Select Subcommittee show that Ms. Hockridge then sent corporate information related to the
Spencers and their businesses to Ms. Spencer.313 The Spencers would later receive PPP loans
through Blueacorn for themselves and at least one of their businesses.314

In March 2021, Mr. Spencer, Ms. Spencer, two of their sons (one of whom had recently
graduated high school), two other close relatives, and Sweet P Designs (owned by Ms. Spencer)
each received PPP loans from Blueacorn partner Capital Plus.315 These loans totaled over
$117,000 and were all forgiven.316 Ms. Spencer’s Sweet P Designs received another PPP loan in
May 2021 worth $20,515 from Blueacorn partner Prestamos.317 Each of these loans came
through Blueacorn, even though, at the time, the Spencers were performing a significant amount
of Blueacorn’s eligibility verification and fraud prevention work.318 Additionally, Elev8
Advisors’ subcontractor, Business Warrior—which also reviewed PPP applications for
39


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 198

Page 43 of 131 PageID

Blueacorn—and its CEO received over $80,000 in PPP loans facilitated by Blueacorn’s lending
partners.319

Figure 4: Loans issued to the Spencers, their children, and the Spencers’ other businesses.320

The Select Subcommittee reviewed the applications corresponding to each PPP loan
granted to Mr. and Ms. Spencer, their businesses, and their family members. As with the loans
Mr. Reis and Ms. Hockridge secured for themselves, multiple loan applications contain markers
potentially indicative of fraud. Nearly all of these loans were approved by Blueacorn while the
Spencers were contracted to conduct eligibility verification and fraud screening for PPP loans.
In a spreadsheet obtained by the Select Subcommittee from Elev8 Advisors, multiple loans to the
Spencers, their businesses, and their family members were marked as having an “elev8” partner
code, indicating that the consultancy was involved in the processing of their own PPP loans.321
Despite listing themselves as co-owners of Elev8 Advisors Group LLC on a June 26,
2020 PPP loan application to Prestamos322—and despite Mr. Spencer’s ownership of Vital Card,
Inc. and vending services company Evergreen and Ms. Spencer’s ownership of Sweet P
Designs323—neither Mr. nor Ms. Spencer disclosed their ownership in these companies on PPP
loan applications, as required. In this regard, the Spencers appear to have made false statements
in an application for Sweet P Designs (signed by Ms. Spencer on March 2, 2021, and submitted
to Capital Plus),324 in an application for Ms. Spencer (signed by Ms. Spencer on March 15, 2021,
and submitted to Capital Plus),325 and in an application for Mr. Spencer (signed by Mr. Spencer
on March 18, 2021, and submitted to Capital Plus).326
Ms. Spencer made other questionable representations on multiple PPP loan applications.
In an application submitted to Prestamos, Ms. Spencer successfully sought a PPP loan based on a
claim that she was paid nearly $200,000 for “interior architect” services for her husband’s
company.327 This claim appears improbable since not only does Ms. Spencer not appear to have
had previous experience as an “interior architect,” but her husband’s company’s office address
matches the address of a WeWork shared office space and therefore likely had little need for
40


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 199

Page 44 of 131 PageID

“interior architect,” architectural, or interior design services.328 Additionally, the bank
statements supplied as part of her application did not show financial transactions matching these
income claims.329
As part of another PPP loan application submitted to Capital Plus, Ms. Spencer claimed
that her Facebook clothing design store earned over $100,000 in 2020, achieving a net profit
margin of 80 percent.330 Ms. Spencer’s business’s purported net profit margin of over 80 percent
is almost 12 times higher than the average online retail apparel firm331—and is particularly
remarkable since the Facebook store has posted no activity since March of 2019.332
Additionally, financial documents related to Ms. Spencer’s company listed the cost of goods sold
as $11,500 and total expenses of $4,615 ($1,500 in “car and truck expenses” and $3,115 for
rented or leased “vehicles, machinery, and equipment”)—but notably listed no costs for
inventory or actual t-shirts.333
PPP loan applications associated with Mr. Spencer also contain details of questionable
veracity. In supporting documentation that Mr. Spencer submitted to Prestamos based on his
purported work as an independent contractor for Vital Card, Inc.—a company co-founded by Mr.
Spencer which does not appear to have brought a product to market as of 2020334—Mr. Spencer
claimed to have received $237,328 from the company in 2019.335 Yet, a second PPP loan
application submitted by Mr. Spencer based his PPP loan on income received as a “Financial
Transactions Processing, Reserve, and Clearinghouse Activities” contractor (possibly in
reference to his work for Elev8 Advisors), rather than on any income from Vital Card, Inc.336
In addition to the suspicious indicators in the Spencers’ own loans, a person with
knowledge of the Spencers’ activities during the PPP informed Select Subcommittee staff on
condition of anonymity that the Spencers instructed at least one family member who did not
qualify for a PPP loan to submit a loan application to Blueacorn with false employment and
income information.337 Altogether, at least 11 PPP loans (totaling nearly $200,000) that
Blueacorn facilitated for the Spencers, their companies, and their relatives were forgiven—
including all those containing suspicious information.338
The Spencers and Elev8 Advisors also earned millions from reviewing PPP loans.339
These profits—which ultimately derived from taxpayer funds—appear to have had a significant
impact on the Spencers’ lifestyle. The couple made a number of large purchases shortly after the
conclusion of the PPP. In July 2021, they purchased a nearly 11,000 square foot hilltop mansion
in Silverleaf, Arizona for nearly $8 million in an all-cash deal.340 Shortly thereafter, they used a
series of real estate transactions to give ownership of the mansion to an entity called Elev8
Holdings LLC.341 In 2021 and 2022, the Spencers acquired several luxury cars, including a
Porsche Taycan Turbo with an MSRP of $153,600.342

41


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 200

Page 45 of 131 PageID

Public records also show that at least 16 PPP loan application reviewers working for
Elev8 Advisors on behalf of Blueacorn received over $150,000 in PPP loans through
Blueacorn.343 A former Blueacorn supervisor told Select Subcommittee staff that Blueacorn and
Elev8 Advisors had no formal controls or policies in place governing the manner by which
employees or contractors could receive PPP loans themselves.344 According to the supervisor,
employees of Blueacorn and Elev8 Advisors were encouraged to apply for PPP loans but were
given no special instructions, except for being instructed to ask other team members to review
their loans, instead of reviewing their own loans.345 Troublingly, a person with knowledge of
Blueacorn contacted the Select Subcommittee to report that Mr. Spencer instructed members of
his family to apply for loans through Blueacorn, despite knowing that those family members did
not have eligible businesses.346
Mr. Reis, Ms. Hockridge, or Blueacorn were involved in the issuance of nearly all of the
PPP loans received by Mr. Spencer, Ms. Spencer, and their companies.347 Ms. Spencer and Ms.
Hockridge discussed their efforts to secure some of these PPP loans in Slack messages obtained
by the Select Subcommittee.348 Ms. Hockridge specifically mentioned that she and Mr. Reis
submitted the documentation for the first round of PPP loans that the Spencers received.349 Ms.
Hockridge also told Ms. Spencer that Mr. Spencer “wanted to restructure the deal based on how
we submitted for 1st Round.” 350 In regard to later PPP loans obtained by the Spencers, Ms.
Hockridge told the Blueacorn financial crime consultants that “you guys can take care of it.”351
12.

Capital Plus, Which Had Primary Responsibility for Overseeing Blueacorn Under
PPP Program Rules, Reaped Windfall Profits While Not Conducting Sufficient
Oversight

Blueacorn partnered with Capital Plus, a small, for-profit CDFI with 34 full-time
employees, to jointly facilitate the issuance of over half a million PPP loans.352 According to
Capital Plus, Blueacorn was engaged to “provide[]significant identity and eligibility verification
and fraud compliance services.”353 Blueacorn ultimately submitted a total of 521,221 loan
applications to the SBA on Capital Plus’ behalf. 354 Capital Plus told the Select Subcommittee
42


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 201

Page 46 of 131 PageID

that they “relied on Blueacorn’s technological solutions to determine borrower eligibility and
combat fraud efficiently and at scale.”355 However, as an SBA lender, Capital Plus was required
to “exercise[] day-to-day responsibility for evaluating, processing, closing, disbursing, servicing,
liquidating, and litigating its SBA portfolio.”356
Despite the fact that Capital Plus was responsible under SBA regulations for each PPP
loan that it issued with Blueacorn, the lender also provided little evidence of a formal governance
structure to monitor anti-fraud efforts or more generally conduct oversight of Blueacorn’s
activities.357 Instead of proactively screening loans received from Blueacorn, Capital Plus told
the Select Subcommittee that “personnel reviewed loan applications and other materials upon
becoming aware of some indication of fraud or ineligibility.”358 Capital Plus was unable to tell
the Select Subcommittee how many of the loan applications that it received from Blueacorn were
given a manual review by employees of Capital Plus to verify eligibility or to identify fraud.
Capital Plus told the Select Subcommittee: “Capital Plus does not maintain statistics regarding
the number of PPP loan applications that were manually reviewed by Capital Plus personnel to
verify eligibility or to identify fraud”359 and that it “does not maintain a comprehensive log of all
individual loan applications manually reviewed by Capital Plus personnel.”360
When asked whether Capital Plus held executive or senior leadership meetings
concerning potential, suspected, or confirmed fraud or other financial crime related to PPP loans
or loan applications that came from Blueacorn, the lender did not provide details of any such
meetings. Capital Plus claimed that “senior leadership regularly discussed combating potential
fraud related to PPP loans and applications,” but no minutes were kept of those meetings.361
Capital Plus declined to provide briefing materials related to those meetings and it is unknown if
any were created.362 Capital Plus similarly declined to provide total amounts budgeted for and
spent on AML, BSA, eligibility verification, and fraud compliance during the PPP.363 However,
Capital Plus engaged Everett Advisors, the same consultancy retained by Blueacorn, to conduct
audits and assessments of Capital Plus’s antifraud and compliance programs.364
Capital Plus also issued hundreds of thousands of dollars in loans to Blueacorn’s
principals and their businesses.365 Capital Plus issued these loans despite the fact that
Blueacorn’s principals were clearly named as owners or key employees in documents supporting
loan applications.366 Ms. Giga—Capital Plus’ CFO—signed off on the loan to Mr. Reis where
he inaccurately described himself as an African American and a veteran.367 Ms. Giga also
attested that she had no “financial interest in the applicant” of each loan, as required by the SBA
application.368 However, although she did not have a personal ownership interest in these
applicants, her employer stood to profit from fees on the large quantities of loans that Blueacorn
referred to Capital Plus through their ongoing business partnership. Capital Plus also signed off
on a number of other loans that appear to raise similar conflicts of interest, including loans to
Elev8 Advisors’ principals, their businesses, and their family members.369 All of these loans
were processed through Blueacorn itself.370 In response to inquiries by the Select Subcommittee,
Capital Plus representatives claimed that it was “made aware” of the Blueacorn founders’ loans
through an unidentified source sometime after they were approved, despite Ms. Giga having
authorized the loans in the first instance.371

43


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 202

Page 47 of 131 PageID

Despite these issues, the CEO of Capital Plus’ publicly traded parent company,
Crossroads Systems, Inc., said in the second quarter of 2021 that “our success in the [PPP] has
put us into the best position we have ever been in.”372 As of the end of the PPP in May 2021,
Capital Plus was fourth in the SBA’s list of top lenders by number of PPP loans approved in
2021.373 Shareholder disclosures by Capital Plus’ parent company would later describe 2021 as
a “transformational year” for the company, in part because Capital Plus’ “[p]articipation in PPP
resulted in total revenue from operations for the fiscal year ended October 31, 2021 of $930.6
million compared to $36.6 million for the same period of 2020, or 2,440%.”374 The increase in
revenue was attributable to PPP lender fees, which were paid by SBA as a percentage of PPP
loan amounts, scaled to incentivize lenders to distribute smaller loans.375
13.

Blueacorn Took the Majority of SBA Processing Fees from Prestamos CDFI—Its
Non-Profit Lending Partner

Prestamos is a wholly owned subsidiary of a nonprofit organization, Chicanos Por La
Causa (CPLC).376 At approximately $7.7 billion in loans issued, Prestamos was the third-ranked
lender for PPP by net dollar value of loans issued in 2021, after JP Morgan Chase Bank and
Bank of America.377 Prestamos approved nearly half a million loans in 2021, more than any of
the other top PPP lenders for that year.378 As of late December 2019, Prestamos had provided
“more than $50 million in loans supporting more than 400 businesses” since its formal inception
in 2000.379 In other words, in the two decades prior to the pandemic, Prestamos likely issued less
than one percent of the funds that it issued in 2021 as part of the PPP.
Prestamos issued 925 PPP loans (worth $26 million total) in 2020 and more than 2,200
loans in 2021 through its preexisting SBA lending platform.380 According to Prestamos, its
employees manually reviewed each of those applications.381 Upon entering the contract with
Blueacorn, Prestamos immediately and dramatically increased its PPP lending. Between April
14, 2021, and the end of round three in June 2021, Prestamos processed approximately 434,000
loans.382
Prestamos’ review process for loans issued from April to June 2021 with Blueacorn was
less intensive than the process for loans it directly issued before partnering with Blueacorn.
Prestamos told the Select Subcommittee that it primarily conducted oversight of the loans
processed by “spot-check[ing] certain loans” at random but that this “QC effort” did not involve
“digging into every file.”383 Prestamos said that these spot checks were “not formally logged or
documented as they occurred.”384 Prestamos informed the Select Subcommittee that it would
reject an application received by Blueacorn “only if a flag arose,” including loans flagged by the
SBA or a bank receiving the funds.385 Prestamos also did not conduct hands-on oversight of
Blueacorn’s anti-fraud systems. When asked whether Prestamos gave direction to Blueacorn as
to how to do fraud checks or directed the fintech to change their processes in any way,
Prestamos’ CEO stated: “No, we didn’t. We did spend a lot of time on the front end to try to
understand what they were doing to prevent or eliminate any fraud.”386
In a briefing with Select Subcommittee staff, Prestamos’ President acknowledged that the
CDFI was “not prepared for all the applications we received” during the PPP387 and said that the
nonprofit knowingly took on a role larger than it had been prepared to handle because they saw a
44


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 203

Page 48 of 131 PageID

limited number of PPP funds going to underserved communities and believed that Blueacorn
could help them serve those communities without compromising program requirements:
“[W]e’re looking at it from the mission perspective, of: Who else is going to serve the rest of the
country? Nobody else was doing it the way we were.”388
C.

Womply’s PPP Fraud Screenings Failed to Prevent “Rampant Fraud”—and
Were Accompanied by Questionable Business Practices—Despite Generating
Over a Billion Dollars in Profits

Multiple high volume PPP lenders relied on Womply to review PPP applications for
eligibility and potential fraud, even though the fintech lacked prior experience in conducting high
volume small business lending, managing large scale financial crime compliance, or creating
scalable automated fraud prevention technology.
Communications obtained by the Select Subcommittee show that some of Womply’s
partners—who collectively issued over $16 billion in PPP loans in 2021—accused the fintech of
referring to them hundreds of thousands of PPP applications containing “rampant fraud.”389
Throughout the PPP, many of Womply’s closest business partners questioned its fraud
prevention capabilities—in one case describing the fintech’s technological systems as “put
together with duct tape and gum.”390
This ad hoc system resulted in Womply referring applications with “obvious[ly]
fraudulent” supporting documentation and led the fintech to become one of the “paths of least
resistance” for those looking to commit PPP fraud.391
1.

Lenders Paid Womply $2 Billion in SBA Processing Fees to Review PPP
Applications for Fraud and Verify Applicant Eligibility

Womply, also known as Oto Analytics, Inc., was founded in 2011 as a provider of
reputation management, email marketing, and business intelligence services for small
businesses.392 Womply’s leadership team, led by Founder and CEO Toby Scammell and CoFounder and President Cory Capoccia, were deeply involved in all aspects of the fintech’s
operations during the PPP.393
The fintech—which had never before involved itself in loan processing or high volume
fraud prevention screening—began its involvement in the PPP in April 2020 as a referral
agent.394 In this role, Womply created a website through which small businesses seeking a PPP
loan could input their personal information that Womply would, in turn, submit to a lender.395
Upon receipt of the referral, lenders would conduct all other tasks associated with processing,
managing, and tracking the PPP loans, including verifying borrower identity and auditing
borrowers.396
Womply entered into referral agent agreements with ten lenders or platforms and
ultimately referred approximately 7,000 PPP loans totaling $360 million in taxpayer dollars
while acting as a referral agent. The average amount of these loans was approximately

45


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 204

Page 49 of 131 PageID

$52,000.397 In 2020, Womply received just under $3 million from lenders for its referral
services.398
Beginning in February 2021, Womply initiated a “PPP Fast Lane” service, which it
claimed would provide PPP lenders with technological, marketing, underwriting, prequalification review, eligibility verification, and other services.399 PPP lenders Harvest Small
Business Finance, LLC (“Harvest”), Benworth Capital Partners, LLC (“Benworth”),
Fountainhead SBF LLC (“Fountainhead”), DreamSpring, and the Sunshine State Economic
Development Corporation used Womply’s PPP Fast Lane service.400 These five PPP lenders, to
whom Womply provided both referral and LSP services, collectively issued over a million PPP
loans (totaling more than $16 billion) in 2021.401
In a presentation to Select Subcommittee staff, Womply explained that, as part of its new
PPP Fast Lane service, the fintech’s staff (1) conducted automated eligibility checks; (2)
identified and verified their PPP borrowers’ identities through automated and manual KYC
management; (3) conducted automated and manual bank and tax document analysis to confirm
PPP program eligibility; and (4) implemented automated and manual anti-fraud tools and
measures to detect application fraud, in service of BSA requirements.402 Applicants that passed
Womply’s pre-qualification reviews were then forwarded to one of its partner lenders.
According to information obtained by the Select Subcommittee, PPP loan applicants submitted a
total of over 3.7 million applications in 2021 through Womply, with most likely going through
their PPP Fast Lane program.403 Of that 3.7 million, 70 percent, or 2.58 million applications,
were sent to lenders after passing Womply’s pre-qualification reviews and underwriting
processes.404
In March 2021 alone, Womply referred 889,275 PPP loan applications to lenders.405 In
April 2021, Womply’s busiest month, the fintech referred over 1.2 million PPP loan applications
to lenders.406 In just one week of that month, the fintech reviewed, processed, and referred over
375,000 PPP loan applications.407 Ultimately, over 1.3 million PPP loans that went through
Womply—out of the 2.58 million that Womply referred to lenders—were funded.408 By the end
of the program, Womply reviewed and referred approximately $16 billion in taxpayer dollarfunded PPP loans.409 Womply claimed that the services it provided were “crucial to the success”
of the PPP.410
Womply’s lending partners that participated in its PPP Fast Lane program told the Select
Subcommittee that they relied on the fintech to weed out ineligible and fraudulent PPP
applicants. Harvest—which was referred more than 800,000 PPP loan applications by
Womply—told the Select Subcommittee that “Womply assured Harvest that it would only refer
to Harvest complete applications that Womply’s platform had confirmed were for eligible
borrowers.”411 In a conversation with Select Subcommittee staff, Harvest’s Managing Director
and Chief Operating Officer Adam Seery said that Harvest understood that “Womply’s system
had checkmarks that would check every part of eligibility requirements. At the point when [the
PPP application] came to us, the loan should be ready to go.”412
Womply lending partner Fountainhead told the Select Subcommittee that Womply was a
“super loan agent” that it believed had the ability to “use some technology to do a lot of the KYC
46


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 205

Page 50 of 131 PageID

and AML type mechanisms that were clearly spelled out as part of PPP guidelines.”413
Similarly, Womply lender Benworth, which received over 400,000 PPP applications from
Womply, also relied on the fintech to review PPP loan applications.414 According to Benworth,
“Womply handled eligibility verification and fraud prevention in connection with hundreds of
thousands of PPP applications referred to Benworth by Womply.”415 Benworth told the Select
Subcommittee that the “key service” that Womply provided was “verifying—on the basis of
such information and documents—[a PPP] applicant’s eligibility for a PPP loan” and that a
“primary reason why Benworth contracted with Womply was [PPP] Fast Lane and its ability to
identify ineligible applicants and stop fraud.”416 Benworth also told the Select Subcommittee
that it relied on Womply to prevent fraud related to identity theft and the use of fake documents
by using its systems to validate a PPP applicant’s identity, authenticity, and type of documents
submitted, calculations for the PPP loan amount, and bank account information, among other
underwriting services.417
Agreements between Womply and its lending partners obtained by the Select
Subcommittee reveal that Womply often took at least half—and in some cases up to 90
percent—of all the taxpayer-funded fees allocated to lenders by SBA to compensate it for
processing PPP loans.418 Under these agreements, Womply was entitled to fees both for
referring applicants to PPP lenders and for providing its PPP Fast Lane pre-qualification review,
eligibility verification, and fraud detection services.419 According to Womply, the vast majority
of its revenue—$1.9 billion in 2021—was “PPP Technology Service Revenue” from the PPP
Fast Lane.420 Additionally, multiple Womply contracts contain provisions that imposed “UnderFunding Fees” that required lenders to pay Womply additional funds as a penalty for failing to
fund a certain value of PPP loans in a calendar week.421
2.

As Womply Pushed Lenders to Fund as Many PPP Loans as Possible, Its PPP
Lending Partners Observed That the Company Had Poor Processes and Was
Approving a Large Number of Seemingly Fraudulent Applications

a.

Womply’s PPP Lending Partners Expressed Concern About the Quality of the
Company’s Fraud Screenings, with One PPP Lender Accusing Womply of
Referring PPP Loan Applications with Missing Documents and “Obvious
Fraudulent Information”

In a conversation with Select Subcommittee staff, the CEO of Fountainhead—one of
Womply’s major lending partners—described the PPP Fast Lane as “kind of put together with
duct tape and gum.”422 The lender said that, despite Womply having developed the system
specifically to process PPP loans, “I don’t think [Womply’s] system was built to handle the
workload it was put under” and that “there were always problems with their system in terms of
tech glitches.”423

47


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 206

Page 51 of 131 PageID

Womply lending partner DreamSpring also expressed concern about Womply’s prequalification review capabilities and repeatedly stated that the fintech was referring obviously
fraudulent PPP applications. In a March 20, 2021 email, DreamSpring’s Chief Lending and
Client Experience Officer notified Womply that some of the applications that the fintech referred
to the lender, mostly from Florida, had “a bunch of fraud.”424 In a March 30 email to Mr.
Capoccia, DreamSpring’s Chief Operations and Innovation Officer told Womply that the fintech
had referred PPP applications containing “[t]ax returns with obvious fraudulent information.”425
DreamSpring also told Womply that the fintech had referred “[applications] with no [t]ax return
attached” as required. 426 In the same email, DreamSpring’s Chief Operations and Innovation
Officer stated that the company was “still seeing some important issues come up during our
review” of the PPP applications referred by Womply and that the lender wanted to have a
discussion with Womply to “see how [we] can work together to mitigate the risk of receiving
more volume with errors…”427 In a March 31 email, DreamSpring told Mr. Capoccia that “we
need to address [these errors] asap.”428
On April 13, 2021, Mr. Capoccia pressed DreamSpring to fund more PPP loans. Mr.
Capoccia asked DreamSpring’s Chief Operations and Innovation Officer by email if the lender
would “increase your daily [PPP] funding amounts closer to the $20m/day that we originally
discussed a while back?” 429 In response, DreamSpring’s Chief Operations and Innovation
Officer again stated that Womply was sending the lender ineligible and likely fraudulent loans:
Yes we can but are having difficulty doing so because we continue to find applications
that ARE NOT eligible to fund. As you know, we are fully responsible and hold all the
risk associated to the loans. To answer your question, the only way we can get there is if
we can be reassured that everything in our pipeline is completely eligible.430
In that email, DreamSpring informed Womply that it would “be providing a list of
DUPLICATE names/apps, from a very small sample, we have just found today which are
evidently fraudulent loans” as evidence of the large amount of ineligible loans that the lender
was receiving from Womply.431 In the same email, DreamSpring’s Chief Operations and
Innovation Officer described the impact that their referral of “evidently fraudulent loans” had on
the lender’s operations and explained that failures in Womply’s screening processes, which were
still occurring in mid-April 2021, slowed down the funding of PPP loans:
All of this prompts us to review larger samples of the loans Womply is providing and
thus slows down our process. I am sure you understand that impedes us from funding
loans blindly in large volumes. I hope you understand and we will continue to fund on a
daily basis as much as we can while we mitigate potential risks to DreamSpring.
48


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 207

Page 52 of 131 PageID

Everything that is eligible in the pipeline will get funded. The $20m was based on the
assumption that we would not be having to review larger and larger samples of
applications.432
The CEO of PPP lender Lendistry—a fintech which itself issued over $4.7 billion in PPP
loans in 2021—also expressed concerns to Womply and its lending partner Harvest regarding
their fraud prevention and screening processes and asked for details on the companies’ fraud
mitigation processes. On June 8, 2021, Lendistry’s CEO emailed Mr. Scammell and Harvest’s
Mr. Seery:
We have noticed a meaningful increase in the number of third-party and other inquiries
related to fraud associated with applicants coming through Harvest. Can you confirm
that your team is focused on making sure these issues are resolved and provide us with a
written summary or other documentation of your team’s fraud mitigation processes?433
Mr. Seery, adding Mr. Capoccia to the email chain, responded by asking for “specific examples
of what you are seeing on your end” and stated that he would “connect with Womply and our
accounting team to review and investigate.”434
b.

Benworth—Womply’s Second Largest PPP Lending Partner—Criticized the
Fintech for Referring Applications with “Rampant Fraud”

The Select Subcommittee obtained a series of May 2021 emails between Womply and
Benworth, the fintech’s second-largest PPP lending partner, in which Benworth’s senior
leadership expressed serious concerns about Womply’s fraud prevention and eligibility
verification program capabilities.435 These emails show that, in late April and early May 2021,
Womply discovered what Benworth described as “rampant fraud” in the over 200,000 PPP loan
applications Womply had referred to Benworth.436 Subsequently, Benworth became concerned
that Womply’s application screening processes were inadequate and had exposed it to “a
dangerous amount of liability.”437 On May 10, 2021, Benworth’s CEO wrote to Mr. Scammell
and Mr. Capoccia:
Over the last several days, it has become clear that the services promised by Womply,
have not only not been provided, but have also placed our company in a very bad
predicament due to the high likelihood of fraud involved in many of the referred loans
from your company. We relied on the promises and representations made by Womply, as
to the validity and legality of the referred loans, when we entered into the agreement, yet
it has become clear…that Womply is unable to perform as agreed to.438

49


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 208

Page 53 of 131 PageID

Benworth wrote that banks involved in disbursing PPP loans referred by Womply had
previously voiced concerns about the high incidence of fraud in Womply-reviewed loans.439 On
May 7, 2021, Benworth’s CEO wrote to Mr. Scammell and Mr. Capoccia: “We are managing
our banking relationship very closely because they are anxious with the amount of fraud they are
seeing. Bluntly stated, we have been on the brink of being closed 3 times.”440 Benworth’s CEO
told Mr. Scammell: “I have given our bank assurances that we have every protocol in place to
mitigate fraud. Now it seems that may not be the case.”441
In a May 10, 2021 email, Benworth’s CEO alleged that Womply had “misrepresented
(either willfully or negligently) its ability to perform [PPP application review services]” and had
improperly excluded Benworth from the fintech’s communications with the SBA and SBA OIG
concerning fraud.442 Prior to that, on May 7, 2021, Benworth’s CEO wrote:
What happened to the systems you had in place that you were so quick to remind me of
yesterday? Are they no longer good enough? Have the services provided and promised
by Womply not as reliable as had been promised therefore requiring changes? Should we
be worried about the 200,000 loans already funded through the use of your Company’s
systems?443
In an earlier email to Benworth, dated April 8, 2021, Womply proposed changes to its
pre-qualification, fraud prevention, and other screening processes to better address fraud.444
Those changes included increased manual reviews and sending an email to PPP applicants
stating that “they should not attempt to commit fraud through [Womply].”445 Womply told
Benworth that such a warning would “minimize casual fraud.”446 However, in a May 10
response, Benworth’s CEO characterized Womply’s new proposed fraud review process as
50


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 209

Page 54 of 131 PageID

“unproven” and “last minute,”447 and pointed out that these changes would not detect fraud in the
200,000 loans that Womply had already referred to the lender.448
In a letter to the Select Subcommittee, Benworth stated that it had multiple concerns with
Womply’s performance, and had “many discussions” with Womply about the fintech’s
performance.449 For example, Benworth discovered documentation errors, and “[i]n the final
weeks of PPP, Benworth discovered that Womply was not providing Benworth with the
applicants’ supporting documents in many of the packages being submitted.”450 Benworth
further stated that its concerns with Womply’s performance grew towards the end of the PPP as
“Benworth also started receiving complaints—and even some subpoenas—relating to loans
referred by Womply.”451 Benworth’s CEO had earlier warned Womply that the fintech’s
activities left both companies exposed to criticism or penalty after the PPP ended, cautioning,
“When the party is over and the lights turn on, we [Benworth] will be the only ones at the party
(and it seems standing naked).”452
3.

Womply’s CEO Has a History of Unethical Behavior, Including a Conviction for
Criminal Fraud That May Have Warranted His Exclusion from SBA Programs,
Including the PPP

The SBA may prohibit entities from participating in its 7(a) lending program due to a
history of unethical or illegal conduct—including debarments and prior convictions for fraud.453
Mr. Scammell—who served as Womply’s CEO and ran its fraud prevention operations—was
previously convicted of financial crime and barred from the securities industry.454 Despite this,
Mr. Scammell’s company was allowed to oversee the distribution of billions of dollars of
taxpayer funds, with Mr. Scammell serving as the highest ranking Womply executive that had
“responsibilities related to the KYC process and anti-fraud measures implemented by Womply
for the Fast Lane Program.”455
In 2009, Scammell was charged with stealing proprietary and confidential information
from his girlfriend related to a potential merger between Disney and Marvel Entertainment, and
trading on that information using bank accounts belonging to his brother.456 On August 11,
2011, the SEC filed a civil action alleging that Mr. Scammell engaged in unlawful insider trading
through that conduct.457 On June 15, 2012, Scammell consented to the entry of a permanent
injunction prohibiting him from participating in the securities industry.458 On April 21, 2014, in
a parallel criminal case, Mr. Scammell pleaded guilty to “‘knowingly and with intent to defraud’
engag[ing] in a fraudulent scheme” related to insider trading and was sentenced to three months
of imprisonment and $120,000 in restitution, in addition to the $801,000 he was to pay under a
civil settlement with the SEC.459
In its opinion regarding the case, the SEC noted “the high degree of scienter involved in
[Mr. Scammell’s] offense and his intentional acts of concealment,” and concluded that “there is a
significant risk that, given the opportunity, he would commit further misconduct in the future.”460
Further, the SEC determined that “Scammell’s misappropriation of material, nonpublic
information for his own personal benefit and profit demonstrates that he is unfit to take on such
heightened responsibilities in any capacity in the securities industry.”461

51


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 210

Page 55 of 131 PageID

The SEC stated that Mr. Scammell provided misleading information regarding Womply
in the course of their 2011 investigation, noting that Mr. Scammell “tried to impede the [SEC’s]
investigation through a lack of candor in responding to the staff’s questions,” and that Mr.
Scammell continued his dishonest behavior even after his civil and criminal punishments. 462
The SEC wrote that, “[d]espite Scammell’s consent to an injunction, it is questionable whether
he has learned anything or has been ‘chastened and deterred’ as a result of his prior conduct.”463
The SEC also observed that “Scammell’s financial condition is [] closely tied to the
financial condition of Oto Analytics and Womply” and accused Mr. Scammell of lying to federal
regulators about Womply’s financial condition in an attempt to frustrate government’s efforts to
determine the appropriate amount of monetary relief owed in the underlying civil injunctive
action.464 Additionally, according to the SEC, Mr. Scammell also improperly used Womply
investor funds for his personal legal defense.465
Mr. Scammel’s criminal history may have constituted good cause for the SBA to revoke
or suspend Womply and Mr. Scammell’s privilege to conduct business with the SBA. Rules
contained in 13 C.F.R. § 103.4(f) allow the SBA to revoke the right to participate in SBA
programs any entity found to be “engaging in any conduct indicating a lack of business integrity
or business honesty, including debarment, criminal conviction, or civil judgment within the last
seven years for fraud, embezzlement, theft, forgery, bribery, falsification or destruction of
records, false statements, conspiracy, receiving stolen property, false claims, or obstruction of
justice.”466 Mr. Scammell’s permanent injunction prohibiting him from participating in the
securities industry and criminal conviction may have also constituted good cause to disallow
Womply from participating in SBA 7(a) programs in 2020 and 2021.
4.

On Multiple Occasions, Womply Resisted Providing Information to Support SBA
OIG Investigations into Pandemic Relief Fraud and Was Criticized by the SBA
OIG and the SBA for Its Behavior

Despite purportedly working on the PPP program in an effort to help the federal
government provide relief to American small businesses, Womply declined requests to help the
federal government prevent fraud in the program and ensure that loans were going to only
eligible Americans. Beginning in May 2021, Fountainhead—which was the lender of record for
a group of Womply-referred PPP loans under investigation—and the SBA OIG repeatedly
requested that Womply provide information to aid the SBA OIG in an investigation into potential
fraud related to those loans.467 According to internal emails provided to the Select
Subcommittee, Womply declined to provide this information for at least two months. Mr.
Scammell (copying Mr. Capoccia) wrote to Fountainhead and the SBA OIG to state that the
company would not comply with the SBA OIG’s requests.468
A month after its initial request for PPP loan applicant data, an SBA OIG official emailed
Fountainhead stating: “Can you please make the below request to Womply again?” and stated
that “Womply should be providing this information to it’s [sic] lenders…”469 Fountainhead,
following the SBA OIG’s direction, again pleaded with Womply for this information, writing on
June 10, 2021, “[w]e are dependent on Womply for the research data being requested by the U.S.

52


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 211

Page 56 of 131 PageID

Small Business Administration, which is being requested so that the SBA can investigate
potential fraudulent loan activity carried out by PPP borrowers.”470

Despite this plea, that same day, Mr. Scammell responded to Fountainhead and the SBA
OIG and declined their request for information to aid the SBA OIG’s PPP fraud investigation. In
that email, Mr. Scammell stated that Womply would not “agree to undertake the substantial work
involved in researching and packaging the requesting information” unless Womply was paid
additional money “pursuant to a new contract [that] would be subject to our a la carte list of
technology service fees for research requests.”471
Mr. Scammell, on behalf of Womply, also stated that the fintech would not provide the
requested information to aid the SBA OIG investigation because “Womply is not interested in
contracting with Fountainhead for such purposes.” Womply claimed that it was not obligated to
assist in the SBA OIG investigation because “Womply is not a lender—it is a technology
provider with no existing contractual relationship with either SBA or Fountainhead.” 472
Womply even claimed that it was “inappropriate for Fountainhead to direct SBA OIG
information requests to Womply.”473
Mr. Scammell’s refusal on Womply’s behalf to assist in the SBA OIG investigation drew
a response from both Fountainhead and the SBA. One day later, Fountainhead’s COO responded
to Mr. Scammell, arguing: “The status of Fountainhead’s relationship with Womply should not
have any impact on the OIG agents’ requests, which were initially forwarded to [Mr. Capoccia]
over a month ago.”474 On June 16, 2021, the SBA again requested information from
Fountainhead regarding two loan files. In response, Fountainhead’s COO directed the SBA
request to Womply’s “Contact Us” page and suggested that the SBA may need to subpoena
Womply for the information.475 A senior litigation counsel for the SBA contacted Mr. Scammell
directly in response, asking “What is going on here?”476 In her email to Mr. Scammell, she
described the importance of Womply providing the files and the impact that the fintech’s
resistance to doing so would have on fraud prosecutions and innocent borrowers:

53


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 212

Page 57 of 131 PageID

[I]t appears [that Fountainhead] are unclear as to whether they can obtain PPP files from
Womply. This is unacceptable. I have dozens of both active fraud cases that need to be
either referred to the IG/DOJ or cleared so that borrower loans can be forgiven. SBA and
borrowers will be harmed if Fountainhead and/or Womply cannot provide assurances that
the Agency will have timely and continually access to PPP loan documentation…
Please confirm that Womply will assist Fountainhead in complying with SBA file
requests in a timely fashion. And of course, please confirm that Womply is not requiring
SBA to issue subpoenas for PPP files.477

In a conversation with Select Subcommittee staff, Fountainhead confirmed that the lender
had “difficulties getting complete loan files out of Womply” in response to requests from federal
investigators.478 Fountainhead said that the lender was forced to get “a temporary restraining
order against [Womply], so they can’t destroy these [PPP loan] documents.”479
Womply also resisted providing data to Benworth to assist an SBA OIG investigation.
On April 27, 2021, an SBA OIG official requested from Benworth electronic copies of loan files
and IP address information related to a PPP borrower in connection with an investigation.480
Benworth provided the loan files but informed the SBA OIG official that Womply held the
requested IP address information.481 On May 17 the SBA OIG requested these files directly
from Womply.482 Womply declined to provide the information to Benworth and directed the
SBA OIG to fill out a web form on the “Contact Us” section of Womply’s website.483
In response to Womply’s refusal to provide the information to Benworth, an SBA OIG
official wrote directly to Mr. Scammell stating that “Womply should be providing the lender the
related loan information for any related loans associated with the requesting lender” and making
clear to Womply that their response was “not acceptable protocol for SBA / SBA OIG when a
request was made to an SBA Lender.”484 By June 17, 2021, Womply still had not provided the
information that the SBA OIG requested.485
54


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 213

Page 58 of 131 PageID

Separately, on June 11, 2021, the SBA formally warned Womply that the fintech was
potentially engaged in “unlawful or unethical activity” related to its acceptance of PPP loan
applications after the PPP deadline and described information on Womply’s home page as
“misleading.”486 Specifically, Womply’s website indicated that the fintech was still accepting
PPP applications although the PPP had ended weeks earlier.487 The SBA warned Womply that
the fintech had “currently no authority…to accept PPP applications” and warned that Womply
should not be “accepting PPP loan applications, charging applicants fees for submitting PPP loan
applications (if applicable), or collecting personal information from applicants.”488 The SBA
wrote: “Womply’s continued acceptance of PPP applications may constitute unlawful or
unethical activity as provided for in 13 CFR part 103, et seq.” 489
5.

Lenders and SBA OIG Officials Accused Womply of Leveraging Its Close
Connection with the Trump Administration’s SBA to Convince Lenders of Its
Reliability

Harvest’s Adam Seery told Select Subcommittee staff that he was under the impression
that Womply “had their own direct tie ins to the SBA and Treasury” and that “one of the big
reasons we decided to partner with [Womply] was because of the interaction they were having
directly both with Treasury and SBA.”490 SBA rules warn that entities that claim or imply
special connection to SBA officials may be engaged in unethical behavior.491 According to
Harvest, “Womply, both to Harvest and publicly, represented it was capable of performing this
service because of its close association with the SBA.”492 Harvest also noted that “Womply
indicated that it was working directly with Bill Briggs, head of the Paycheck Protection Program
at the SBA [during the Trump Administration], to ensure the [PPP Fast Lane] program was
meeting all of the SBA’s requirements.”493
In early 2021, Mr. Scammell and Mr. Briggs hosted an online seminar on the PPP. In
one Facebook ad, Womply said, “We teamed up with Bill Briggs from the Small Business
Administration” to “answer your PPP burning questions.”494 Mr. Scammell also texted Mr.
Briggs directly. In a text message obtained by the Select Subcommittee, Mr. Scammell asked
Mr. Briggs if he would participate in “two more high profile livestreams next week: one on
Instagram and the other on LinkedIn” and speculated that he could “get hundreds of thousands of
viewers.”495

55


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 214

Page 59 of 131 PageID

Figure 5: Womply CEO Toby Scammell in a joint virtual appearance with Trump Administration
SBA Official Bill Briggs.

An SBA OIG staff member told the Select Subcommittee that they first became aware of
Womply because “we were starting to get a lot of contacts from financial institutions who were
starting to get [PPP loan payments] into people’s personal bank accounts for people they knew
did not own their own business and a lot of returned funds were [originated by lenders] using
these companies BA [Blueacorn] and Womply.”496 In a briefing with the Select Subcommittee,
an SBA OIG staff member said that Mr. Scammell was “trying to position himself to utilize his
communications with SBA and SBA OIG” as “propaganda to get more lenders to partner with
Womply.”497 According to SBA OIG staff, Mr. Scammell also appeared to have misrepresented
his relationship to the SBA and SBA OIG: “I’d talk to lenders and they’d say [Scammell] says
he’s coordinating with SBA. I’d say ‘I’ve seen that communication and that’s not what’s
happening.’”498 When asked about the usefulness of the information that Mr. Scammel provided
regarding potential fraud, the SBA OIG staff told the Select Subcommittee: “I can’t say for
certain that the stuff Womply sent over was specifically utilized.”499
The SBA OIG staff recalled that, in April 2021 conversations between the SBA OIG,
Harvest, and Fountainhead, “Womply said [to their lenders] they had spoken to SBA about what
they were doing and what they are doing is appropriate for the program,”500 and that Womply
“was selling propaganda to the lenders claiming [Mr. Scammell] had communications with SBA,
or OIG, or other law enforcement saying that what was happening in his programs was catching
the fraud.”501 Although senior Trump Administration officials collaborated with Womply on
outreach efforts, Biden Administration officials had a different interaction with Mr. Scammell.
A Biden Administration SBA official told the Select Subcommittee that Mr. Scammell “was
hoping to get support from SBA to build new contractual relationships with other lenders and
certainly that’s not what we do. We just listened and took notes. I wouldn’t say we used any of
the information he provided.”502
6.

Despite Windfall Company and Owner Profits, Womply and Its Executives
Received Millions of Dollars’ Worth of Taxpayer-Funded PPP Loans

According to internal company financial information obtained by the Select
Subcommittee, in 2021, Womply’s total net revenue was $2.09 billion, gross profit of $1.8
billion, constituting an 87.6 percent profit margin.503 This financial information shows that
56


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 215

Page 60 of 131 PageID

Womply’s operating expenses were $160 million and “other income expenses” were $379
million.504 Womply’s total net income was over $1.3 billion.505 By contrast, in the last prepandemic year for which the Select Subcommittee has figures, Womply was unprofitable, losing
$11 million.506
Despite this windfall, Womply, using the name Oto Analytics, Inc., was approved to
receive $5.1 million in PPP loans from taxpayers.507 Mr. Capoccia, in his role as Womply’s
President, signed the application for the fintech’s 2020 PPP loan.508 In a potential conflict of
interest, these PPP loans were approved by Harvest, the entity that would become Womply’s
most important PPP business partner.509 In Womply’s second PPP loan, received shortly before
it began working on the PPP, Mr. Scammell and Mr. Capoccia corresponded directly with
Harvest senior executives, including close business partner and Harvest Managing Director
Adam Seery, in securing the multi-million-dollar loan for Womply.510 Womply’s second loan
was for $1,999,997, just three dollars below the threshold for receiving heightened scrutiny by
the Treasury Department, which had announced in May 2020 that it would not audit PPP loans
under $2 million.511
On August 19, 2021, Mr. Scammell signed Womply’s PPP Loan Forgiveness Application
Form for its first PPP loan.512 On September 10, 2021, he signed the company’s PPP Loan
Forgiveness Application Form for the second PPP loan.513 On September 1, 2022, the SBA
informed Harvest that both of the PPP loans it had approved for Womply were denied
forgiveness.514 According to the SBA Denial Justification letter obtained by the Select
Subcommittee, both loans issued to Womply and approved by Harvest were later determined to
have been ineligible. In a letter to Harvest, the SBA explained that it “determined that [Womply]
was ineligible for the PPP loan amount” that it received in the first draw.515
The SBA further “conclude[d] that the documentation provided [by Womply was]
insufficient to support forgiveness” and noted that “[m]ultiple requests were made for
documentation to determine eligibility and not all requested information were provided.”516 The
SBA further noted that, by virtue of Womply being ineligible for its first draw PPP loan, the
company was also ineligible for the second draw PPP loan.517 As such, the SBA is now
requiring that Womply pay back the PPP loans that it received, in full.518

Figure 6: Loans Received by Mr. Scammell, Mr. Capoccia, and Womply (d/b/a Oto Analytics).519

57


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 216

Page 61 of 131 PageID

Womply declined to disclose to the Select Subcommittee full details of its ownership
structure, including the percentage of the company that Mr. Scammell and Mr. Capoccia
owned.520 However, according to a PPP application submitted by Womply to Harvest, as of
2020, Mr. Scammell owned 18 percent of Womply, and Mr. Capoccia owned five percent.521
Based on the ownership percentages presented in Womply’s PPP application, Mr. Scammell may
be entitled to as much as $324 million of the taxpayer funds paid to Womply for its involvement
with the PPP, and Mr. Capoccia may be entitled to take $90 million, assuming a $1.8 billion
gross profit.
Womply owners Mr. Scammell and Mr. Capoccia also received separate PPP loans for
themselves or their other companies. Mr. Scammell received a PPP loan for himself through his
single member limited liability company, Chasm LLC.522 Mr. Capoccia also received two
personal PPP loans through Womply’s partners with at least one facilitated by Womply.523
Despite receiving over $400,000 in salary from Womply, including a nearly $160,000 bonus and
up to $324 million in profits, in 2021, Mr. Scammell received taxpayer forgiveness for his PPP
loan.524 Mr. Capoccia received forgiveness for his loans despite receiving over $400,000 in
salary in 2020, including $150,000 bonus and potentially millions in additional profits.525
The Select Subcommittee offered Mr. Scammell and Mr. Capoccia an opportunity to
speak directly with the Select Subcommittee to discuss potential waste, fraud, and abuse in the
PPP.526 Both Womply executives declined. Mr. Scammell, through his counsel, told the Select
Subcommittee that he was unavailable to speak to the Select Subcommittee, either in person or
virtually, at any time this summer, because he was in Europe.527
7.

Womply May Have Given the Sensitive Personal Information and Private
Business Data of Millions of PPP Applicants to Its New Business to Market and
Sell Additional New Products to PPP Loan Recipients

Mr. Scammell, Mr. Capoccia, and other Womply executives founded Solo Global, Inc. in
2022, after their work on the PPP concluded.528 The company, for which Mr. Scammell serves
as President, markets a mobile application and other financial and marketing services to small
businesses.529 On May 20, 2022, Womply updated its privacy policy to notify PPP applicants
who had previously applied for PPP loans through Womply that Womply’s (retroactively)
updated terms gave Solo Global, Inc. the right to use the personal data of PPP loan applicants for
its own purposes, “including, but not limited to, improving their products and services and
marketing their products and services to you.”530 This change gave Mr. Scammell, Mr.
Capoccia, and their new business access to “over 2 [million] tax documents, over 1.5 [million]
bank accounts from applicants, and over 1 [million] completions of various KYC/CIP/KBA
inquiries,” from small businesses and sole proprietors who had used Womply to apply for federal
relief benefits.531
In their privacy policy update, Womply notified PPP applicants that the fintech would
share their names, email addresses, phone numbers, bank account numbers, full credit card
numbers, IP addresses, geolocation data, tax return details, social security numbers, income and
wage information, information about bank account balances (including current and available
balance), and professional information (including information about a PPP applicant’s
58


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 217

Page 62 of 131 PageID

employer), among other highly sensitive information to their new for-profit business venture.532
As a result, the sensitive personal and business data of anyone who applied for a PPP loan
through Womply is now available to Solo Global, Inc. and can be used to further Mr. Scammell
and Mr. Capoccia’s business interests.
Personal information submitted to government agencies, including the SBA, is typically
protected by the Privacy Act of 1974, which places limitations on federal agencies’ use and
disclosure of data on individuals that is controlled by federal agencies.533 However, although the
SBA’s application form for PPP borrowers cited Privacy Act protections for borrowers,534 the
Privacy Act may not have applied to private entities such as fintechs where they were neither
supervised by the SBA nor contractually obligated via government contracts to comply with the
Act.535
The Select Subcommittee asked Womply for details as to how PPP applicant information
was being used. In response, the fintech referred the Select Subcommittee to its May 20, 2022,
privacy policy,536 and declined to answer questions regarding what PPP information was given to
Solo Global, Inc. and how the new company was using or intended to use the sensitive personal
information of over a million pandemic relief applicants.
8.

Womply Claimed to Be a “Technological Service Provider” to Avoid
Accountability for Its PPP Actions, Despite Likely Meeting the Definition of an
LSP

Womply has described itself as a “technology service provider,” despite performing
functions usually associated with LSPs, and has used its purported status to avoid accountability.
Evidence obtained by the Select Subcommittee indicates that Womply likely should have been
considered an LSP and therefore been subject to SBA regulation. While Womply did provide
some technology services, its core functionalities appear to closely resemble the SBA’s criteria
for an LSP.
The SBA defines an LSP as an entity “who carries out lender functions in originating,
disbursing, servicing, or liquidating a specific SBA business loan or loan portfolio for
compensation from the lender.”537 The Select Subcommittee obtained evidence showing that
multiple PPP lenders delegated functions in originating, disbursing, and servicing loans to
Womply.538 Further, the SBA specifically states that individuals or entities who “[p]erform any
pre-qualification review based on SBA’s eligibility and credit criteria or the 7(a) Lender’s
internal policies prior to submitting the Applicant’s information to the 7(a) Lender[,] or [p]rovide
to the 7(a) Lender an underwritten application, whether through the use of technology or
otherwise,” “meet the definition of an LSP.”539 Evidence further indicates that Womply
independently conducted pre-qualification reviews on PPP applications based on SBA and lender
criteria before referral to lenders.540
When SBA OIG asked for Womply’s help in an investigation into a potentially
fraudulent loan, Womply told the SBA OIG and a lending partner that the fintech was not
obligated to assist the investigation, asserting: “Womply is not a lender—it is a technology

59


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 218

Page 63 of 131 PageID

provider with no existing contractual relationship with either SBA or Fountainhead. As such, it
is inappropriate for Fountainhead to direct SBA OIG information requests to Womply.”541
Womply used the same reasoning to avoid responsibility for approving fraudulent loans
through its PPP Fast Lane service. In a letter to the Select Subcommittee, Womply claimed that,
as technology service provider, it was “not subject to the Bank Secrecy Act or any of its antimoney laundering (‘AML’) program requirements” and that it was “not a Lender Service
Provider subject to SBA regulations.”542 Had Womply been designated as an LSP, it would have
been subject to SBA regulations and required to follow rules set forth by the SBA that governed
LSPs, including the potential exclusion of LSPs with a criminal history of fraud, such as Mr.
Scammell.543
Womply, in a lawsuit against Capital Plus, emphasized that its status as a “technology
service provider” meant that the company should be treated differently from lenders’ “agents”
that provide loan application preparation and referral services. Womply also stressed that its
status as a “technology service provider” meant that it was not subject to any SBA caps on how
much money the company could take in SBA processing fees.544
Benworth similarly accused Womply of miscategorizing itself as a “technology service
provider” in order to secure higher shares of taxpayer-funded fees. According to Benworth,
Womply, “taking advantage of its superior bargaining position,” tried to “mask[] the lender
service provider [] relationship the companies enjoyed.”545 Benworth stated that Womply, by
improperly categorizing itself as a “technology service provider,” was able to demand a payment
structure that would lead to “Benworth pay[ing] Womply more than 90% of the total fee
collected” from certain PPP loans.546
9.

Womply’s Largest Partner—Harvest Small Business Finance—Took Home
Millions in Profits While Delegating Anti-Fraud Measures to Womply and
Conducting Little Oversight of Their Fraud Controls

Womply reviewed, processed, and referred 800,000 applications to Harvest.547 Harvest
estimates that it ultimately submitted 600,000 of these PPP applications to the SBA.548 Prior to
partnering with Womply, Harvest relied on a manual process to review PPP loans.549 In a
briefing with Select Subcommittee staff, Harvest’s COO estimated that its PPP loan review
process took approximately half an hour per loan, and that Harvest funded approximately 5,200
loans through this process in round one of the PPP.550 After contracting for Womply’s PPP Fast
Lane services, Harvest used Womply to review loan applications in later rounds of the PPP.551
As an SBA lender, Harvest was required by SBA regulations to “exercise[] day-to-day
responsibility for evaluating, processing, closing, disbursing, servicing, liquidating, and litigating
its SBA portfolio.”552 These requirements existed despite Harvest’s delegation of these functions
to Womply. Harvest initially reviewed “a sample” of the loans Harvest was submitting, but
ceased its manual spot-checks early in their PPP processing relationship.553 Harvest also did not
perform any formal audits, assessments, or evaluations of Womply.554 Instead, Harvest relied on
Womply’s assurance “that it would only refer to Harvest complete applications that Womply’s
platform had confirmed were for eligible borrowers.”555
60


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 219

Page 64 of 131 PageID

Harvest was unable to provide to the Select Subcommittee a breakdown of its total
budgets for, and amounts allocated to, AML, BSA, eligibility verification, and fraud compliance
in 2019, 2020, and 2021, claiming that it “did not create separate budget line items for the
amounts allocated to the activities listed.”556 Nor do minutes obtained by the Select
Subcommittee from meetings of Harvest’s senior leadership reflect any analysis, estimates, or
discussions concerning the risk of PPP fraud.557 Moreover, Harvest told the Select
Subcommittee that it did not have any logs or other documents recording any manual reviews it
conducted of Womply loan applications and that it did not maintain records of either the number
of Womply-referred applications that it reviewed or the number that it suspected were fraudulent
or ineligible.558
Harvest’s failure to allocate resources to fraud prevention was not for lack of funds.
Harvest’s nearly $1.2 billion in 2021 gross receipts—earned in large part because Womply
processed loans for Harvest at such a large scale—amounted to nearly 18 times Harvest’s gross
receipts from 2020.559 Between 2020 and 2021, Harvest increased its operating expenses by only
$14 million—an increase of about 40 percent on its prior operating expenses, but a
comparatively small slice of its billion-dollar fee income.560 Harvest paid over $350 million in
distributions directly to its owners in 2021 alone (with over $225 million going to its majority
member, a private equity fund, and nearly $42 million going to each of Harvest’s other three
members).561 The 2021 distributions represented more than five times the amount of Harvest’s
entire gross receipts in the year 2020.562 Minutes from members’ meetings also show that
Harvest’s owners discussed early in the PPP plans to pay down the majority member’s debt with
PPP program profits.563
D.

Fintechs Such as Womply and Blueacorn Were the “Paths of Least
Resistance” for Criminal Gangs and Fraudsters Looking for PPP Loans

Fraudsters on the dark web swapped tips about how to successfully commit PPP fraud
and identified fintechs as the “paths of least resistance,” according to an SBA OIG official who
spoke to Select Subcommittee staff.564 Specifically, individuals looking to commit fraud
identified Bluevine, Blueacorn, and Womply as “fintechs with lower fraud risk capabilities that
were letting a lot more fraud go through.”565
An independent fraud researcher analyzing Telegram-based fraud rings came to the same
conclusion. The researcher noticed “thousands and thousands of post[s] – all of them boasting
about defrauding Womply’s PPP loan program.”566 In a May 2021 website post entitled “Is
Womply [] Getting Whomped With PPP Fraud?”, the researcher wrote: “Scammers were
posting a flurry of messages about ‘Womply’ PPP loans and how easy it was for them to scam
the service and get fraudulent loans.”567 Womply communications obtained by the Select
Subcommittee show that the fintech knew that it was a top target for fraud. In May 2021, Mr.
Scammell wrote: “We’re seeing an increase in the sophistication of attacks and our team is also
picking up significant dark web activity surrounding SBA, EIDL, PPP (including Womply and
other technology companies).”568

61


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 220

Page 65 of 131 PageID

Womply- and Blueacorn-facilitated PPP loans were crucial to one violent drug dealing
enterprise in central Florida.569 Police and media reporting show that gang members allegedly
created limited liability companies, solicited individuals through social media, and, in some
cases, stole identities to apply for PPP loans, which were then approved.570 Investigators believe
the PPP loans were then used to finance the criminal enterprises, including the purchase of guns
and drugs.571 Police documents allege that the gang members quickly identified Womply and
Blueacorn as easy targets to obtain PPP loans without much scrutiny.572
In conversations intercepted by law enforcement as part of their investigation into
narcotics trafficking, an Army Gang member spoke about the ease of using Womply to obtain
fraudulent PPP loans. In a phone call, the Army Gang member was recorded explaining how
Womply works and trying to recruit others into his PPP fraud scheme. The Army Gang member
explained to an unidentified associate that Womply was popular with fraudsters, stating that
“everybody in the ‘hood’” was using Womply.573

In one group conversation with multiple gang members, a member of the Army Gang
stated that he specialized in using Womply to get fraudulent PPP loans, while another gang
member stated that he used Blueacorn for fraud.574

62


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 221

Page 66 of 131 PageID

At one point, an Army Gang member sent a screenshot to the group chat of a successful
deposit into a bank account related to an earlier fraudulent Womply PPP loan. Despite using
both Blueacorn and Womply, some members of this criminal gang preferred Womply “because it
was quicker” at processing PPP loans.575
E.

The PPP’s Structure Did Not Incentivize Kabbage to Implement Strong
Fraud Prevention or Develop a Robust Loan Servicing Apparatus

Before the pandemic, Kabbage was an Atlanta-based fintech with a valuation of $1.2
billion that specialized in financing underserved small businesses and individuals.576 Founded in
2009, Kabbage both ran its own lending operation and offered an automated platform to other
lending businesses.577 Beginning in April 2020, Kabbage participated in the PPP through
partnerships with banks and as a direct lender in its own right.578 Kabbage signed contracts for
round one of the PPP to market, process, and service PPP loans for two banks, Cross River and
Customers Bank.579 However, Kabbage has said that even at the height of its bank partnerships,
it was the direct lender for over half of its PPP loan volume.580
Kabbage facilitated over 310,000 PPP loans over the course of the PPP.581 Loans by
Kabbage featured heavily in PPP fraud prosecutions. An October 2020 Project on Government
Oversight report identified Kabbage as one of the four top lenders for loans that the Justice
Department had alleged to be fraudulent.582 A joint investigation by the Miami Herald,
McClatchy DC, and the Anti-Corruption Data Collective also found that about 20 percent of the
PPP loans they identified as suspicious in 2020 were approved by Kabbage.583
Many Kabbage loans contained indicators of fraud at the time of application. As noted
below, a ProPublica report found that Kabbage sent 378 PPP loans worth $7 million to purported
farms that were questionable on their face, including an orange grove in Minnesota and a cattle
ranch based on a New Jersey sandbar.584 The Miami Herald reported that Kabbage facilitated a
loan of between $350,000 and $1 million to a Florida company registered three months after the
date that would qualify them to participate in the PPP. They also reported that between $150,000
and $300,000 in loans to companies in Louisiana were registered just days before making their
loan application and operated by a borrower with delinquent SBA loans, in violation of PPP
lending rules.585 High-profile prosecutions involving Kabbage loans—such as a May 2022
prosecution of the actor who played the Red Power Ranger in the Mighty Morphin Power
Rangers television and film franchise—have continued into 2022. Prosecution documents state
that these applications contained red flags such as business names that differed across various
support documents for the same loan.586
1.

The Program’s Full Guaranty for Loans and Lender Payment Structure Likely
Disincentivized Kabbage from Rigorously Rooting Out Fraud

Documents obtained by the Select Subcommittee indicate that Kabbage was aware of
weaknesses in its fraud prevention systems, but that it nevertheless reduced its primary fraud
staff and implemented a system that confused and concerned employees and financial
institutions. The company’s internal communications raise questions about whether Kabbage
approved loans with markers of potential fraudulent loans without doing adequate due diligence.
63


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 222

Page 67 of 131 PageID

Although the SBA issued a rule holding lenders harmless for borrower ineligibility, lenders were
nevertheless required to follow standard BSA requirements, including verifying borrower
identities—which Kabbage repeatedly failed to accomplish.
a.

Kabbage Was Aware of Fraud, but Had Little Incentive to Prevent It

Kabbage executives were aware of the risk that fraudulent PPP applications would pass
through the company’s systems. In the first months of the program, Kabbage hired a consulting
firm, Alvarez & Marshall Disputes & Investigations, LLC (A&M), to conduct a review of its
work on the PPP. A&M’s testing, concluded by June 11, 2020, indicated that one of ten
Kabbage-approved loans tested by A&M had failed its automated test to verify business identity
and recommended that the applicable procedures “should more clearly account for [a] process”
to handle such failures.587 A&M also found that three of ten approved applications tested were
missing one or more required supporting documents.588 The report noted that “Kabbage is
currently in the midst of enhancing controls.”589 But, at the time of that statement, Kabbage had
already funded over 120,000 loans through the prior control system.590 Despite these issues, the
assessment concluded that “[o]verall,” Kabbage’s program complied with the limited SBA rules
and applicable regulatory standards.591
By July 2020, internal emails among Kabbage executives indicated that Kabbage had
seen significant increases in fraud by businesses applying for PPP loans (first-party fraud),
including through falsified tax documents that had been auto-approved without any manual
input. For example, a series of applications from a fraud ring using forged W-3 forms for
identical loan amounts across multiple applications had passed all of the automated screenings
Kabbage had in place, but were caught by banks receiving the funds.592 Kabbage introduced
plans in the same month to use additional reviews for higher-value loans and new controls to flag
suspicious documents.593 By that time, however, Kabbage had already funded over 160,000 PPP
loans totaling nearly $5 billion.594
At least one exchange suggests that the program’s structure incentivized Kabbage to
deprioritize rigorous fraud reviews. In a July 2020 internal chat among risk and fraud analysis
team members, several Kabbage team members raised concerns about the scope of fraud they
were seeing.595 One analyst wrote, “I’m feeling really uncomfortable with the review procedure
we have now because I’m not comfortable passing almost all the people I have to pass. . . . I feel
like the level of fraud we’re reviewing is wildly underestimated.”596 Another wrote, “we are also
getting a lot of tickets from [initial reviewers] for ‘weird looking docs’ but if they come back in
inscribe [a third-party document screening software] as clear should we just say sorry there is
nothing we can do here?”597

64


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 223

Page 68 of 131 PageID

In response to an analyst’s question about multiple applications coming from a single
device, a Kabbage risk manager instructed his team that the fact that “the risk here is not ours—it
is SBAs [sic]” should inform their decisions to approve or deny the applications.598 This
comment appears to have referred to the full SBA guarantee for PPP loans and the SBA’s
promise to ultimately “h[o]ld harmless” lenders for borrowers’ lack of compliance with program
criteria, even though lenders were still required to conduct due diligence on borrower identities
consistent with regulatory standards applicable to banks.599

65


Case 1:25-cv-00117-FB-CHK

b.

Document 1-14 Filed 01/07/25
#: 224

Page 69 of 131 PageID

Kabbage Reduced Its Risk and Account Review Staff by 50 Percent While
Approving Billions in PPP Loans

Despite the risk of fraud, Kabbage made staffing reductions throughout 2020 that likely
weakened its capacity to address fraud. Press reports indicate that Kabbage furloughed
employees in March 2020, anticipating a contraction in business during the pandemic, but that
participation in the program “saved” the struggling fintech.600 Nonetheless, internal employment
data obtained by the Select Subcommittee indicates that, starting May 2020, Kabbage
continuously reduced its core staff over the course of many months despite its lucrative
participation in the PPP.601 The staff shed by Kabbage included full-time members of the Risk
and Account Review teams that were primarily responsible for fraud reviews and KYB/KYC
reviews.
By June 2020, Kabbage halved its Risk and Account Review employees from 84 (in
April) to 42, and the numbers continued to meaningfully decline through September.602 Despite
these staff reductions, Kabbage funded approximately $1.6 billion in PPP loans in May, $1.5
billion in June, and over $800 million in July 2020.603 Kabbage outsourced the work to
temporary contractors.604 In an email exchange regarding contractor onboarding, Kabbage
66


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 225

Page 70 of 131 PageID

executives discussed heavily pressuring these prospective reviewers to prioritize speed by setting
“crystal clear [contractual] expectations with them in terms of output per hour so we manage
cost/output appropriately.”605 A quota system, if it was indeed implemented, would have further
incentivized reviewers to ignore indicators of fraud in applications.
c.

Kabbage PPP Application Reviewers Expressed Confusion and Concern About
Kabbage’s Fraud Controls

In communications obtained by the Select Subcommittee, a Kabbage employee expressed
concerns to an executive about unclear or inadequate processes for identifying and addressing
potential fraud. The employee contacted Kabbage’s Head of Strategy in early July, noting that
“it just seems like there is money going out the door to bogus businesses that is preventable.”
The executive responded that the company should approve questionable loans, stating: “it’s a
really hard spot we’re in with the program . . . . Essentially if there is no definitive proof of fraud
(I’m sure there are exceptions to what I’m going to say) then we have to let it through.”606
Although the program rules permitted lenders to rely on borrower certifications when analyzing
a lender’s eligibility for given loan amounts and its use of loan proceeds, lenders were generally
required to implement methods to identify and verify new borrowers’ identities (or to use a
Customer Identification Program operated by certain federally insured financial institutions) and
to develop customer risk profiles.607 It is therefore unclear how the executive concluded that
lenders “have to let … through” loans they suspected of being fraudulent.
Members of Kabbage’s fraud team repeatedly questioned the effectiveness of Kabbage’s
guidance to its fraud review teams. Internal chats among fraud analysts suggest confusion about
the company’s formal requirements for fraud prevention. In a June 2020 chat, one fraud team
member expressed alarm at the company’s lack of clear guidance for red flag escalation, writing:
“For real though . . . is this process not all written down somewhere?” and mocked Kabbage’s
purported “See Something” “Say Something” approach to fraud escalation:608

67


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 226

Page 71 of 131 PageID

On June 3, 2020, Kabbage’s Head of Portfolio Risk and Analytics instructed fraud
reviewers in Kabbage’s internal “ppp fraud”-focused chat channel, “We should absolutely not
clear any account for Fraud or KYC/KYB until 100% sure . . . it’s better to decline if we are not
100% sure than actually approve with 90% confidence.”609 However, another supervising risk
manager sent contrary instructions to the same chat group on July 16, 2020: “[I]f someone sends
in all the docs we have asked for and are not forged, then we need a convincing reason to decline
them. Simply ‘we think you’re fraudulent because you have a device match’ does not cut it.”610
Kabbage employees responded to the latter advice by requesting “something in writing.”
Another employee wrote that they wanted written guidance to “cover my rear end” in the event
the guidance led them to approve fraudulent applications.611
Concerns about Kabbage’s processes extended to the executive level. In late April 2020,
several weeks into the program, Kabbage’s Chief Technology Officer wrote to other executives:
“[W]e need an end to end system. [T]his is a wreck. I don’t know what people are reviewing
and under what rules . . . . it’s crazy to manage this volume in spreadsheets.”612 At the time of
that discussion, Kabbage had already funded over 50,000 PPP loans.613 Kabbage’s antifraud
program also lacked governance structures such as a committee focused on fraud and financial
crime or minuted leadership meetings on fraud-related issues, even though these would be
standard protocols in many similarly situated, directly-regulated financial institutions.614
d.

Multiple Banks Working with Kabbage Raised Concerns About Fraud in
Kabbage-Approved Loans, but Kabbage Did Not Appear to Take Steps to
Mitigate Those Concerns

A number of banks working with Kabbage—both as lending partners and as recipient
institutions for PPP funds—raised concerns about fraud among Kabbage-approved loans.

68


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 227

Page 72 of 131 PageID

Both Cross River and Customers Bank stopped working with Kabbage after the PPP’s
first round. When asked about its experience with Kabbage during the PPP, Cross River
indicated that it ended its partnership with Kabbage in August 2020. Among other factors, Cross
River described concerns surrounding Kabbage’s application reviews, including “process and
documentation issues” that made it “a prudent risk management decision not to work with
Kabbage during the 2021 PPP.”615
Wells Fargo, which processed fund transfers for Kabbage during the first round of the
PPP, developed what one Kabbage executive referred to as a “contentious relationship” with the
fintech over its approval of fraudulent applications.616 Wells Fargo requested in July 2020 that
Kabbage transition to a different bank for its fund transfer services.617 A representative of Wells
Fargo wrote to executives at Kabbage on July 17, 2020: “As discussed on the call today, we are
concerned about the significant increase in the fraudulent transactions confirmed by Kabbage
over the past few days, including $18MM of new transactions that were flagged yesterday.”618
Kabbage executives dismissed Wells Fargo’s concerns. In a July 17, 2020, exchange, Kabbage’s
Head of Capital Markets passed along to other Kabbage executives a question from Wells Fargo
about whether Kabbage knew about, or informed the FBI about, an applicant who had been
arrested after obtaining a PPP loan from Kabbage. The company’s Head of Strategy responded
internally: “I doubt anyone would ever confirm or deny any of that …. so sure what the hell …
we called them.” He added: “It’s not like we’d be able to comment on anything if we did. I’m
not going to even look to see if we filed any reports on that one.”619 Kabbage’s General Counsel
responded to the email chain: “good grief[.] OK you got me it was me – I’m behind [fraudulent
applicant] little piglet soap company.”620
Kabbage also appears to have failed to address fraud flags raised by recipient financial
institutions. On July 31, 2020, a senior vice president for fraud prevention at Citi Bank emailed
Kabbage’s Head of Strategy with the subject line “Incoming Kabbage SBA Loan to Citibank--Possible Fraud,” marked as “High” importance. The executive explained in the email that an
incoming PPP loan for $20,833—the maximum available to a sole proprietor—was sent to an
individual who did not own a business, and offered: “I have some of the funds still on hold if
you guys want them back.”621 In a follow up email to Kabbage’s Head of Strategy on September
22, 2020, regarding another potentially fraudulent loan, the executive noted: “[U]nfortunately, I
wasn’t able to hold the funds on the last loan because I never got a response from anyone at
Kabbage.”622
2.

The Select Subcommittee’s Investigation Confirmed That Suspicious KabbageFunded Loans Identified by News Organizations Were Approved Despite
Multiple Red Flags

The structure of the PPP, in which the SBA and American taxpayers assumed all the risk,
while lenders (and, by extension, their partners) were paid for all loans issued but not for
applications reviewed and rejected as ineligible, meant that fintechs like Kabbage were not
incentivized to utilize robust anti-fraud systems. The Select Subcommittee obtained previously
undisclosed documents revealing failures in Kabbage’s fraud checks. This evidence confirms
prior reporting by ProPublica and illustrates that the fintech overlooked significant red flags
when it approved apparently fraudulent farm loans. The documents show that the improbable
69


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 228

Page 73 of 131 PageID

locations of the farms were only part of the story—rather, many of the loans included multiple
significant fraud indicators.
In one example, “Deely Nuts” was approved for and issued a $20,833 loan (the maximum
for sole proprietorships) in August 2020.623 ProPublica previously reported that, although Deely
Nuts’ principal business was described as “tree nut farming,” the business claimed to be located
on a sandbar in New Jersey. Loan application documents obtained by the Select Subcommittee
indicate that the applicant filed the incorrect tax schedule form for farms624 and also listed the
business’ Principal Business or Professional Activity Code (a numerical code based on North
American Industry Classification System (NAICS) codes) as “999999”—a default number for
“Unclassified establishments” (rather than any of the codes under the “Agriculture, Forestry,
Hunting, & Fishing” category).625 The application documents also list zero expenses for wages
or contract labor or for purchases of supplies that would typically be required to operate a
farm.626 The “Cost of Goods Sold” section of the tax documents cite no expenses for “Materials
and supplies” or “labor.”627 In contrast to the average gross margin of 13.61 percent for farms in
the United States,628 data from the Deely Nuts supporting documents indicate a gross margin of
82 percent.629 The Select Subcommittee also determined that the business address listed
throughout the PPP Borrower Application Form is that of a beachfront vacation rental cottage in
coastal New Jersey.630
Kabbage approved an application for Shaila Big Fresh Oranges in August 2020 for a
$17,931 loan.631 ProPublica and other outlets previously reported that the principal business for
this applicant was described as “Orange Groves,” even while the application listed a business
address in Minnesota.632 Documents obtained by the Select Subcommittee reveal additional red
flags, including that the purported farm claimed to have a single employee, listed no wages or
contract labor on its application, listed no supply purchases within its expenses, used the
incorrect tax form for farms, cited a miscellaneous 999999 NAICs code rather than a code
appropriate for farms, and included data indicating an unusual gross margin of 84 percent.633
The Select Subcommittee also determined that the business address previously flagged by Pro
Publica was a three bedroom, single family home.634
In the case of Strawberry Joseph Schrempp, which Kabbage approved for a loan of
$19,829 in June 2020, ProPublica previously reported that the application listed the home of a
bank president who denied owning a strawberry farm. Internal Kabbage documents obtained by
the Select Subcommittee show that Kabbage flagged the application for a “fake passport” two
weeks after it was approved and its SBA note signed for disbursement.635 Despite the
disbursement approval, notes on Kabbage’s LexisNexis analysis of the application include “Risk
Indicators” such as “Unable to verify business name, address, TIN and phone on business
records;” “The input business address may be a residential address (single family dwelling);
“Unable to verify phone number;” “The input phone number and input zip code combination is
invalid;” and “The input name and address return a different phone number.” Nevertheless, the
application’s “Verification Status” was listed as “Verified.”636 A website tracking and analyzing
PPP loan data from the SBA notes that “PPP recipients in th[e strawberry farming] industry
report an average of 43 employees, 4200% higher than Strawberry Joseph Schrempp’s reported 1
employees [sic], and received an average PPP loan of $230,326, 1,062 percent higher than this
company’s loan of $19,829.”637
70


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 229

Page 74 of 131 PageID

Many of these patterns—including tax documents not typically used by farms,
miscellaneous 999999 NAICs codes, a lack of labor expenses, business addresses for singlefamily homes in residential neighborhoods, gross margins exceeding 70 percent and sometimes
approaching 90 percent, and email addresses using persons’ names other than the name of the
applicant contact—appeared in the applications of three other purported farms that were reported
by ProPublica, including a tomato farm that Kabbage approved for $12,739; a “Wheat farming
wheat farming [sic] field and seed production” that Kabbage approved for $20,833; and a “Beef
cattle ranching and farming” business (which ProPublica noted had been registered to the home
address of the mayor of Long Beach, New Jersey) approved by Kabbage for $20,567.638 Internal
Kabbage emails indicate that each of these businesses had been confirmed as fraudulent in
March 2021, seven to eight months after the loans were funded, and that Kabbage had failed to
recover any of the funds.639
These issues were sometimes accompanied by other red flags, such as loans sought for
exactly the amount available through the PPP to sole proprietors. For example, the Ritter Wheat
Club application’s payroll calculations added up to exactly $20,833, which was the maximum
loan amount for a single proprietor with one employee.640 Internal correspondence indicates that
Kabbage had discussed whether loans for $20,833 were suspicious as early as May 2020, but that
Kabbage’s Head of Policy had opined, “I don’t think that’s suspicious given we’re serving these
markets, nor do I think it’s fraud.”641 At that point, Kabbage had already approved nearly 9,000
loans for that amount, collectively worth over $183 million dollars.642

Figure 7: Google street view of the residential beachfront site of a supposed “Beef Cattle Ranching
and Farming” business in New Jersey, on a PPP application approved by Kabbage.643

71


Case 1:25-cv-00117-FB-CHK

3.

Document 1-14 Filed 01/07/25
#: 230

Page 75 of 131 PageID

Kabbage Sold Its Primary Business to American Express Mid-Program,
Capitalizing on PPP Profits While Leaving Legitimate Borrowers Without
Effective Assistance with Forgiveness

On October 16, 2020, Kabbage sold the majority of its assets to American Express
Company for approximately $850 million.644 The entity currently known as “Kabbage” is now
operated by American Express, while what remained of the original fintech was spun off into a
business called “KServicing.”645 As part of these transactions, the majority of Kabbage’s key
employees, data, documents, and systems were transferred to American Express.646 However,
American Express did not assume the company’s PPP liabilities. In communications with the
Select Subcommittee, American Express emphasized that the company “expressly did not
acquire Kabbage’s liabilities arising under, resulting from, or related to Kabbage’s historical loan
portfolio or the PPP portfolio. Any regulatory obligations or issues related to Kabbage’s PPP
loans belong solely to Kabbage.”647
At the time of the acquisition and spinoff, Kabbage had already issued PPP loans to over
a quarter million borrowers that would need ongoing servicing, including for forgiveness
processing. Without clear regulatory penalties for poor servicing of funded loans, Kabbage and
its new owner left these borrowers to a severely under-resourced company with fewer than 12
full-time employees to help service those loans.648 Although public estimates put Kabbage’s
PPP fee earnings at over $300 million at the time of the acquisition,649 KServicing was unable to
tell the Select Subcommittee how much funding it had at its disposal post-acquisition to provide
services to PPP borrowers.650 However, KServicing told the Select Subcommittee that its
resources were “limited.”651
KServicing also retained only contractual use of American Express’ data and systems, to
which they had to request access in order to perform forgiveness services for borrowers.652
Public reports detailed borrowers struggling to obtain their second-draw loan funds from
KServicing after the spin-off.653 In March 2022, the Miami Herald also reported that
Kabbage/KServicing saw the lowest forgiveness rate of any major lender in the first year of the
PPP.654
Even after Kabbage was sold and KServicing was left with a skeleton staff, KServicing
continued to fund loans. KServicing informed the Select Subcommittee that, following the
October 2020 acquisition, only “one Kabbage employee was dedicated full time and exclusively
to AML [anti-money laundering], BSA [Bank Secrecy Act], or fraud compliance from October
16, 2020 to May 2021, at which point this employee was transferred to American Express.”655
As of mid-June 2021, “[t]here [were] no Kabbage employees that [were] dedicated full time
exclusively to AML, BSA, or fraud compliance,” although some employees did such work parttime. Kabbage claimed to have contracted a third-party firm to support the part-time
employees.656 Nevertheless, Kabbage continued to fund loans; in the time in which Kabbage
claimed to have only one full-time anti-fraud employee, Kabbage funded over 50,000 loans
within a 13-week period. Loans continued to be funded even after Kabbage lost that
employee.657

72


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 231

Page 76 of 131 PageID

While American Express obtained Kabbage’s assets, KServicing was left with its
responsibilities to service borrowers’ loans and the portfolio’s liabilities, including multiple
Department of Justice investigations into whether Kabbage’s review of PPP applications was
consistent with federal fraud laws, as well as an investigation by the Federal Trade Commission
into potential deceptive and unfair practices.658 KServicing eventually filed for Chapter 11
bankruptcy on October 3, 2022.659
Upon filing for bankruptcy, KServicing disclosed that it faced allegations from SBA that
it had made excess loan payments to borrowers, as well as accusations from Customer Bank that
it had failed to perform required loan servicing.660 In the same filing, KServicing accused
American Express, which continues to manage and publicize Kabbage’s primary lending
business,661 of failing to honor its commitments to provide KServicing with the data it needed to
run it PPP business, including access to the platform used by borrowers.662 While Kabbage’s
sale left the company with fewer staff to prevent fraudulent loans and protect taxpayer dollars,
and borrowers with limited assistance with forgiveness servicing, American Express, Kabbage,
and its executives were left free from liability and responsibility.
F.

Bluevine Initially Faced Significant Fraud Rates, but Its Longstanding
Partners Intervened to Improve Fraud Prevention over the Course of the
Program

The story of another fintech, Bluevine, demonstrates that it was possible to reduce the
amount of fraud in the PPP with adequate diligence measures.
1.

Bluevine Attracted and Facilitated Significant Amounts of Fraud Early in the PPP

Bluevine, a fintech headquartered in California, was founded in 2013 to facilitate loans
for small businesses. Between its entry into the PPP in April 2020 and the end of the program in
May 2021, Bluevine worked exclusively with two preexisting bank partners—Celtic Bank and
Cross River Bank. Bluevine estimated that it had facilitated approximately $2 billion in funds
for at least 20,000 small businesses over its approximately seven-year pre-pandemic history.
Over the course of the PPP, Bluevine assisted in delivering $8.9 billion in PPP funds to over
300,000 small businesses.663 In other words, during its participation in the PPP, Bluevine
facilitated over four times the amount of funds it had worked with in its entire prior history, for
at least 15 times the total number of businesses it had previously worked with.
As with other PPP facilitators, numerous fraudulent applications passed through
Bluevine’s systems. In one case, Bluevine approved a loan application for $1.9 million in May
2020 for a Florida man who claimed to operate a scrap metal company employing 69 people out
of his home address.664 The purported business had no internet presence, and the application
included IRS forms that cited identical information concerning the number of employees,
compensation, and federal income tax over four consecutive quarters.665 Another applicant was
initially rejected by Bluevine after submitting falsified bank statements in May 2020, only for
Bluevine to approve a second fraudulent application, for the same business from the same IP
address for $841,000, a week later.666

73


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 232

Page 77 of 131 PageID

Fraud rings appear to have singled out Bluevine for its susceptibility to fraud. Court
records show that Bluevine allegedly approved applications in May of 2020 even after its
systems linked multiple applications to a single IP address, which was later identified as the
home address of a fraud ring participant.667 A member of the ring allegedly sent text messages to
his accomplices referring to Bluevine by name and complaining on June 5, 2020 that the fintech
was “out of cash.”668 Another convicted fraudster, who received 17 years in prison for leading a
$20 million coronavirus-related fraud scheme, texted a co-conspirator: “10k guaranteed...they
don't check for s---...it’s all automated,” and “I did 7 [applications] last night and 4 of them got
email that it’s funded...I’m telling you to apply [to] Bluevine.”669
Minutes from Celtic Bank’s internal Risk Committee meetings obtained by the Select
Subcommittee show that loans processed by Bluevine had higher fraud rates than those
processed by Celtic acting alone or in conjunction with other partners, including other fintechs or
fintech-owned companies.670 As of mid-May 2021, Celtic’s analysis of PPP fraud indicated that
Celtic had confirmed 1,723 cases of fraud, 1,557 of which were associated with Bluevineprocessed loans.671 As shown in figure 8, Celtic’s Risk and Compliance Committees also
tracked fraud in PPP loans, with fraud statistics broken out by partner fintech. These records
show that Bluevine had an estimated gross fraud rate of seven percent, as compared to under five
percent for Celtic’s direct loans and lower amounts for those loans processed through other
fintech partners.

Figure 8: Celtic’s assessment of PPP fraud, broken down by partner, throughout the PPP (as of May 11, 2021).672

2.

Federally-Regulated Bank Partners Successfully Pressured Bluevine to Improve
Its Controls During the PPP, Likely Reducing Fraud

Bluevine worked exclusively with preexisting bank partners to process PPP applications.
Both Celtic and Cross River are well-established banks subject to federal anti-fraud regulations,
including the Bank Secrecy Act. Each had a history of working with both SBA and fintech
companies prior to the pandemic. Celtic had previously partnered with both Bluevine and
Kabbage, among others, to provide other lending products, and had been an authorized SBA
lender for two decades.673 Cross River, a small bank with 350 employees, had partnered with
fintechs such as Bluevine on various products since 2010.674
Because SBA rules—unchanged when largely unregulated fintechs became major players
in the PPP—allowed lenders to delegate fraud controls to contractors, these banks appear to have
74


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 233

Page 78 of 131 PageID

been the primary outside source of accountability for Bluevine’s anti-fraud work.675 Bluevine
appears to have benefited from the regulated banks’ influence both before and during the PPP.
By virtue of Bluevine’s relationships with the banks, Bluevine’s approximately 80 risk and
compliance employees already received regular annual training on customer identification
protocols and red flags for identity theft before the pandemic.676 The banks’ relative success in
pressuring Bluevine to improve its controls over time also suggests that the PPP would have
benefited from rigorous oversight of entities responsible for fraud controls and/or from rules
restricting delegation of anti-fraud controls, in particular, to well-regulated entities. SBA’s
general lack of direct oversight of third-party service providers,677 in combination with
participation by lenders who had varying regulatory obligations and experience and who largely
delegated compliance controls to third parties, created varying degrees of oversight by private
lenders responsible for their contractors’ actions.
Consistent with risk management guidance from the Office of the Comptroller of the
Currency (OCC), both Celtic and Cross River appear to have undertaken “due diligence . . .
before selecting and entering into contracts” specific to the PPP, rather than “rely[ing] solely on
experience with or prior knowledge of the third party as a proxy for an objective, in-depth
assessment of the third party’s ability to perform the activity in compliance with all applicable
laws and regulations.”678 The banks also ensured that the contracts “clearly define[d]
expectations and responsibilities of the third party.”679 Bluevine informed the Select
Subcommittee that its bank partners “regularly review and approve Bluevine’s compliance and
risk policies and procedures, and can direct Bluevine to make changes in these policies,
including any underwriting policies, both before engaging Bluevine to provide third-party
services and throughout the course of the business relationship.”680 Internal correspondence
among Bluevine, Celtic, and Cross River indicates that Bluevine made multiple enhancements to
its fraud controls over the course of the program in response to requests and pressure from its
regulated bank partners. These improvements indicate that the presence of a strong regulatory
structure applicable to fintechs or other entities managing anti-fraud controls may have improved
fraud rates across the board during the PPP.
By May 2, 2020, Celtic was “originating annual program volumes in mere days,”
according to internal correspondence among Celtic executives and Bluevine staff.681 Celtic
representatives informed Select Subcommittee staff that they discovered more fraud than they
had expected in the first round of the PPP, particularly with respect to the submission of
manipulated documents by PPP applicants.682
Celtic’s formal governance structure assisted it in tracking and acting on fraud that came
through Bluevine. From early in the program, Celtic’s Compliance and Risk Committees, made
up of executives experienced in risk and fraud-detection operations or other aspects of the
financial industry, closely tracked actionable information concerning fraud in Celtic-funded PPP
loans.683 Materials from this committee show that Celtic tracked the number and value of
fraudulent applications, as well as progress on investigations into fraud, broken down by fintech
partner to help Celtic track each partners’ anti-fraud performance.684
Celtic representatives had ongoing, regular meetings with Bluevine’s compliance and risk
teams from the beginning of the program, initially on a daily basis and subsequently three times
75


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 234

Page 79 of 131 PageID

per week, to discuss fraud trends, individual cases, and potential control enhancements.685
Correspondence obtained by the Select Subcommittee confirms that Celtic personnel gauged the
effectiveness of Bluevine’s fraud controls in real time and pressed Bluevine to enact increasingly
rigorous standards.686
Correspondence between Celtic and Bluevine in the first three months of the PPP indicate
that Bluevine introduced new software and manual review processes in response to requests or
pressure by Celtic, which was actively monitoring its own fraud risk (and by extension, the fraud
risks created by its partnerships) to ensure ongoing compliance with anti-fraud statutes
applicable to banks. In response to the bank’s request, Bluevine also conducted an analysis of
the new checks, which indicated that the controls would have caught 78% of previouslyapproved fraudulent applications had they been implemented earlier.687 Data subsequently
collected by Celtic suggests that the fraud incidence in Celtic’s loans (the majority of which were
originated by Bluevine) began to decline at the time that these fraud prevention measures were
implemented.688 These real-time analyses indicate that the bank’s active oversight of its fintech
partner, consistent with its own regulatory obligations, may have reduced fraud after new
controls were implemented.

Figure 9: Data from Celtic Bank’s internal chart of PPP fraud cases per month in all Celtic-funded loans (as of
May 11, 2021), indicating a steep decline in Bluevine fraud incidents following the addition of new controls in June
2020 (and again after further changes for the 2021 round of PPP). Although these figures represent all Celtic PPP
loans, nearly three-quarters of PPP funds issued by Celtic’s PPP funding were ultimately done through Bluevine
applications.689

Celtic continued to engage closely with Bluevine on fraud controls throughout 2020 and,
in a renewed partnership limited to second-draw loans, into 2021.690 In board materials for
Celtic’s Compliance Committee in April 2021, toward the end of the PPP, Celtic estimated that
Bluevine’s 8.54 percent rate of fraudulent loan funds in first-draw loans had declined to a 0.08
percent rate of fraudulent loan funds in second-draw loans based on then-available data.691

76


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 235

Page 80 of 131 PageID

Celtic attributed the improvement to “Process Enhancements” including “Increased front-end
controls at Bluevine.”692

Figure 10: Events demonstrating the influence of Celtic Bank’s oversight of Bluevine’s fraud prevention efforts. 693

Bluevine’s second partner bank, Cross River, also negotiated the authority to review and
require changes to Bluevine’s fraud policies and procedures.694 Cross River appears to have
performed such reviews of Bluevine’s fraud controls periodically, including in advance of each
new PPP round. In addition to the April 2020 due diligence discussed above, Cross River
requested and reviewed a list of enhancements to anti-fraud detection and prevention measures
that Bluevine was making in preparation for PPP reopening in 2021.695 Cross River continued to
conduct periodic reviews of partners’ fraud policies until late in the PPP.696 However,
contemporaneous correspondence from Cross River obtained by the Select Subcommittee
77


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 236

Page 81 of 131 PageID

generally did not reflect the same rigorous and consistent oversight efforts as Celtic’s emails
with Bluevine. In a briefing with Select Subcommittee staff, Bluevine acknowledged that Celtic
was “more hands on” than Cross River with regard to fraud concerns.697 This difference shows
how, without direct oversight of third-party service providers by SBA, even experienced and
regulated lenders varied significantly in their ability and willingness to supervise the agents
responsible for protecting billions in taxpayer dollars from fraud.
Available data indicates that Cross River’s comparatively less hands-on approach to its
partners may have led it to approve somewhat riskier loans than Celtic, again suggesting that
active oversight of the unregulated fintechs may have correlated with reduced fraud risk. The
University of Texas graph shows that nearly 20 percent of Cross River’s loans had at least one
suspicious indicator, as compared to approximately 10 percent of Celtic’s (which was below
average across PPP lenders).698 Lenders that worked with Blueacorn and Womply who were less
than diligent in monitoring their fintech partners had even higher rates of suspicious loans.699
The apparent distinction between Celtic’s and Cross River’s results suggest that diligent
oversight processes (or the relative lack thereof) may have materially impacted the quantity of
fraud in the program.
3.

Bluevine Struggled to Provide Timely QARs, Underscoring That Oversight Was
Required to Ensure Unregulated Fintechs Complied with Applicable Rules

In order to file required Suspicious Activity Reports (or SARs)—reports that alerted
regulators to fraudulent loans and related patterns—banks relied on Bluevine to investigate
potential fraud associated with Bluevine-processed loans and to provide them with Questionable
Activity Reports (QARs) summarizing the issues identified.700 Emails and documents reviewed
by the Select Subcommittee show that at least one bank had significant difficulty, throughout the
program, in obtaining timely cooperation from Bluevine on QARs to meet applicable legal
reporting deadlines under the Bank Secrecy Act (i.e., the filing of a SAR no later than 30
calendar days after suspicious activity is first detected701), an issue that did not improve for much
of the program.702 This suggests that significant oversight was sometimes required to ensure that
fintechs complied with standard regulations for financial institutions, including regulations
critical to keeping law enforcement informed about fraud patterns.
Celtic’s internal Compliance Committee minutes from early in the PPP flagged that “PPP
Fraud has increased QAR/SAR volumes significantly,” and noted the “Highest concentration [of
SARs] is with Bluevine.”703 In July 2020, Celtic emailed Bluevine’s Compliance and Risk
leadership to reiterate the bank’s need for timely-filed QARs within ten days of confirmed
fraud.704

Figure 11: Item in October 2020 deck for Celtic’s Compliance Committee, noting late filings of Suspicious Activity
Reports to law enforcement, due in part to “[d]elays in reviews by Bluevine.”705

78


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 237

Page 82 of 131 PageID

These delays continued well into 2021. On March 30, 2021, Bluevine’s Vice President
of Compliance wrote to Bluevine’s compliance and risk teams:
[W]e have growing concern about the timeliness and completeness of investigations and
QARs from Bluevine. … Recently, we have had a lot of back and forth on incomplete
QARs and this is putting us behind on our timeframes [for SAR reporting]. … We need
to avoid this at all costs because it is a direct violation of law.706

In response to the pressure from Celtic, Bluevine reallocated resources in 2021, including
by hiring “an additional full-time employee … to specifically help support PPP fraud
reviews.”707
Even with heavy oversight by its regulated partner and its apparent success in reducing
fraud rates, the “surge in fraud associated with PPP” appears to have overwhelmed Bluevine,
causing its partners to miss legal reporting requirements designed to help law enforcement
identify, and respond to, fraud in real time. These requirements were even more critical in the
PPP, given the speed at which taxpayer funds were spent and the rapidly evolving strategies of
criminal fraud rings. This example raises concerns about adequate and full reporting of PPP
fraud by other third-party service providers—especially those who lacked experience in filing
SARs—who were facing the same fraud surge but may have had less attentive and experienced
lending partners.

79


Case 1:25-cv-00117-FB-CHK

I.

Document 1-14 Filed 01/07/25
#: 238

Page 83 of 131 PageID

RECOMMENDATIONS
A.

SBA’s Office of Inspector General Should, in Addition to Its Ongoing Work
to Assess the Precise Amount of Fraud Committed Against the PPP, Conduct
a Comprehensive Review for Waste, Fraud, and Abuse by Lenders and Their
Service Providers in the PPP.

The Select Subcommittee’s investigation determined that certain lenders and service
providers implemented ineffective identity verification programs while collecting billions of
dollars in taxpayer-funded loan fees, and that certain fintech principals may have abused their
position in the PPP to charge unauthorized fees or to obtain PPP loans for themselves, their
businesses, and their family members. A comprehensive review of lenders and their third-party
service providers will be crucial for lawmakers to better understand what worked and what failed
in the PPP so as to incorporate those lessons into future relief programs. This type of review will
inform decisions by government agencies when selecting private partners for government
programs.
As part of its review, SBA OIG should examine allegations that Blueacorn executive
Stephanie Hockridge charged borrowers fees as part of Blueacorn’s “VIPPP” operation in
violation of SBA policy.708 SBA OIG should also examine lender approvals of PPP loans
awarded to the principals of and businesses owned by Womply and Blueacorn, other businesses
owned by their principals and family members of those principals, and businesses owned by
Blueacorn subcontractor Elev8 Advisors’ principals and their family members. The Select
Subcommittee’s findings make clear that, while SBA OIG previously identified billions of
dollars of PPP funds approved and disbursed to ineligible applicants, taxpayers still do not know
the precise extent of fraud committed against the PPP. Confirming the full scope and nature of
such fraud is vital to determine best practices for ongoing and future SBA programs, and to
reduce future emergency programs’ vulnerability to financial crime.
Based on the findings of its review, SBA OIG should refer any potential criminal
violations to appropriate law enforcement agencies and refer instances of program
noncompliance or ineligible loans to SBA, so that SBA can assess whether to demand repayment
of individual loans, suspend or revoke the privileges of certain lenders and LSPs from
participating in SBA programs,709 and/or demand that the lenders responsible for approving
preventable, fraudulent loans return PPP processing fees. SBA OIG should also publish its
general findings to improve government agency decision-making about, and public
accountability for, lenders and their subcontractors participating in SBA programs.
B.

SBA OIG Should Revisit and Update Its 2015 Examination of the SBA’s
Oversight of Lender Service Providers to Assess Systemic Risks Posed by the
Involvement of Fintechs and Other Underregulated Entities in SBA
Programs, and SBA Lenders’ Delegation of Major Compliance-Related
Responsibilities to Those Entities.

In light of the conduct uncovered by the Select Subcommittee, SBA OIG should revisit
and update its 2015 audit, summarized in Report Number 15-06, Improvement Is Needed in
80


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 239

Page 84 of 131 PageID

SBA’s Oversight of Lender Service Providers.710 The Select Subcommittee’s investigation
identified multiple instances of lenders delegating fraud prevention and eligibility verification
controls, nearly in full, to third parties not overseen by SBA, while failing to responsibly
“exercise day-to-day responsibility for evaluating, processing, closing, disbursing, servicing,
liquidating, and litigating its SBA portfolio” as contemplated by SBA’s Standard Operating
Procedures.711 These concerns were enhanced by the involvement of fintechs, which used
automation to dramatically increase the number of PPP loans being processed for such lenders.
SBA OIG’s updated review should examine systemic risks posed by (1) the involvement
of fintechs and similarly underregulated entities in SBA programs, and (2) the current framework
for SBA lenders’ participation in the 7(a) program, which permits SBA lenders to delegate major
compliance-related responsibilities to third parties (whether or not categorized as LSPs) that are
not overseen by SBA. The Select Subcommittee’s findings also suggest the oversight
mechanisms previously examined by SBA OIG—including tracking LSPs, approving LSP
contracts, and responding to referrals of potential policy violations by LSPs and lenders—are
insufficient to protect taxpayers, particularly as applied to very prolific third-party service
providers and those responsible for compliance controls. OIG should provide any further
recommendations to facilitate ongoing, proactive SBA oversight of third-party service providers
(and/or oversight of the efforts of SBA lenders to supervise them) that may be warranted in light
of their performance in the PPP. OIG should also publish its findings to inform potential future
programs, legislation, or SBA rules.712
C.

SBA and SBA OIG Should Investigate the Retention and Use of PPP
Applicant Data by Lenders, Fintechs, and Other Third Parties That
Obtained PPP Applicant Data on Behalf of Lenders.

The Select Subcommittee found that at least one fintech, Womply, likely retained and
transferred PPP applicant data to a new company operated by Womply’s leadership, Solo Global,
Inc., after the conclusion of the PPP, apparently for future commercial use. This practice may
not have been limited to Womply. In light of this finding, SBA OIG should investigate the
retention and use of PPP applicant data by lenders, fintechs, and other third-parties that obtained
PPP applicant data for consistency with applicable rules and statutes, such as the Privacy Act of
1974.713 As approximately 5,500 private sector entities including banks, credit unions, fintechs,
and community-based financial institutions participated in originating, underwriting, and
servicing PPP loans, the SBA must have clear guidance in place on what those private companies
can do with the borrower data they collected as part of facilitating those loans. SBA should
consider any recommendations that may be warranted to protect the data and privacy of
American citizens who must provide their information to private companies in order to
participate in government relief programs.

81


Case 1:25-cv-00117-FB-CHK

D.

Document 1-14 Filed 01/07/25
#: 240

Page 85 of 131 PageID

SBA Should Promptly Issue and Enforce Guidelines That Clarify the
Responsibilities of Lenders and Their Service Providers, Particularly in
Regard to Underwriting, Fraud Screening, and Suspicious Activity
Reporting.

The Select Subcommittee’s investigation identified multiple instances of lenders
delegating fraud prevention and eligibility verification controls, nearly in full, to third parties not
overseen by SBA, while failing to responsibly “exercise[] day-to-day responsibility for
evaluating, processing, closing, disbursing, servicing, liquidating, and litigating its SBA
portfolio” as contemplated by SBA’s Standard Operating Procedures.714 The Select
Subcommittee found no public record of actions being taken against PPP lenders for insufficient
due diligence into or oversight of the LSPs and agents that approved significant numbers of
fraudulent applications. SBA guidelines should more clearly require participating financial
institutions to thoroughly and continuously vet third-party service providers—including
fintechs—that perform underwriting, conduct eligibility verification checks, and screen for fraud
to ensure that their experience, operational capacities, and integrity are aligned with program
requirements. Compliance with such rules should be monitored and enforced by SBA to
encourage more stringent oversight of LSPs and agents—including fintechs—by lenders and to
ensure that only appropriately resourced LSPs and agents participate in federal programs.
The Select Subcommittee determined that Womply categorized itself as a technological
service provider, potentially to avoid rules or guidance that would apply to LSPs and agents,
despite performing services that were similar or identical to those traditionally performed by
LSPs, as described by SBA. SBA should clarify the categories of third-party service providers
as needed to prevent private companies from avoiding oversight or compliance with
requirements specific to LSPs and agents, and should conduct oversight of lenders participating
in SBA programs to confirm that existing categories are being appropriately applied by their
third-party contractors.
E.

Any Plans by the SBA to Again Open 7(a) Participation to Fintechs and
Other Unregulated, Non-Depository Institutions Must Be Accompanied by a
Well-Defined, More Rigorous, and Better-Resourced Initial Review Process,
and Such Entities Should Be Subject to Continuous Monitoring to Confirm
Their Adherence to SBA Rules and Industry Best Practices.

The Select Subcommittee’s investigation found that some of the fintechs that participated
in the PPP and took significant responsibility for its fraud controls lacked experience, resources,
established policies and procedures for escalating and mitigating fraud, or good governance
programs. For example, Blueacorn and its consultant Elev8 Advisors processed PPP loans
without first implementing a functioning structure to facilitate effective eligibility screening and
fraud detection, with the result that reviewers reported approving loans they suspected or knew
to be fraudulent.
The SBA’s 7(a) program requires private sector companies to act in a position of public
trust to administer federal programs. The Select Subcommittee’s findings indicate that new
entrants—including companies acting in a service provider or agent capacity that involves
82


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 241

Page 86 of 131 PageID

stewardship of taxpayer funds—should be thoroughly reviewed to ensure that they have
appropriate conflict-of-interest policies and procedures, well-developed mechanisms to identify
and report fraud to law enforcement, management with appropriate qualifications and a history
of business integrity, an adequately developed governance structure, and sufficient capitalization
and capabilities to achieve satisfactory performance. In addition, SBA should conduct ongoing
monitoring of lenders and (whether directly or by requiring information from lending partners)
of third-party service providers for unlawful or unethical conduct and compliance with SBA
rules. Any entities found to engage in unlawful or unethical conduct should be disqualified from
participation in SBA programs.
F.

The SBA Should Consider Suspending or Revoking the Privileges of Any
Participant Found to Have Participated in Unlawful or Unethical Conduct
While Participating in the PPP.

SBA should suspend or revoke the privilege of any lender or third-party service provider
(however categorized and including successor companies) found to have engaged in unlawful or
unethical conduct to participate in 7(a) programs, consistent with 13 CFR § 103.3, 13 CFR §
120.1500, or other applicable rules. The unethical conduct of Blueacorn, Womply, their current
and former owners and leaderships, and their successor companies raise concerns about their
involvement in 7(a) programs or any future relief programs. SBA should also consider whether
the lenders that relied on these fintechs conducted adequate due diligence and oversight of their
service providers to merit suspension or revocation of their privileges to conduct business with
SBA.
G.

In Any Future Emergency Financial Assistance Programs That Prioritize
Speed of Loan Issuance, the SBA Must Conduct Aggressive and Large-Scale
Reviews of Loans Prior to Their Forgiveness to Detect Fraudulent and
Ineligible Loans.

Despite widespread reports of fraud in PPP loans, the SBA forgave many loans before
reviewing them for eligibility and fraud. SBA OIG has previously “expressed concerns
regarding the impact this change will have on SBA’s ability to recover funds for forgiven loans
later determined to be ineligible.”715 In any future relief programs involving forgivable loans,
the SBA must ensure that loans are fully reviewed for eligibility and fraud before granting
forgiveness so that taxpayer dollars are safeguarded and fraudulent loans are identified for
prosecution.
H.

The SBA OIG Should Investigate Suspicious Loans to Fintech Executives,
Their Families, and Associates as Identified in the Select Subcommittee’s
Report.

The Select Subcommittee also uncovered significant evidence that the owners of
Blueacorn and Blueacorn’s primary financial crime consultant, Elev8 Advisors, may have
committed PPP fraud themselves while working on the eligibility verification and anti-fraud
aspects of the program. The SBA OIG should investigate the potentially fraudulent loans

83


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 242

Page 87 of 131 PageID

applied for and awarded to Ms. Hockridge, Mr. Reis, the Spencers, and family members of the
Spencers and refer them to law enforcement if appropriate.
I.

The Department of Justice Should Continue to Aggressively Prosecute PPP
Fraud, with an Increased Focus on Fraud Committed by Individuals in
Positions of Trust and Authority Related to the Program, Such as Lenders,
LSPs, and Other Agents.

The PPP heavily relied on private companies to facilitate the program, and their failures
to be good stewards significantly harmed taxpayers. To the extent that these companies or
individuals affiliated with these companies themselves committed, aided, or encouraged PPP
fraud, they should be prosecuted to the fullest extent of the law to discourage future abuse of
government programs.
Such investigations and prosecutions should include, but not be limited to, the potentially
criminal conduct detailed in this report. The Select Subcommittee’s investigation identified not
only cases where fintech principals may have committed PPP fraud, but instances where fintech
principals, executives, or managers acknowledged that they were aware of a risk of fraud in the
loans that they were approving, but directed that employees continue to approve such loans.
DOJ should therefore also investigate whether these fintechs or their employees and principals
knowingly made, or caused to be made or used, false statements in connection with PPP
applications that they submitted or processed, in violation of the False Claims Act.716
J.

Congress Should Continue to Fund and Support Community Lenders—
Including Community Development Financial Institutions (CDFIs), Minority
Depository Institutions (MDIs), and Others—So That They Can Increase
Their Capacity to Directly Serve Underserved Communities and Small
Businesses While Performing Intensive Oversight of Any Firms That They
Hire to Perform Important Services on Their Behalf.

The Select Subcommittee’s investigation identified several instances in which CDFIs,
overwhelmed by the needs of customers that were underserved by the traditional banking system,
delegated their responsibilities heavily to fintech firms. These institutions sometimes lacked the
resources and experience to oversee those fintechs, leaving their loans vulnerable to fraud. At
the same time, CDFIs and similar community lenders were essential to dramatically increasing
the reach of the PPP to customers that otherwise lacked access to credit, including many of the
small businesses and underserved markets that the PPP was designed to support. In order for
community lenders to effectively participate in future government programs (and to more
generally improve equitable access to credit across the nation), they must be supported with
adequate resources to participate effectively.

84


Case 1:25-cv-00117-FB-CHK

K.

Document 1-14 Filed 01/07/25
#: 243

Page 88 of 131 PageID

Congress Should Consider Additional Federal Regulations for NonBank/Non-Depository Fintechs Considering Their Increasing Role in the
Financial Industry, Including Clearer Standards on Financial Crime
Responsibilities.

Fintechs are claiming an increasingly large role in the financial industry, from providing
application portals to borrowers as they did in the PPP, to housing encrypted transactions on
complex networks. Although fintechs often behave like banks and traditional depository
institutions, they are not subject to banking regulations such as the Bank Secrecy Act, which
would require them to implement certain processes and structures to ensure the safety and
soundness of their operations. The Select Subcommittee’s findings suggest that fintechs
subjected to these requirements via their lending partners, such as Bluevine under the oversight
of Celtic Bank, were more successful at adapting to fraud risks than those that did not. As the
fintech industry grows and develops, Congress must thoughtfully regulate the industry to better
protect consumers and prevent financial crime.

85


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 244

Page 89 of 131 PageID

1
$2 Trillion Coronavirus Stimulus Bill Is Signed into Law, New York Times (Mar. 27, 2020) (online at
https://www.nytimes.com/2020/03/27/us/politics/coronavirus-house-voting.html).
2

National Bureau of Economic Research, The $800 Billion Paycheck Protection Program: Where Did the
Money Go and Why Did It Go There? (Jan. 2022) (online at
https://www.nber.org/system/files/working_papers/w29669/w29669.pdf).
3

Id.

4

Id.

5

Id.

6

Minority Entrepreneurs Struggled to Get Small-Business Relief Loans, New York Times (Apr. 4, 2021)
(online at https://nytimes.com/2021/04/04/business/ppp-loans-minority-businesses.html).
7

Small Business Administration, 7(a) Loans (online at www.sba.gov/funding-programs/loans/7a-loans)
(accessed Oct. 6, 2022).
8
Department of the Treasury, Paycheck Protection Program (PPP) Information Sheet Lenders (online at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf) (accessed Oct.
6, 2022).
9

Department of the Treasury, Press Release: With $349 Billion in Emergency Small Business Capital
Cleared, Treasury and SBA Begin Unprecedented Public-Private Mobilization Effort to Distribute Funds (Mar. 31,
2020) (online at https://home.treasury.gov/news/press-releases/sm961).
10

Id.

11

PPP 2 Years Later: Analyzing the Legacy and Impact of the $800B Government Relief Program,
Banking Dive (May 4, 2022) (online at https://bankingdive.com/news/ppp-sba-small-business-lending-banksanalyzing-legacy-impact-800b-paycheck-protection-program/623160/).
12

Department of the Treasury, Paycheck Protection Program (PPP) Information Sheet Lenders (online at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf) (accessed Oct.
6, 2022).
13
Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0).
14
Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection
Program, 85 Fed. Reg. 20811 (Apr. 15, 2020) (interim final rule).
15

Id. Self-employed workers, independent contractors, or sole proprietorships were also eligible for PPP
loans and required to submit documentation corroborating their eligibility.
16

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0); 13 C.F.R. §§ 103.1 (2022).
17

13 C.F.R. §§ 103.1 (2022); see also Small Business Administration, Office of Capital Access, Lender
and Development Company Loan Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop50-10-lender-development-company-loan-programs-0).
18

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0); see also 13 C.F.R. § 103.1(a) and (d) (2022).

86


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 245

Page 90 of 131 PageID

Small Business Administration, Office of Inspector General, Improvement Is Needed in SBA’s Oversight
of Lender Service Providers (Mar. 12, 2015) (Rept. No. 15-06) (online at https://oversight.gov/sites/default/files/oigreports/OIG_Report_15-06_Lender_Service_Providers.pdf).
19

20
Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0). A March 12, 2015, SBA OIG Report noted that, “due to insufficient resources or
inexperience with the complexities of SBA lending requirements, many lending institutions contract with LSPs to
provide services in connection with originating, closing, servicing, or liquidating SBA business loans” and that
“LSPs are deeply involved in all phases of the loan life cycle, including originating, closing, servicing, and
liquidating SBA business loans.” Small Business Administration, Office of Inspector General, Improvement Is
Needed in SBA’s Oversight of Lender Service Providers (Mar. 12, 2015) (Rept. No. 15-06) (online at
https://oversight.gov/sites/default/files/oig-reports/OIG_Report_15-06_Lender_Service_Providers.pdf).
21

13 C.F.R. §§ 103.3, 120.1500 (2022).

22

Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection
Program, 85 Fed. Reg. 20811 (Apr. 15, 2020) (interim final rule).
23
Department of the Treasury, Paycheck Protection Program (PPP) Information Sheet Lenders (online at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf) (accessed Oct.
27, 2022).
24

Id.

25

Big Banks Generated Billions in PPP Fees, Miami Herald (Dec. 3, 2020) (online at
https://miamiherald.com/news/coronavirus/article247562870.html).
26

Small Business Administration, SBA Procedural Notice (Feb. 8, 2021) (online at
www.sba.gov/sites/default/files/2021-02/Procedural%20Notice%205000-20091%20%202nd%20Updated%20PPP%20Processing%20Fee%20and%201502%20Reporting.pdf).
27

Id.

28

Id.

RegTech Consulting LLC, PPP Round 2 – Why Will It Cost $6 Billion More Than Round 1? (Mar. 31,
2021) (online at https://regtechconsulting.net/general-business-risk-and-life/ppp-round-2-why-will-it-cost-6-billionmore-than-round-1/).
29

30

Id.

31
Brookings Institution, Congressional Oversight of the CARES Act Could Prove Troublesome (Apr. 15,
2020) (online at https://brookings.edu/blog/fixgov/2020/04/15/congressional-oversight-of-the-cares-act-couldprove-troublesome/).
32

Trump Pushes Back Against Congressional Oversight for $500 Billion Bailout Fund, CNBC (Mar. 28,
2020) (online at https://cnbc.com/2020/03/28/trump-pushes-back-against-congressional-oversight-for-500-billionbailout-fund.html).
“Biggest Fraud in a Generation”: The Looting of the Covid Relief Plan Known as PPP, CNBC (Mar. 28,
2022) (online at https://nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-reliefprogram-known-ppp-n1279664); Congressional Research Service, Presidential Objections to Special Investigator
General for Pandemic Recovery Reporting Requirements (May 12, 2020) (LSB10463) (online at
https://crsreports.congress.gov/product/pdf/LSB/LSB10463); The White House, Statement by the President (Mar.
27, 2020) (online at https://web.archive.org/web/20200401135001/https:/www.whitehouse.gov/briefingsstatements/statement-by-the-president-38/).
33

87


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 246

Page 91 of 131 PageID

34

Small Business Administration, Office of Inspector General, White Paper: Risk Awareness and Lessons
Learned from Prior Audits of Economic Stimulus Loans (Apr. 3, 2020) (Rept. No. 20-11) (online at
https://sba.gov/sites/default/files/2020-04/SBA_OIG_WhitePaper_20-11_508.pdf).
35

Id.

36

Inspectors General Warn That Trump Administration Is Blocking Scrutiny of Coronavirus Rescue
Programs, Washington Post (June 15, 2020) (online at www.washingtonpost.com/business/2020/06/15/inspectorgeneral-oversight-mnuchin-cares-act/).
37

Id.

Members of Congress Took Small-Business Loans – and the Full Extent Is Unknown, Politico (June 16,
2020) (online at www.politico.com/news/2020/06/16/congress-small-business-loan-320625).
38

39

Id.

Senator Marco Rubio, Op-Ed: The Data Is Clear – the Paycheck Protection Program Is a Success,
CNBC (Dec. 10, 2020) (online at https://cnbc.com/2020/12/10/marco-rubio-op-ed-the-paycheck-protectionprogram-is-a-success.html).
40

Democrats’ PPP Disclosure Bill Fails Senate Vote, Credit Union Times (May 6, 2020) (online at
https://cutimes.com/2020/05/06/democrats-ppp-disclosure-bill-fails-senate-vote-413167916/?slreturn=20221022104419).
41

Small Business Administration, Office of Inspector General, SBA’s Handling of Potentially Fraudulent
Paycheck Protection Program Loans (May 26, 2022) (Rept. No. 22-13) (online at
https://oversight.gov/sites/default/files/oig-reports/SBA/SBA-OIG-Report-22-13.pdf).
42

Government Accountability Office, Report to the Congress: COVID-19 – Opportunities to Improve
Federal Response and Recovery Efforts (June 2020) (GAO-20-625) (online at https://gao.gov/assets/gao-20625.pdf).
43

44

Id.

45

Id.

46

Id.

47

Id.

48

Id.

49

Id.

50

Id.

51

Memorandum from Majority Staff to Members of the Select Subcommittee on the Coronavirus Crisis,
Preliminary Analysis of Paycheck Protection Program Data (Sept. 1, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2020-0901.PPP%20Interim%20Report.pdf).
52

Government Accountability Office, COVID-19: Urgent Actions Needed to Better Ensure an Effective
Federal Response (Nov. 30, 2020) (GAO-21-191) (online at https://files.gao.gov/reports/GAO-21-191/index.html).
Government Accountability Office, Report to Congressional Committees: COVID-19 – Critical Vaccine
Distribution, Supply Chain, Program Integrity, and Other Challenges Require Focused Federal Attention (Jan. 2021)
(GAO-21-265) (online at https://gao.gov/assets/gao-21-265.pdf).
53

54

Id.

88


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 247

Page 92 of 131 PageID

55

Government Accountability Office, Report to Congressional Addressees: Paycheck Protection Program
– SBA Added Program Safeguards, But Additional Actions Are Needed (July 2021) (GAO-21-577) (online at
https://gao.gov/assets/gao-21-577.pdf).
56
Video: SBA Inspector General Hannibal Ware Discusses COVID Relief Fraud, Pursuit Magazine (Nov.
24, 2020) (online at https://pursuitmag.com/hannibal-ware-discusses-covid-loan-fraud/).
57

Id.

58

Banks Report Record Spike in Fraud as U.S. Business-Aid Flows, Bloomberg (Sept. 24, 2020) (online at
https://bloomberg.com/news/articles/2020-09-24/banks-report-record-spike-in-fraud-as-u-s-business-aid-flows).
59

Id.

60

Project on Government Oversight, Spike in Suspected Business Loan Fraud Reports Coincided with
Paycheck Protection Program (Sept. 20, 2020) (online at https://pogo.org/investigation/2020/09/spike-in-suspectedbusiness-loan-fraud-reports-coincided-with-paycheck-protection-program).
61

Project on Government Oversight, The Great Pandemic Swindle: Feds Botched Review of Billions in
Suspect PPP Loans (Oct. 6, 2022) (online at https://pogo.org/investigation/2022/10/the-great-pandemic-swindlefeds-botched-review-of-billions-in-suspect-ppp-loans).
62

Id.

63

Id.

64

Id.

65

John M. Griffin, Samuel Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP
Fraud?, Journal of Finance, Forthcoming (Aug. 15, 2022) (online at http://dx.doi.org/10.2139/ssrn.3906395).
66

Id.

67

Pair Is Arrested on First Fraud Charges Tied to Small-Business Loan Program, New York Times (May
5, 2020) (online at https://nytimes.com/2020/05/05/us/politics/virus-fraud-justice-department.html).
68

Email from Staff, Department of Justice, to Majority Staff, Select Subcommittee on the Coronavirus
Crisis (Oct. 9, 2022).
69

Id.

70
The Start-Up Enemies of Wall Street Are Booming, New York Times (Mar. 29, 2021) (online at
https://nytimes.com/2021/03/29/technology/fintech-startups-wall-street.html); What Are Fintechs and How Can
They Help Small Business?, New York Times (June 10, 2020) (online at
https://nytimes.com/2020/06/10/business/economy/fintechs-loan-small-business.html).
71
Federal Reserve Bank of St. Louis, Regulating Fintech: One Size Does Not Fit All (Feb. 24, 2021)
(online at https://stlouisfed.org/on-the-economy/2021/february/regulating-fintech-one-size-does-not-fitall#:~:text=Fintech%20Regulation%20101,agency%20that%20oversees%20fintech%20companies).
72

Id.

73

Id.

74
The Start-Up Enemies of Wall Street Are Booming, New York Times (Mar. 29, 2021) (online at
https://nytimes.com/2021/03/29/technology/fintech-startups-wall-street.html); What Are Fintechs and How Can
They Help Small Business?, New York Times (June 10, 2020) (online at
https://nytimes.com/2020/06/10/business/economy/fintechs-loan-small-business.html).
75
The Fintech Revolution Is Here. Can It Help Build a Better Economy?, Forbes (Feb. 22, 2019) (online at
https://forbes.com/sites/jenniferpryce/2019/02/22/the-fintech-revolution-is-here-can-it-build-a-bettereconomy/?sh=2e1d5d875fda).

89


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 248

Page 93 of 131 PageID

76

Department of the Treasury, Office of the Comptroller of the Currency, Acting Comptroller of the
Currency Michael J. Hsu Remarks at the TCH + BPI Annual Conference, “Safeguarding Trust in Banking: An
Update” (Sept. 7, 2022) (online at https://occ.gov/news-issuances/speeches/2022/pub-speech-2022-106.pdf).
77
World Bank, 2020 Global COVID-19 FinTech Market Rapid Assessment Study (Dec. 3, 2020) (online at
www.worldbank.org/en/news/press-release/2020/12/03/fintech-market-reports-rapid-growth-during-covid-19pandemic).
78
Financial Innovation Now, FIN Calls on Congress to Help Small Businesses ASAP – Use Speedy
Alternative Lenders to Distribute Stimulus Loans (Mar. 19, 2020) (online at
http://web.archive.org/web/20220523145910/https://financialinnovationnow.org/2020/03/19/fin-calls-on-congressto-help-small-businesses-asap-use-speedy-alternative-lenders-to-distribute-stimulus-loans/).
79

Id.

80

Innovative Lending Platform Association, Government Must Do More to Ensure Small Business Access
to Capital During Crisis (online at https://innovativelending.org/government-must-do-more-to-ensure-smallbusiness-access-to-capital-during-crisis/) (accessed Oct. 7, 2022).
81

Id.

82
Lending Startups Are Angling for New Business from the COVID-19 Bailout, TechCrunch (Apr. 2, 2020)
(online at https://techcrunch.com/2020/04/02/lending-startups-are-angling-for-new-business-from-the-covid-19bailout/).
83
PayPal, Square Start Lending to Small Businesses Hurt by Virus, Bloomberg (Apr. 14, 2020) (online at
https://bloomberg.com/news/articles/2020-04-14/paypal-square-start-lending-to-small-businesses-hurt-byvirus#xj4y7vzkg); Lendistry Receives Capital from Goldman Sachs to Provide PPP Loans to Underserved
Businesses, Doubles Footprint to 12 States, GlobeNewswire (Apr. 23, 2020) (online at
https://globenewswire.com/en/news-release/2020/04/23/2021007/0/en/Lendistry-Receives-Capital-From-GoldmanSachs-To-Provide-PPP-Loans-To-Underserved-Businesses-Doubles-Footprint-To-12-States.html); Magic Johnson
Offering $100 Million in Loans to Minority-Owned Businesses Left Out of PPP Loans, CNBC (May 19, 2020)
(online at https://cnbc.com/2020/05/19/magic-johnson-offering-100-million-in-loans-to-minority-ownedbusinesses.html); Bluevine, Bluevine Approved as Direct Lender for Paycheck Protection Program (online at
https://bluevine.com/newsroom/bluevine-becomes-direct-lender-for-ppp/) (accessed Oct. 7, 2022); Kabbage,
Kabbage Partners with SBA-Authorized Bank to Deliver Paycheck Protection Program Loans to Small Businesses
(Apr. 7, 2020) (online at https://newsroom.kabbage.com/news/kabbage-partners-with-sba-authorized-bank-todeliver-paycheck-protection-program-loans-to-small-businesses/); Celtic Bank, Utah-Based SBA Lender Celtic Bank
Punches Above Its Weight with $2.5 Billion in PPP Funding (Dec. 21, 2020) (online at
https://celticbank.com/releases/celtic-ppp-funding); Cross River Bank, Press Release: Cross River One of Top
Paycheck Protection Program (PPP) Lenders in the Country (June 9, 2020) (online at https://crossriver.com/crossriver-one-top-paycheck-protection-program-ppp-lenders-country).
84

Capital Plus Financial Partners with Blueacorn to Expedite PPP Loan Relief to Small Businesses,
Cision PR Newswire (Jan. 11, 2021) (online at https://prnewswire.com/news-releases/capital-plus-financialpartners-with-blueacorn-to-expedite-ppp-loan-relief-to-small-businesses-301204999.html); Womply, Womply
Launches PPP Fast Lane to Help Under-Served Businesses Access the Paycheck Protection Program (PPP) (Feb.
23, 2021) (online at https://womply.com/press/womply-launches-ppp-fast-lane-to-help-under-served-businessesaccess-the-paycheck-protection-program-ppp/) (This link now redirects to Solo Global’s website.).
Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals Through
5/31/2021 (May 31, 2021) (online at https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531508.pdf).
85

86

Id.

87

Id.

90


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 249

Page 94 of 131 PageID

88

Innovative Lending Platform Association, ILPA Applauds Confirmation of New SBA Administrator (Mar.
16, 2021) (online at https://innovativelending.org/ilpa-applauds-confirmation-of-new-sba-administrator/).
89
Fintech Lenders Are Critical to Small Businesses Accessing PPP, The Hill (June 24, 2021) (online at
https://thehill.com/opinion/finance/560133-fintech-lenders-are-critical-to-small-businesses-accessing-ppp/).
90

Id.

91

Call between Staff, Small Business Administration, Office of Inspector General, and Majority Staff,
Select Subcommittee on the Coronavirus Crisis (May 5, 2022).
92
PPP Scammers Made Fintech Companies Their Lenders of Choice, Bloomberg (Oct. 7, 2020) (online at
https://bloomberg.com/news/articles/2020-10-07/ppp-loans-scammers-used-fintech-companies-to-carry-outfraud?leadSource=uverify%20wall#xj4y7vzkg).
93
Lamborghinis, Strip Clubs, Bogus Companies, and Lies, Project on Government Oversight (Oct. 8, 2020)
(online at https://pogo.org/investigation/2020/10/lamborghinis-strip-clubs-bogus-companies-and-lies).
94

15% of Paycheck Protection Program Loans Could Be Fraudulent, Study Shows, New York Times (Oct.
11, 2021) (online at https://nytimes.com/2021/08/17/business/ppp-fraud-covid.html); John M. Griffin, Samuel
Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP Fraud?, Journal of Finance, Forthcoming (Aug.
15, 2022) (online at http://dx.doi.org/10.2139/ssrn.3906395).
95

John M. Griffin, Samuel Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP Fraud?,
Journal of Finance, Forthcoming (Aug. 15, 2022) (online at http://dx.doi.org/10.2139/ssrn.3906395).
96

Id.

97

Id.

98

Id.

99

Id.

100
Select Subcommittee on the Coronavirus Crisis, Press Release: Select Subcommittee Launches
Investigation into Role of FinTech Industry In PPP Fraud (May 28, 2021) (online at
https://coronavirus.house.gov/news/press-releases/select-subcommittee-launches-investigation-role-fintech-industryppp-fraud).
101
Select Subcommittee on the Coronavirus Crisis, Press Release: Select Subcommittee Expands
Investigation Into Role of FinTech Industry In PPP Fraud (Nov. 23, 2021) (online at
https://coronavirus.house.gov/news/press-releases/select-subcommittee-expands-investigation-role-fintech-industryppp-fraud); John M. Griffin, Samuel Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP
Fraud?, Journal of Finance, Forthcoming (Aug. 15, 2022) (online at http://dx.doi.org/10.2139/ssrn.3906395).
102
Email from Chief Risk Officer, Cross River Bank, to Staff, Cross River Bank (Apr. 3, 2020)
(CRB_Subcom_0003205-07).
103

Email from Chief Executive Officer, Celtic Bank, to President and Chief Operating Officer, Celtic Bank
(Oct. 30, 2020) (Celtic_SSCC_001179-80).
104

Email from BSA Officer, Celtic Bank, to Chief Risk Officer and Senior Compliance Manager, Celtic
Bank (Nov. 5, 2020) (Celtic_SSCC_001350-51).
105

Email from Vice President - Compliance, Celtic Bank, to Staff, Celtic Bank and Bluevine Inc. (Mar. 30,
2021) (BV_SSCC_0001028-30).
106
Email from President/Chief Operating Officer, Celtic Bank, to President, Utah Bank, (Aug. 12, 2020)
(Celtic_SSCC_001393-95).
107

Email from Head of Policy, Kabbage, Inc., to Head of Capital Markets, Kabbage, Inc. (July 18, 2020)
(AMEX-SSCC-00020140-45).

91


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 250

Page 95 of 131 PageID

108

Letter from Head of Policy, Kabbage, Inc., to Staff, Kabbage, Inc. (Sept. 8, 2020) (AMEX-SSCC00020045-47).
109

Slack Messages between Staff, Kabbage, Inc. (July 16, 2020) (AMEX-SSCC-00019821-25).

110

Id.

111

Email from Chief Executive Officer, Celtic Bank, to Staff, Celtic Bank (May 8, 2020)
(Celtic_SSCC_001189-91).
112
Email from Bernie Navarro, Founder and President, Benworth Capital Partners, LLC to Toby Scammell,
Founder and Chief Executive Officer, Womply (May 7, 2021) (BWSSCCResp0000038-42).
113

Email from Head of Policy, Kabbage, Inc. (Sept. 30, 2020) (AMEX-SSCC-00017302-04).

114

Email from President and Chief Operating Officer, Celtic Bank, to President, Utah Bankers Association
(Aug. 12, 2020) (Celtic_SSCC_001393-95).
115
Blueacorn, Blueacorn’s Role in PPP (online at https://blueacorn.co/about-ppp/) (accessed Nov. 14,
2022); How Two Start-ups Reaped Billions in Fees on Small Business Relief Loans, N.Y. Times (June 27, 2021)
(online at www.nytimes.com/2021/06/27/business/ppp-relief-loans-blueacorn-womply.html).
116
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Mar. 25, 2022). Blueacorn engaged a second compliance consultant, Everett Advisors, that
worked with Elev8 Advisors. Everett Advisors reviewed training and guidance materials and created an AML/BSA
training presentation. Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (February 4, 2022); Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis (June 30, 2022).
117

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,

2022).
118
Blueacorn Pitch Deck Provided to Capital Plus Financial (SSCC-CPF-0000457-65); Blueacorn Pitch
Deck Customized for Prestamos CDFI (PRE-0000119-58).

Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals Through
5/31/2021 (May 31, 2021) (https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531-508.pdf) (Capital
Plus and Prestamos issued 472,036 and 494,415 PPP loans in 2021 for a total of $15,258,132,373 in PPP loans);
Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Apr.
25, 2022) (approximately 434,000 loans processed by Prestamos were originated through the Blueacorn platform
between April 14, 2021 and the end of round three in June 2021); Email from Counsel, Capital Plus Financial LLC,
to Majority Staff, Select Subcommittee on the Coronavirus Crisis (July 22, 2022) (Blueacorn submitted a total of
521,221 loan applications to the SBA on behalf of Capital Plus.)
119

Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals Through
5/31/2021 (May 31, 2021) (online at https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531508.pdf).
120

121

Id.

122

Email from Counsel, Capital Plus Financial LLC, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022) (“Capital Plus relied on Blueacorn’s technological solutions to determine
borrower eligibility and combat fraud efficiently and at scale.”); Letter from Prestamos CDFI to Chairman James E.
Clyburn, Select Subcommittee on the Coronavirus Crisis (Apr. 25, 2022) (“Prestamos CDFI recognized it did not
have the capability to process PPP applications at scale, but Blueacorn’s PPP platform could, by integrating multiple
layers of well-established fraud detection and prevention tools and artificial intelligence (‘AI’) capabilities, as
detailed in Blueacorn’s marketing materials, policies, and procedures[.]”).
123
Blueacorn Group January 1, 2021 – February 28, 2022, Simplified Cash Flow Statement (BA-SSCC0000121-22).

92


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 251

Page 96 of 131 PageID

124

Call between Staff, Small Business Administration, Office of Inspector General, and Majority Staff,
Select Subcommittee on the Coronavirus Crisis (May 5, 2022).
125
Florida drug dealers received PPP loans, many from a Blueacorn lending partner, for non-existent
businesses. According to local police, “[o]ne of the reasons they were able to fund their [drug] operation was
because they were using these [PPP] loans from the government that they had received fraudulently.” COVID Relief
Cash Funded Florida Drug Dealers Day to Day Operations: Police, Newsweek (Nov. 17, 2021) (online at
https://newsweek.com/covid-relief-cash-funded-florida-drug-dealers-day-day-operations-police-1650453);
FederalPay.org, PPP Loan Data – Kenneth Davis Jr., Saint Petersburg, FL (online at
https://federalpay.org/paycheck-protection-program/kenneth-davis-jr-saint-petersburg-fl) (accessed Nov. 27, 2022);
FederalPay.org, PPP Loan Data – Dante Payne, Saint Peterburg, FL (online at https://federalpay.org/paycheckprotection-program/dante-payne-saint-petersburg-fl) (accessed Nov. 27, 2022). Loans were issued by Blueacorn
partners to an ineligible gang member and to an individual who, during the time that he claimed to run an eligible
business, was in fact incarcerated for money laundering and drug dealing. Fraudster Who Bilked $131K in COVID19 Benefits Sent to Prison, Times Union (July 25, 2022) (online at https://timesunion.com/news/article/Fraudsterwho-bilked-131K-in-COVID-19-benefits-17326950.php); FederalPay.org, PPP Loan Data – Hector Sanchez,
Rensselaer, NY (online at https://federalpay.org/paycheck-protection-program/hector-sanchez-rensselaer-ny)
(accessed Nov. 27, 2022); Mobile Murder Suspect Pleads Guilty to Committing PPP Loan Fraud, Advance Local
(Mar. 2, 2022) (online at https://al.com/news/mobile/2022/03/mobile-murder-suspect-pleads-guilty-in-connectionwith-ppp-loan-fraud.html); FederalPay.org, PPP Loan Data – Demetrius Richardson, Mobile, AL (online at
https://federalpay.org/paycheck-protection-program/demetrius-richardson-mobile-al) (accessed Nov. 27, 2022).
126

They Promised Quick and Easy PPP Loans. Often, They Only Delivered Hassle and Heartache,
ProPublica (Jan. 14, 2022) (online at https://propublica.org/article/they-promised-quick-and-easy-ppp-loans-oftenthey-only-delivered-hassle-and-heartache).
127

See, e.g., Facebook, Blueacorn (Apr. 22, 2021) (online at
www.facebook.com/blueacornco/posts/pfbid0svrpDueZjCvK1KmvPKttquMKPwrao8r2V5jxgZxgfoYLvgKaFtYkH
fRdnZUrbtE8l?__cft__[0]=AZUeCMqsCH7amSOetcA8qmiW5WOo9sOts8pUWldZ54PKsqBctibFg8KswdQVp2E
v2y0azP9qxJJ67kQHwgkEzyV-qIqmoBMlT_m2lbkesDp9rravbu8UWqvw1eY7Ns_4U131fGFheOuZuUxaA7c9td0fLY35xOmfUjMn_uwVcYVTF0En-74QMMuJCi1nns4Ra0HvePgoYC0TDFhL4kf7W6&__tn__=%2CO%2CP-R).
Blueacorn Group January 1, 2021 – February 28, 2022, Simplified Cash Flow Statement (BA-SSCC0000121-22).
128

129

Blueacorn, Blueacorn’s Role in PPP (online at https://blueacorn.co/about-ppp/) (accessed June 6, 2022).

130

Blueacorn, Sobre Nostros (online at https://blueacorn.co/sobre-nosotros/) (accessed Nov. 14, 2022);
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis
(Feb. 4, 2022); LinkedIn, Nate Reis (online at https://linkedin.com/in/nathanreis/) (accessed Nov. 15, 2022).
131
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Feb. 4, 2022); Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 3, 2022).
132

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,

133

Blueacorn, Blueacorn’s Role in PPP (online at https://blueacorn.co/about-ppp/) (accessed June 6, 2022).

134

Id.

2022).

135
Federal Reserve Board, Federal Reserve Statistical Release: Large Commercial Banks (June 30, 2022)
(online at https:/federalreserve.gov/releases/lbr/current/); JP Morgan Chase issued 158,345 PPP loans in 2021
totaling over $12.1 billion. Small Business Administration, Paycheck Protection Program (PPP) Report –
Approvals Through 5/31/2021 (May 31, 2021) (online at https://sba.gov/sites/default/files/202106/PPP_Report_Public_210531-508.pdf).

93


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 252

Page 97 of 131 PageID

136

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Dec. 23, 2021).
137
Lender Service Provider Agreement Between Capital Plus Financial LLC and FIN CAP, INC. (Oct. 23,
2020) (BA-SSCC-0000026-40). According to Blueacorn, the fintech entered into the Capital Plus LSPA through its
wholly-owned subsidiary, Fin Cap, Inc. The original Capital Plus LSPA was executed in January 2021, with an
effective date of October 23, 2020, and was updated in February 2021. Letter from Blueacorn PPP, LLC to
Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Jan. 12, 2022).
138
Lender Service Provider Agreement Between Capital Plus Financial LLC and FIN CAP, INC. (Oct. 23,
2020) (BA-SSCC-0000026-40); According to Blueacorn, the fintech entered into the Capital Plus LSPA through its
wholly-owned subsidiary, Fin Cap, Inc. The original Capital Plus LSPA was executed in January 2021, with an
effective date of October 23, 2020, and was updated in February 2021. Letter from Blueacorn PPP, LLC, to
Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Jan. 12, 2022).
139

Lender Service Provider Agreement Between Prestamos CDFI, LLC and BA PPP Fin, LLC (Apr. 14,
2021) (BA-SSCC-0000001-15).
140

See, e.g., Blueacorn Pitch Deck Customized for Prestamos CDFI (PRE-0000119-58).

141

Blueacorn Pitch Deck Provided to Capital Plus Financial (SSCC-CPF-0000457-65).

142

Id.

143

Id.

144

Blueacorn Pitch Deck Customized for Prestamos CDFI (PRE-0000119-58).

145

Id.

146

Call between Staff, Prestamos CDFI, and Staff, Select Subcommittee on the Coronavirus Crisis (Mar.

31, 2022).
147

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Dec. 23, 2021).
148

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Jan. 12, 2022).
149
Anchor, Sessions by Monster Chats, Episode #25 - The Paycheck Protection Program with Stephanie
Hockridge Reis (online at https://anchor.fm/sessions-monster-chats/episodes/Episode-25---The-PaycheckProtection-Program-with-Stephanie-Hockridge-Reis-eedc2s).
150

Id.

151

Are PPP Loan Companies Legit? PPP Loans Are Being Aggressively (And I Suspect Deceptively)
Marketed, Medium (Mar. 23, 2021) (online at https://medium.com/web-design-web-developer-magazine/are-ppploan-companies-legit-ppp-loans-are-being-aggressively-and-i-suspect-deceptively-marketed-2fa99e7ec6fb).
Blueacorn Group January 1, 2021 – February 28, 2022, Simplified Cash Flow Statement (BA-SSCC0000121-22).
152

153

Id.

154

In a letter to the Select Subcommittee, Blueacorn described the fee structure with its partners:
“Blueacorn’s compensation from Capital Plus consisted of: (i) an initial 20% share of SBA fees received by Capital
Plus for each loan (with 50% of this amount held back until the borrower applied for SBA forgiveness for the
underlying loan), which compensated Blueacorn for the amount that Blueacorn paid marketers to advertise on the
internet; and (ii) 41% of the remaining SBA fees (and 8% for two of Blueacorn’s initial founders, who had since
exited), which, among other things, compensated Blueacorn for its various operating costs and expenses (including
personnel costs for the application review process, expenses related to technological development, costs associated
with the provision of customer support for borrowers, and other technology costs such as DocuSign). . . . Blueacorn

94


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 253

Page 98 of 131 PageID

earned 70% of the SBA fees received by Prestamos for each loan, with 10% of Blueacorn’s share held back until the
borrower either completed a forgiveness application or the loan matured. Although not broken out into a separate
reimbursement item as it was in the Capital Plus LSPA, this arrangement similarly compensated Blueacorn for its
expense of paying the entire cost associated with marketing on the internet, along with all of the other operating
costs and expenses associated with Blueacorn’s various responsibilities.” Letter from Blueacorn PPP, LLC to
Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Jan. 12, 2022). See also Lender
Service Provider Agreement Between Prestamos CDFI, LLC and BA PPP Fin, LLC (Apr. 14, 2021) (BA-SSCC0000001-15); Lender Service Provider Agreement Between Capital Plus Financial LLC and FIN CAP, INC. (Oct.
23, 2020) (BA-SSCC-0000026-40).
155

Text messages communications from Nate Reis provided to Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
156

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000631).

157

Barry Calhoun, Interview of Michael Faulkender (June 21, 2022) (online at
https://medium.com/@barry_calhoun).
158
Jimmy Flores (@JimmyMFlores), Twitter (Apr. 26, 2020) (online at
https://twitter.com/JimmyMFlores/status/1254548298683215873).
159

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000614).

160

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis; Conversation with former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis; Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on
the Coronavirus Crisis; Letter from Blueacorn PPP, LLC, to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (June 6, 2022).
161

Letter from Blueacorn PPP, LLC, to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 6, 2022); LinkedIn, Jack Snyder (online at https://linkedin.com/in/jack-snyder-57852268/)
(accessed Nov. 15, 2022); LinkedIn, Robert Conley (online at https://linkedin.com/in/robert-conley/) (accessed Nov.
15, 2022).
162

Blueacorn Pitch Deck Provided to Capital Plus Financial (SSCC-CPF-0000457-65).

163

LinkedIn, Jack Snyder (online at https://linkedin.com/in/jack-snyder-57852268/) (accessed Nov. 15,

2022).
164

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis; Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on
the Coronavirus Crisis.
165

LinkedIn, Robert Conley (online at https://linkedin.com/in/robert-conley/) (accessed June 7, 2022).

166

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 6, 2022); LinkedIn, Robert Conley (online at https://linkedin.com/in/robert-conley/)
(accessed June 7, 2022); LexisNexis Records for Robert Conley (accessed June 8, 2022).
167

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Sept. 9, 2022).
168

Id.

169

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Jan. 12, 2022).
170

Id.

171
See Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Jan. 12, 2022).

95


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 254

Page 99 of 131 PageID

172

Paycheck Protection Program Loan Forgiveness Application Form 3508S for Adam Spencer (Aug. 25,
2021) (PRE-0000413-16).
173

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,

174

Id.

175

Id.

176

Id.

2022).

177

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
178

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,

179

Id.

180

Id.

2022).

181

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
182

Id.

183

Slack Messages Between Blueacorn IT employee and Kristen Spencer (ELEV8_00000585).

184

Complaint from former Blueacorn employee to Small Business Administration, Office of Inspector
General (Complaint No. 20210331k636); Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 3, 2022).
185

Complaint from former Blueacorn employee to Small Business Administration, Office of Inspector
General (Complaint No. 20210331k636).
186
Underwriting History for Paycheck Protection Program First Draw Loan (BA-PSI-0005456-7) (Showing
the Spencers’ son as an “underwriter”); Email from Adam Spencer to Adam Spencer (Apr. 5, 2021)
(ELEV8_00000011-13) (A welcome email from Adam Spencer to Elev8 Advisors reviewers sent to relatives Craig
Owensby, Heather Owensby, Jane Owensby, Jordan Spencer, and Jarred Spencer).
187
Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
188

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000626,
ELEV8_00000666).
Blueacorn Group January 1, 2021 – February 28, 2022, Simplified Cash Flow Statement (BA-SSCC0000121-22).
189

190

Id.; Complaint, Fin Cap Inc. and Blueacorn PPP, LLC v. Pay Nerd LLC and PayNerdier LLC, No.
N21C-12-118 AML (Del. Super. Ct. 2022) (BA-SSCC-0000089-120); Blueacorn Pitch Deck Customized for
Prestamos CDFI (PRE-0000119-58).
191
Blueacorn Group January 1, 2021 – February 28, 2022, Simplified Cash Flow Statement (BA-SSCC0000121-22).
192

Id.

193

Id.

194

Id.

96


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 255

Page 100 of 131 PageID

195

Id. PPP applicants waiting for emergency funds reported that customer service representatives, even
when reachable, gave out incorrect and inconsistent information or did not follow through with promised actions.
At one point, Blueacorn was so inundated with complaints on its Facebook portal that the company shut down its
Facebook Comments section altogether as it could not handle the inflow of complaints. Blueacorn made a
“promise[] to do better,” yet the company’s internal financial statements show that it never allocated the funding
necessary to properly resource its customer service apparatus. Facebook, Blueacorn (Apr. 22, 2021) (online at
www.facebook.com/blueacornco/posts/pfbid0svrpDueZjCvK1KmvPKttquMKPwrao8r2V5jxgZxgfoYLvgKaFtYkH
fRdnZUrbtE8l?__cft__[0]=AZUeCMqsCH7amSOetcA8qmiW5WOo9sOts8pUWldZ54PKsqBctibFg8KswdQVp2E
v2y0azP9qxJJ67kQHwgkEzyV-qIqmoBMlT_m2lbkesDp9rravbu8UWqvw1eY7Ns_4U131fGFheOuZuUxaA7c9td0fLY35xOmfUjMn_uwVcYVTF0En-74QMMuJCi1nns4Ra0HvePgoYC0TDFhL4kf7W6&__tn__=%2CO%2CP-R); They Promised Quick and Easy PPP Loans. Often, They Only Delivered
Hassle and Heartache, ProPublica (Jan. 14, 2022) (online at https://propublica.org/article/they-promised-quick-andeasy-ppp-loans-often-they-only-delivered-hassle-and-heartache).
196

Id.

197
Email from Adam Spencer, Elev8 Advisors Group, to Barry Calhoun, Matt Yahes, and Noah Spirakus,
Blueacorn PPP, LLC (Apr. 15, 2021) (ELEV8_00000210-12).
198

Id.

199

Excerpts of the Operating Agreement of Blueacorn PPP, LLC (May 26, 2021) (online at XXX).

200
Video and Geolocation Data of Nate Reis (Dec. 12, 2021) obtained by Majority Staff, Select
Subcommittee on the Coronavirus Crisis.
201

Open Corporates, Lender Service Consultants, LLC (online at
https://opencorporates.com/companies/pr/464827-1511) (accessed Nov. 15, 2022).
202

Video and Geolocation Data of Nate Reis, dated Oct. 8, 2021, obtained by Majority Staff, Select
Subcommittee on the Coronavirus Crisis.
203

Text messages communications obtained by Majority Staff, Select Subcommittee on the Coronavirus

204

Id.

205

Id.

Crisis

206

Complaint from former Blueacorn employee to Small Business Administration, Office of Inspector
General (Complaint No. 20210331k636).
207

Id.

208

Id.

209

Id.

210

Id.

211

Id.

212
Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
213

Id.

214

Id.

215

Id.

216

Id.

97


Case 1:25-cv-00117-FB-CHK

217

Document 1-14 Filed 01/07/25
#: 256

Page 101 of 131 PageID

Id.

218

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
219

Id.

220

Id.

221

Id.

222

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
223

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
224

Id.

225

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
226

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (May 12, 2022); Blueacorn, Paycheck Protection Program Loan Processing Script (BA-PSI0011447).
227

Blueacorn, Paycheck Protection Program Loan Processing Script (BA-PSI-0011447).

228

Id.

229

Id.

230
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 6, 2022).
231

Id.

232

Id.

233

Blueacorn, Paycheck Protection Program Loan Processing Script (BA-PSI-0011447).

234

Id.

235

Id.

236

Id.

237

Id.

238

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 6, 2022).
239
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022); Blueacorn, Paycheck Protection Program Loan Processing Script (BA-PSI0011447).
240

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022).
241

Slack Messages Between Blueacorn IT Employee and Kristen Spencer (ELEV8_00000581).

242

Id.

243

Slack Messages Between Blueacorn IT Employee and Kristen Spencer (ELEV8_00000614).

98


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 257

Page 102 of 131 PageID

244

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
245

Text messages communications obtained by Majority Staff, Select Subcommittee on the Coronavirus

246

Email from President, Business Warrior, to Matt Yahes, Blueacorn PPP, LLC (ELEV8_00000039-41).

Crisis.

247

Emails between President, Business Warrior, Matt Yahes, Chief Operating Officer, and Noah Spirakus,
Founder, Blueacorn PPP, LLC (ELEV8_00000039-41); Emails between President, Business Warrior, Matt Yahes,
Chief Operating Officer, and Noah Spirakus, Founder, Blueacorn PPP, LLC (ELEV8_00000125-27).
248

Email from President, Business Warrior, to Matt Yahes, Blueacorn PPP, LLC (ELEV8_00000039-41).

249

Blueacorn, Blueacorn Helps Process Over $14 billion in Loans Throughout the Paycheck Protection
Program (online at https://blueacorn.co/2022/05/25/blueacorn-helps-process-over-14-billion-in-loans-throughoutthe-paycheck-protection-program) (accessed June 6, 2022).
250

Blueacorn Pitch Deck Customized for Prestamos CDFI (PRE-0000119-58).

251

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 6, 2022).
252

Id.

253

Id.

254

Id.

255
Select Subcommittee on the Coronavirus Crisis, Press Release: New PPP Report Shows Trump
Administration and Big Banks Left Behind Struggling Small Businesses (Oct. 16, 2020) (online at
https://coronavirus.house.gov/news/press-releases/new-ppp-report-shows-trump-administration-and-big-banks-leftbehind-struggling).
256

Id.

257

Small Business Administration, Press Release: SBA Prioritizes Smallest of Small Businesses in the
Paycheck Protection Program (Feb. 22, 2021) (online at https://sba.gov/article/2021/feb/22/sba-prioritizes-smallestsmall-businesses-paycheck-protection-program).
McGraw Hill, Two Start-Ups Stepped in When Big Lenders Wouldn’t for P.P.P. Loans (Aug. 2021)
(online at https://mheducation.com/highered/ideas/articles/two-start-ups-stepped-in-when-big-lenders-wouldn-t-forp-p-p-loans).
258

259

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000658).

260

Id.

261

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000656).

262

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,
2022); see also Email from Kristen Spencer, Director of Operations, Blueacorn PPP, LLC, to Adam Spencer,
Managing Partner, Ele8 Advisors Group (Mar. 17, 2021) (ELEV8_00000091-92).
263
Email from Kristen Spencer, Director of Operations, Blueacorn PPP, LLC, to Adam Spencer, Managing
Partner, Ele8 Advisors Group (Mar. 17, 2021) (ELEV8_00000091-92).
264

Reddit, Destiny Ligon Response to VIPPP Questions (accessed Nov. 16, 2022).

265

Id.

266

Id.

267

Id.

99


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 258

Page 103 of 131 PageID

268

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Sept. 8,

269

Id.

270

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000658).

271

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000717).

272

Id.

273

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000717).

274

Id.

2022).

275

Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection
Program, 85 Fed. Reg. 20811 (Apr. 15, 2020) (interim final rule); Department of the Treasury, Paycheck Protection
Program (PPP) Information Sheet Lenders (online at
https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf) (accessed Nov.
15, 2022).
276

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,
2022); Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Sept. 8, 2022).
277

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Sept. 8,

278

Id.

279

Id.

2022).

280

ProPublica - Tracking PPP, Nathan Reis (Apr. 27, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis-3510607208); ProPublica - Tracking PPP,
Nathan Reis (Jan. 26, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis5993658309); ProPublica – Tracking PPP, Stephanie Hockridge (May 1, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-9174497307); ProPublica – Tracking
PPP, Stephanie Hockridge (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-6291968406); ProPublica – Tracking
PPP, Body Politix, LLC (June 24, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/bodypolitix-llc-3391698009); ProPublica – Tracking PPP, Body Politix, LLC (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-6349828403); ProPublica – Tracking PPP,
Juuice, Inc. (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc9174317310); ProPublica – Tracking PPP, Juuice, Inc. (Feb. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc-7467358410); ProPublica – PPP Tracking,
Juuice, LLC (June 19, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc9055237906); ProPublica – PPP Tracking, Juuice, LLC (Feb. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-8143118406); ProPublica – Tracking PPP,
Elev8 Advisors Group LLC (June 30, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/elev8-advisors-group-llc-6824408003); ProPublica –
Tracking PPP, Adam Spencer (July 16, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-4627438101); ProPublica – Tracking PPP,
Adam Spencer (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer6232778604); ProPublica – Tracking PPP, Kristen Spencer (Mar. 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer-3090888602); ProPublica – Tracking PPP,
Kristen Spencer (July 21, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer6269958102); ProPublica – Tracking PPP, Jarred Spencer (Mar. 12, 2021)
(https://projects.propublica.org/coronavirus/bailouts/loans/jarred-spencer-9383918501); ProPublica – Tracking PPP,
Jordan Spencer (Mar. 15, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer-

100


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 259

Page 104 of 131 PageID

2616498604); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); ProPublica – Tracking
PPP, Sweet P Designs (May 21, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/sweet-pdesigns-4924429003); ProPublica – Tracking PPP, Rebecca Owensby (Mar. 25, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/rebecca-owensby-9150558608); ProPublica – Tracking
PPP, Carmen Hartin (Mar. 13, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/carmenhartin-1688898600); ProPublica – Tracking PPP, Men’s Revival LLC (Mar. 17, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/men-s-revival-llc-3427758605); ProPublica – Tracking
PPP, Lincoln Jore (Jan. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/lincoln-jore2361038309); ProPublica – Tracking PPP, Bluume LLC (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/bluume-llc-6430348507).
281
ProPublica - Tracking PPP, Nathan Reis (Apr. 27, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis-3510607208); ProPublica - Tracking PPP,
Nathan Reis (Jan. 26, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis5993658309); ProPublica – Tracking PPP, Stephanie Hockridge (May 1, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-9174497307); ProPublica – Tracking
PPP, Stephanie Hockridge (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-6291968406); ProPublica – Tracking
PPP, Body Politix, LLC (June 24, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/bodypolitix-llc-3391698009); ProPublica – Tracking PPP, Body Politix, LLC (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-6349828403); ProPublica – Tracking PPP,
Juuice, Inc. (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc9174317310); ProPublica – Tracking PPP, Juuice, Inc. (Feb. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc-7467358410); ProPublica – PPP Tracking,
Juuice, LLC (Feb. 13, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc8143118406); ProPublica – PPP Tracking, Juuice, LLC (June 19, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-9055237906).
282

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
283

ProPublica - Tracking PPP, Nathan Reis (Jan. 26, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis-5993658309 ); Paycheck Protection Program
Second Draw Borrower Application Form for Nathan Reis (Feb. 5, 2021) (SSCC-CPF-00000058-64).
ProPublica – PPP Tracking, Juuice, LLC (Feb. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-8143118406); Paycheck Protection Program
Borrower Application Form for Juuice, LLC (Jan. 27, 2021) (PRE-0000479-84).
284

285
ProPublica – Tracking PPP, Juuice, Inc. (Feb. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc-7467358410); Juuice, INC Payroll Report Jan.
1, 2020 – Dec. 31, 2020 (SSCC-CPF-00000197); Paycheck Protection Program Loan Forgiveness Application Form
for Juuice, Inc. (Jan. 30, 2021) (CDC Response00040-52).
286
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 30, 2022) (Providing Blueacorn files related to loans made to Nathan Reis and Juuice,
Inc.); ProPublica – PPP Tracking, Juuice, LLC (Feb. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-8143118406).
287
ProPublica – Tracking PPP, Stephanie Hockridge (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-6291968406); Paycheck Protection
Program Borrower Application Form for Stephanie Hockridge (Feb. 5, 2021) (SSCC-CPF-00000150-56).
288
Paycheck Protection Program Second Draw Borrower Application Form for Body Politix, LLC (Feb. 5,
2021) (SSCC-CPF-00000162-68); ProPublica – Tracking PPP, Body Politix, LLC (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-6349828403).

101


Case 1:25-cv-00117-FB-CHK

289

Document 1-14 Filed 01/07/25
#: 260

Page 105 of 131 PageID

Juuice, INC Payroll Report Jan. 1, 2020 – Dec. 31, 2020 (SSCC-CPF-00000197).

ProPublica – Tracking PPP, Stephanie Hockridge (May 1, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-9174497307); ProPublica – Tracking
PPP, Stephanie Hockridge (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-6291968406); ProPublica – Tracking
PPP, Body Politix, LLC (June 24, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/bodypolitix-llc-3391698009); ProPublica – Tracking PPP, Body Politix, LLC (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-6349828403); ProPublica – Tracking PPP,
Juuice, Inc. (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc9174317310); ProPublica – Tracking PPP, Juuice, Inc. (Feb. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc-7467358410); ProPublica – PPP Tracking,
Juuice, LLC (Feb. 13, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc8143118406); Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 30, 2022).
290

291
ProPublica – Tracking PPP, Nathan Reis (Apr. 27, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis-3510607208); ProPublica – Tracking PPP,
Nathan Reis (Jan. 26, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis5993658309); ProPublica – Tracking PPP, Stephanie Hockridge (May 1, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-9174497307); ProPublica – Tracking
PPP, Stephanie Hockridge (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/stephanie-hockridge-6291968406); ProPublica – Tracking
PPP, Body Politix, LLC (June 24, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/bodypolitix-llc-3391698009); ProPublica – Tracking PPP, Body Politix, LLC (Feb. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-6349828403); ProPublica – Tracking PPP,
Juuice, Inc. (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc9174317310); ProPublica – Tracking PPP, Juuice, Inc. (Feb. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc-7467358410); ProPublica – PPP Tracking,
Juuice, LLC (Feb. 13, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc8143118406); ProPublica – PPP Tracking, Juuice, LLC (June 19, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-9055237906).
292

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42).

293
ProPublica – Tracking PPP, Men’s Revival LLC (Mar. 17, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/men-s-revival-llc-3427758605); ProPublica – Tracking
PPP, Lincoln Jore (Jan. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/lincoln-jore2361038309); Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42);
Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis
(July 22, 2022); Trendsetter to Know: Lincoln Jore (Dec. 15, 2020) (online at
https://arizonafoothillsmagazine.com/people/entrepreneurs/trendsetter-to-know-lincoln-jore).
294

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42).

295
Call between Counsel, Capital Plus Financial LLC, and Majority Staff, Select Subcommittee on the
Coronavirus Crisis (May 10, 2022).
296

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42).

Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Feb. 5, 2021)
(SSCC-CPF-00000105-07) (Nathan Reis); Paycheck Protection Program Lender’s Application for Capital Plus
Financial, LLC (Feb. 5, 2021) (SSCC-CPF-00000157-59) (Stephanie Hockridge);
297

298

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42).

102


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 261

Page 106 of 131 PageID

299

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42);
Call between Counsel, Capital Plus Financial LLC, and Majority Staff, Select Subcommittee on the Coronavirus
Crisis (May 10, 2022).
300
ProPublica – Tracking PPP, Nathan Reis (Apr. 27, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-reis-3510607208); ProPublica – Tracking PPP,
Stephanie Hockridge (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/stephaniehockridge-9174497307); ProPublica – Tracking PPP, Body Politix, LLC (June 24, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/body-politix-llc-3391698009); ProPublica – Tracking PPP,
Juuice, Inc. (May 1, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-inc9174317310); ProPublica – PPP Tracking, Juuice, LLC (Feb. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc-8143118406); ProPublica – PPP Tracking,
Juuice, LLC (June 19, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/juuice-llc9055237906).
301

Paycheck Protection Program Second Draw Borrower Application Form for Nathan Reis (Feb. 5, 2021)
(SSCC-CPF-00000058-64).
302

Paycheck Protection Program Loan Forgiveness Application for Nathan Reis (Feb. 22, 2021) (BOA20220607-USHR-0000001-07); Paycheck Protection Program Loan Forgiveness Application Form for Juuice, Inc.
(Jan. 30, 2021) (CDC Response00040-52).
303

Biden Readies Changes to PPP to Prioritize Small, Minority-Owned Businesses, The Hill (Feb. 22,
2021) (online at https://thehill.com/homenews/administration/539811-biden-readies-changes-to-ppp-to-prioritizesmall-minority-owned/); The White House (@WhiteHouse), Twitter (Jan. 10, 2021) (online at
https://twitter.com/WhiteHouse/status/1348403213200990209).
304

Schedule C for Nathan J. Reis Submitted to Bank of America (2019) (BOA-20220607-USHR-000000809); Invoice From Nate Reis to Stephanie Hockridge, Body Politix LLC (Dec. 1, 2019) (BOA-20220607-USHR0000010); Nathan Reis, Recipient, and Body Politix, LLC, Payer, Form 1099-MISC Copy B (2019) (BOA20220607-USHR-0000011) (showing $96,000 in non-employment compensation and listing the “Payer” as Body
Politix LLC and the “Recipient” as Nathan Reis.); Invoice From Nate Reis to Stephanie Hockridge, Body Politix
LLC (Jan. 1, 2020) (BOA-20220607-USHR-0000013) (January 2020 Invoice From Nate Reis to Body Politix LLC
for $8,000 for “agency consulting.”); Invoice From Nate Reis to Stephanie Hockridge, Body Politix LLC (Jan. 1,
2020) (SSCC-CPF-00000102) (January 2020 Invoice From Nate Reis to Body Politix LLC for $8,000 for “agency
consulting” submitted to Cap Plus as part of PPP loan application); Schedule C for Nathan J. Reis Submitted to
Capital Plus Financial, LLC (2019) (SSCC-CPF-00000108-09) (2019 Schedule C Submitted to Cap Plus).
305

Bank Statement of Nathan J. Reis, Jan. 30, 2020 – Feb. 26, 2020 (SSCC-CPF-00000098-101).

Schedule C of Body Politix LLC (2019) (SSCC-CPF-00000178). In addition to reporting “Total
expenses” of less than $20,000, Body Politix left Line 11 (Contract Labor) blank indicated that they had no expenses
meeting this criterion. According to IRS instructions for filling out a Schedule C, Line 11 includes “payments to
persons you do not treat as employees (for example, independent contractors) for services performed for your trade
or business.” IRS guidance also states that contract labor could be deducted elsewhere on the Schedule C on lines
17, 21, 26, or 37. These lines are all blank on Body Politix LLC’s Schedule C indicating that the company had no
contract labor expenses.
306

307

Paycheck Protection Program Borrower Application Form for Stephanie Hockridge (Feb. 5, 2021)
(SSCC-CPF-00000150-56); Paycheck Protection Program Second Draw Borrower Application Form for Body
Politix, LLC (Feb. 5, 2021) (SSCC-CPF-00000162-68); Paycheck Protection Program Second Draw Borrower
Application Form for Nathan Reis (Feb. 5, 2021) (SSCC-CPF-00000058-64); Paycheck Protection Program
Borrower Application Form for Body Politix, LLC (June 19, 2020) (PRE-0000389-92); Paycheck Protection
Program Borrower Application Form for Juuice, LLC (June 17, 2020) (PRE-0000444-47); Paycheck Protection
Program Borrower Application Form for Juuice, Inc. (May 9, 2020) (CDC Response00001-04).

103


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 262

Page 107 of 131 PageID

308

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42);
Call between Counsel, Capital Plus Financial LLC, and Majority Staff, Select Subcommittee on the Coronavirus
Crisis (May 10, 2022).
309

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000675).

310

Id.

311

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000733).

312

Id.

313

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000734-38).

ProPublica – Tracking PPP, Adam Spencer (Mar. 20, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-6232778604); ProPublica – Tracking PPP,
Kristen Spencer (Mar. 16, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristenspencer-3090888602); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); Letter from Blueacorn
PPP, LLC, to Chair James Clyburn, Select Subcommittee on the Coronavirus Crisis (July 22, 2022). Although
mentioned in message between Stephanie Hockridge and Kristen Spencer, Elev8 Advisors Group, LLC did not
receive a loan through Blueacorn as their loan application was withdrawn at the request of the Spencers. However,
Sweet P Designs, Adam Spencer, and Kristen Spencer each received PPP loans through Blueacorn in 2021.
314

ProPublica – Tracking PPP, Adam Spencer (Mar. 20, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-6232778604); ProPublica – Tracking PPP,
Kristen Spencer (Mar. 16, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristenspencer-3090888602); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); ProPublica – Tracking
PPP, Jarred Spencer (Mar. 12, 2021) (https://projects.propublica.org/coronavirus/bailouts/loans/jarred-spencer9383918501); ProPublica – Tracking PPP, Jordan Spencer (Mar. 15, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer-2616498604); ProPublica – Tracking PPP,
Rebecca Owensby (Mar. 25, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/rebeccaowensby-9150558608); ProPublica – Tracking PPP, Carmen Hartin (Mar. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/carmen-hartin-1688898600).
315

ProPublica – Tracking PPP, Adam Spencer (Mar. 20, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-6232778604); ProPublica – Tracking PPP,
Kristen Spencer (Mar. 16, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristenspencer-3090888602); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); ProPublica – Tracking
PPP, Jarred Spencer (Mar. 12, 2021) (https://projects.propublica.org/coronavirus/bailouts/loans/jarred-spencer9383918501); ProPublica – Tracking PPP, Jordan Spencer (Mar. 15, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer-2616498604); ProPublica – Tracking PPP,
Rebecca Owensby (Mar. 25, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/rebeccaowensby-9150558608); ProPublica – Tracking PPP, Carmen Hartin (Mar. 13, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/carmen-hartin-1688898600).
316

ProPublica – Tracking PPP, Sweet P Designs (May 21, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-4924429003).
317

318

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022); Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis (June 30, 2022).
ProPublica – Tracking PPP, Bluume LLC (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/bluume-llc-6430348507); Business Warrior Helping
Deploy Thousands of PPP Loans to SMB’s, Newsfile (Jan. 21, 2021) (online at
https://www.newsfilecorp.com/release/72469/Business-Warrior-Helping-Deploy-Thousands-of-PPP-Loans-to319

104


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 263

Page 108 of 131 PageID

SMBs) Business Warrior, Leader in Small Business Software Now Publicly Traded Under Ticker Symbol KDNG
(Feb. 12, 2020) (online at https://businesswarrior.com/business-warrior-goes-public/); Business Warrior Reports
1,331% Annual Financial Growth, Yahoo! (Dec. 1, 2021) (online at https://finance.yahoo.com/news/businesswarrior-reports-1-331-130000227.html); ProPublica – Tracking PPP, Rhett Doolittle (June 30, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/rhett-doolittle-6490248002).
ProPublica – Tracking PPP, Elev8 Advisors Group LLC (June 30, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/elev8-advisors-group-llc-6824408003); ProPublica –
Tracking PPP, Adam Spencer (Jul. 16, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-4627438101); ProPublica – Tracking PPP,
Adam Spencer (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer6232778604); ProPublica – Tracking PPP, Kristen Spencer (Mar. 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer-3090888602); ProPublica – Tracking PPP,
Kristen Spencer (July 21, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer6269958102); ProPublica – Tracking PPP, Jarred Spencer (Mar. 12, 2021)
(https://projects.propublica.org/coronavirus/bailouts/loans/jarred-spencer-9383918501); ProPublica – Tracking PPP,
Jordan Spencer (Mar. 15, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer2616498604); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); ProPublica – Tracking
PPP, Sweet P Designs (May 21, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/sweet-pdesigns-4924429003).
320

321

Elev8 Advisors provided a spreadsheet listing Adam Spencer, Jarred Spencer, Jordan Spencer, Kristen
Spencer, Elev8 Advisors Group LLC, Carmen Hartin, Rebecca Owensby, and Sweet P Designs as both having
Blueacorn loan numbers and a “partner code” associated with Elev8 Advisors. Spreadsheet from Elev8 Advisors
Group Listing Status of Blueacorn PPP, LLC Loans (ELEV8_00000565).
322

Paycheck Protection Program Borrower Application Form for Elev8 Advisors Group LLC (June 26,
2020) (PRE-0000413-16).
323

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,

2022).
324

Paycheck Protection Program Borrower Application Form for Sweet P Designs (Mar. 2, 2021) (SSCCCPF-00000133-38).
325
Paycheck Protection Program Second Draw Borrower Application Form for Kristen Spencer (Mar. 15,
2021) (SSCC-CPF-00000427-33).
326

Paycheck Protection Program Second Draw Borrower Application Form for Adam Spencer (Mar. 18,
2021) (SSCC-CPF-00000114-20).
327

Sweet P Designs, Recipient, and Vital Card Inc., Payer, Form 1099-MISC Copy B (2019) (PRE0000349); Paycheck Protection Program Loan Application Form for Kristen Spencer (July 20, 2020) (PRE0000345-46); Schedule C for Kristen Spencer (2019) (PRE-0000357-58).
328

Sweet P Designs, Recipient, and Vital Card Inc., Payer, Form 1099-MISC Copy B (2019) (PRE0000349); WeWork, Office at 214 West 29th Street, New York, NY 10001 (online at
https://wework.com/buildings/214-w-29th-st--new-york-city--NY) (accessed Nov. 16, 2022); Paycheck Protection
Program Loan Application Form for Kristen Spencer (July 20, 2020) (PRE-0000345-46); Schedule C for Kristen
Spencer (2019) (PRE-0000357-58).
Bank Statement of Kristen Spencer d/b/a Sweet P Designs, Feb. 29, 2020 – Mar. 31, 2020 (PRE0000347-48).
329

330

Schedule C for Kristen Spencer (2020) (SSCC-CPF-00000142).

105


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 264

Page 109 of 131 PageID

331

New York University, Stern School of Business, Margins by Sector (US) (Jan. 2022) (online at
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html) (showing online retail net profit
margin at 7.26 percent and apparel industry net profit margin of 7.06 percent).
332

Facebook, Sweet P Designs (online at https://www.facebook.com/sweetpdesigns617/) (accessed Nov.

27, 2022)
333

Schedule C for Kristen Spencer (2020) (SSCC-CPF-00000142).

Money at 30: Vital Card Review – What You Need to Know, Dyer News (June 19, 2019) (online at
https://dyernews.com/vital-card-review/); Facebook, Vital Card (online at
https://www.facebook.com/vitalcreditcard/) (accessed Nov. 16, 2022) (In 2021, VitalCard claimed in a Facebook
comment that the Vital Card product would launch “Q2 2021”).
334

335

Adam Spencer, Recipient, and Vital Card Inc., Payer, Form 1099-MISC Copy B (2019) (PRE-0000318).

336

Schedule C for Adam Spencer (2020) (SSCC-CPF-00000124-25).

337

Conversation between former Blueacorn employee and Majority Staff, Select Subcommittee on the
Coronavirus Crisis.
ProPublica – Tracking PPP, Elev8 Advisors Group LLC (June 30, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/elev8-advisors-group-llc-6824408003); ProPublica –
Tracking PPP, Adam Spencer (Feb. 20, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer-2295108503); ProPublica – Tracking PPP,
Adam Spencer (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/adam-spencer6232778604); ProPublica – Tracking PPP, Kristen Spencer (Mar. 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer-3090888602); ProPublica – Tracking PPP,
Kristen Spencer (July 21, 2020) (online at https://projects.propublica.org/coronavirus/bailouts/loans/kristen-spencer6269958102); ProPublica – Tracking PPP, Jarred Spencer (Mar. 12, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/jarred-spencer-9383918501); ProPublica – Tracking PPP,
Jordan Spencer (Mar. 15, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer2616498604); ProPublica – Tracking PPP, Sweet P Designs (Mar. 3, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/sweet-p-designs-6265518505); ProPublica – Tracking
PPP, Sweet P Designs (May 21, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/sweet-pdesigns-4924429003); ProPublica – Tracking PPP, Rebecca Owensby (Mar. 25, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/rebecca-owensby-9150558608); ProPublica – Tracking
PPP, Carmen Hartin (Mar. 13, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/carmenhartin-1688898600).
338

339

Proffer by Elev8 Advisors Group to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 3,
2022). Representatives of Elev8 Advisors told the Select Subcommittee that the consultancy received millions in
compensation but would not share specifics due to the terms of a settlement agreement with Blueacorn.
340
Mediterranean-Style Home in Scottsdale’s Silverleaf Sells for Nearly $8M, AZCentral (Aug. 23, 2021)
(online at https://azcentral.com/picture-gallery/money/real-estate/done-deals/2021/08/23/mediterranean-style-homescottsdales-silverleaf-sells-nearly-8-m/8184909002/).
341

Arizona State Real Property Records (accessed Nov. 17, 2022).

342

Arizona Motor Vehicle Registration Records; April 20, 2022 Instagram Post by OverDrive Motor Group
(@OMGLeasing); Kelley Blue Book, 2021 Porsche Taycan Turbo (online at
https://www.kbb.com/porsche/taycan/2021/turbo/) (accessed Nov. 17, 2022).
ProPublica – Tracking PPP, Nathan Sampson (Mar. 15, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/nathan-sampson-2542228600); ProPublica – Tracking
PPP, Jarred Spencer (Mar. 12, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/jarredspencer-9383918501); ProPublica – Tracking PPP, Jordan Spencer (Mar. 15, 2021) (online at
343

106


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 265

Page 110 of 131 PageID

https://projects.propublica.org/coronavirus/bailouts/loans/jordan-spencer-2616498604); ProPublica – Tracking PPP,
Andrea Ortega (Mar. 1, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/andrea-ortega5616688508); ProPublica – Tracking PPP, Jaime Virkus (Mar. 24, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/jaime-virkus-8252298609); ProPublica – Tracking PPP,
Breanna Adams (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/breannaadams-5509808610); ProPublica – Tracking PPP, Zachary King (Mar. 15, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/zachary-king-2706068608); ProPublica – Tracking PPP,
Beth Khoundara (Apr. 7, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/beth-khoundara8683918705); ProPublica – Tracking PPP, Racksany Volrath (Apr. 22, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/racksany-volrath-7701378807); ProPublica – Tracking
PPP, Mina Sobati (Apr. 11, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/mina-fatimasobati-2208328807); ProPublica – Tracking PPP, Kareem Sobati (Apr. 11, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/kareem-sobati-2213408801 ); ProPublica – Tracking PPP,
Byron Copeland (Mar. 10, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/byroncopeland-8493198506); ProPublica – Tracking PPP, Tamara Garcia (Mar. 27, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/tamara-garcia-1752068702); ProPublica – Tracking PPP,
Michael Nupoff (May 14, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/michael-nupoff1909969010); ProPublica – Tracking PPP, Erin Raven (Mar. 10, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/erin-raven-8771958510); ProPublica – Tracking PPP,
Chaz Mattison (Mar. 31, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/chaz-mattison3714188701); List of Elev8 Contractors (June 30, 2022) (ELEV8_00000578).
344

Conversation between former Blueacorn employee and Staff, Select Subcommittee on the Coronavirus

345

Id.

346

Id.

Crisis.

347

Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (June 30, 2022) (Listing Blueacorn loan files for Body Politix LLC, Bluume LLC (Business
Warrior), Carmen Hartin, Stephanie Hockridge, Juuice, Inc. Rebecca Owensby, Nathan Reis, Adam Spencer, Jarred
Spencer, Jordan Spencer, Kristen Spencer); Letter from Blueacorn PPP, LLC to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis (July 22, 2022) (Listing Blueacorn loan files for Elev8 Advisors Group
LLC (withdrawn), Lincoln Jore, Men’s Revival, LLC, and Sweet P Designs).
348

Slack Messages Between Stephanie Hockridge and Kristen Spencer (ELEV8_00000733-38).

349

Id.

350

Id.

351

Id.

352
Crossroads Systems Inc., Annual Report for the Period Ending October 31, 2021 (the “Reporting
Period”) (Jan. 27, 2022) (online at https://crossroads.com/wp-content/uploads/2022/01/FY-2021-AnnualDisclosure-Statement_CRSS.pdf); Email from Counsel, Capital Plus Financial LLC, to Majority Staff, Select
Subcommittee on the Coronavirus Crisis (July 22, 2022).
353
Email from Counsel, Capital Plus Financial LLC, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022).
354

Id.

355

Id.

356
Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0).

107


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 266

Page 111 of 131 PageID

357

Email from Counsel, Capital Plus Financial LLC, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022).
358

Id.

359

Id.

360

Id.

361

Id.

362

Id.

363

Id.

364

Email from Counsel, Capital Plus Financial LLC, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (July 22, 2022).
Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Feb. 5, 2021)
(SSCC-CPF-00000105-07) (Nathan Reis); Paycheck Protection Program Lender’s Application for Capital Plus
Financial, LLC (Feb. 5, 2021) (SSCC-CPF-00000157-59) (Stephanie Hockridge); Paycheck Protection Program
Lender’s Application for Capital Plus Financial, LLC (Feb. 5, 2021) (SSCC-CPF-00000169-71) (Body Politix,
LLC); Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Feb. 5, 2021) (SSCCCPF-00000198-200) (Juuice, Inc.).
365

366

Letter from Fin Cap, Inc. to Capital Plus Financial LLC (June 23, 2021) (SSCC-CPF-00000439-42);
see, e.g., Schedule C for Body Politix, LLC (2019) (SSCC-CPF-00000178-79) (Schedule C for Body Politix, LLC);
Paycheck Protection Program Second Draw Borrower Application Form for Body Politix, LLC (Feb. 5, 2021)
(SSCC-CPF-00000162-68) (PPP application form for Body Politix); Juuice, INC Payroll Report Jan. 1, 2020 – Dec.
31, 2020) (SSCC-CPF-00000197) (Payroll Report for Juuice Inc.).
367

Paycheck Protection Program Second Draw Borrower Application Form for Nathan Reis (Feb. 5, 2021)
(SSCC-CPF-00000058-64); Blueacorn Internal Dashboard for Nathan Reis Loan (SSCC-CPF-00000066-67).
See, e.g., Paycheck Protection Program Lender’s Application – Second Draw Loan Guaranty (Feb. 5,
2021) (SSCC-CPF-00000105-07).
368

Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Mar. 12, 2021)
(SSCC-CPF-00000013-15) (Carmen Hartin); Paycheck Protection Program Lender’s Application for Capital Plus
Financial, LLC (Mar. 14, 2021) (SSCC-CPF-00000029-31) (Jordan Spencer); Draft Schedule C for Jordan Spencer
(2020) (SSCC-CPF-00000032-33); Paycheck Protection Program Lender’s Application for Capital Plus Financial,
LLC (Mar. 18, 2021) (SSCC-CPF-00000121-23) (Adam Spencer); Paycheck Protection Program Lender’s
Application for Capital Plus Financial, LLC (Mar. 2, 2021) (SSCC-CPF-00000139-41) (Sweet P Designs);
Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Mar. 24, 2021) (SSCC-CPF00000211-13) (Rebecca Owensby); Paycheck Protection Program Lender’s Application for Capital Plus Financial,
LLC (Mar. 9, 2021) (SSCC-CPF-00000227-29) (Jarred Spencer); Schedule C for Jarred Spencer (2020) (SSCCCPF-00000230-31); Paycheck Protection Program Lender’s Application for Capital Plus Financial, LLC (Mar. 15,
2021) (SSCC-CPF-00000434-36 (Kristen Spencer).
369

370

Email from Counsel, Capital Plus Financial, LLC, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (May 19, 2022).
371
Call between Counsel, Capital Plus Financial, LLC, and Majority Staff, Select Subcommittee on the
Coronavirus Crisis (May 10, 2022).
372

Crossroads Systems Inc., Press Release: Crossroads Systems Reports Fiscal Second Quarter 2021
Financial Results (June 14, 2021) (online at http://crossroads.mediaroom.com/2021-06-14-Crossroads-SystemsReports-Fiscal-Second-Quarter-2021-Financial-Results).
Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals Through
5/31/2021 (May 31, 2021) (https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531-508.pdf).
373

108


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 267

Page 112 of 131 PageID

Crossroads Systems Inc., Annual Report for the Period Ending October 31, 2021 (the “Reporting
Period”) (Jan. 27, 2022) (online at https://crossroads.com/wp-content/uploads/2022/01/FY-2021-AnnualDisclosure-Statement_CRSS.pdf).
374

375

Id.

376

Prestamos CDFI, About Us (online at https://prestamosloans.org/about-prestamos/) (accessed Nov. 16,

2022).
Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals Through
5/31/2021 (May 31, 2021) (https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531-508.pdf).
377

378

Id.

379

Chicanos Por La Causa, Economic Development - Small Business Lending (online at
http://web.archive.org/web/20190603170701/https://www.cplc.org/econ/lending.php) (accessed Nov. 16, 2022).
380

Briefing by Staff, Prestamos CDFI, to Staff, Select Subcommittee on the Coronavirus Crisis (Mar. 31,
2022); Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis
(Apr. 5, 2022); Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Aug. 18, 2022).
381

Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 5, 2022); Briefing by Staff, Prestamos CDFI, to Staff, Select Subcommittee on the Coronavirus Crisis
(Mar. 31, 2022).
382

Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 5, 2022).
383

Briefing by Staff, Prestamos CDFI, to Staff, Select Subcommittee on the Coronavirus Crisis (Mar. 31,

2022).
384
Letter from Prestamos CDFI to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 25, 2022).
385

Briefing by Staff, Prestamos CDFI, to Staff, Select Subcommittee on the Coronavirus Crisis (Mar. 31,

386

Id.

387

Id.

388

Id.

2022).

389

Emails Between Toby Scammell, Founder and Chief Executive Officer, Womply, Inc., and Cory
Capoccia, Womply, Inc, and Bernie Navarro, Benworth Capital Partners, LLC (Apr. 8, 2021 – May 10, 2021)
(BWSSCCResp0000034-52).
390

Call between Staff, Fountainhead Commercial Capital, and Majority Staff, Select Subcommittee on the
Coronavirus Crisis Conversation (May 2, 2022).
391
Email from Chief Operations and Innovation Officer, DreamSpring, to Cory Cappocia, President,
Womply and Vice President of Partnerships, Womply, Inc. (Mar. 30, 2021) (House_Select_000013734-35); Call
between Staff, Small Business Administration, Office of Inspector General, and Majority Staff, Select
Subcommittee on the Coronavirus Crisis (May 5, 2022).
392
Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022); Oto Analytics, Inc. d/b/a Womply Presentation to the House Select Subcommittee on the
Coronavirus Crisis (May 4, 2022) (House_Select_000012782-835); Womply, The Smart Way to Get More Happy
Customers (online at https://web.archive.org/web/20190709041424/https://www.womply.com/) (accessed Nov. 16,
2022).

109


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 268

Page 113 of 131 PageID

393

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022); Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis (Apr. 29, 2022).
394
Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022).
395

Id.; Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022).
396

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022).
397

Oto Analytics, Inc. d/b/a Womply Presentation to the House Select Subcommittee on the Coronavirus
Crisis (May 4, 2022) (House_Select_000012782-835).
398
Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022).
399

Id. Womply denies that the fintech provided underwriting services, although its activities, as described
to the Select Subcommittee by its lending partners and by Womply itself, clearly meets the definition of
underwriting under the PPP rules. Further discussion of Womply’s extensive efforts to miscategorize itself as a
“technology service provider” is found in Section C. 5.
400

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022); Oto Analytics, Inc. d/b/a Womply Presentation to the House Select Subcommittee on the
Coronavirus Crisis (May 4, 2022) (House_Select_000012782-835).
401

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022); Small Business Administration, Paycheck Protection Program (PPP) Report – Approvals
Through 5/31/2021 (May 31, 2021) (https://sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531508.pdf).
402

Oto Analytics, Inc. d/b/a Womply Presentation to the House Select Subcommittee on the Coronavirus
Crisis (May 4, 2022) (House_Select_000012782-835).
403

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022).
404

Id.

405

Id.

406

Id.

407

Id.

408

Id.

Womply’s primary PPP lending partners Harvest, Benworth, and Fountainhead jointly issued over $16
billion in PPP loans in 2021. Small Business Administration, Paycheck Protection Program (PPP) Report –
Approvals Through 5/31/2021 (May 31, 2021) (https://sba.gov/sites/default/files/202106/PPP_Report_Public_210531-508.pdf).
409

Plaintiff’s First Amended Complaint, Oto Analytics, Inc. d/b/a Womply v. Capital Plus Financial, LLC,
Crossroads Systems, Inc., Eric Donnelly, BA Fin Orion, LLC d/b/a Blueacorn, and Barry Calhoun, No. 3:21-cv02636-B (N.D. Tex. Dec. 23, 2021).
410

411

Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022).

110


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 269

Page 114 of 131 PageID

412

Call between Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC, and Staff,
Select Subcommittee on the Coronavirus Crisis (Apr. 4, 2022).
413
Call between Staff, Fountainhead Commercial Capital and Majority Staff, Select Subcommittee on the
Coronavirus Crisis (May 2, 2022).
414

Letter from Benworth Capital Partners, LLC to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (Aug. 5, 2022).
415

Id.

416

Id.

417

Id.

418

See, e.g., PPP Loan Referral Agreement between Oto Analytics, Inc. d/b/a Womply and Fountainhead
SBF (Feb. 9, 2021) (House_Select_000003690-94); Amended and Restated PPP Loan Referral Agreement between
Oto Analytics, Inc. d/b/a Womply and Harvest Small Business Finance, LLC (Apr. 21, 2021)
(House_Select_000003780-84); House_Select_000003769; Agent Agreement between Benworth Capital Partners,
LLC and Oto Analytics, Inc. (Feb. 2021) (House_Select_000003577-97); Womply Developer Order Form between
Oto Analytics, Inc. d/b/a Womply and Benworth Capital Partners, LLC (Apr. 14, 2021) (House_Select_00000360406); Womply Developer Order Form between Oto Analytics, Inc. d/b/a Womply and Harvest Small Business
Finance, LLC (Apr. 21, 2021) (House_Select_000003786-89); Letter from Benworth Capital Partners, LLC to
Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Nov. 21, 2022).
419
Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Apr. 14, 2022).
420

Id.

421

Womply Developer Order Form between Oto Analytics, Inc. d/b/a Womply and Benworth Capital
Partners, LLC (Apr. 14, 2021) (House_Select_000003604-06); Womply Developer Order Form between Oto
Analytics, Inc. d/b/a Womply and Harvest Small Business Finance, LLC (Apr. 21, 2021)
(House_Select_000003786-89).
422

Call between Fountainhead Commercial Capital, and Majority Staff, Select Subcommittee on the
Coronavirus Crisis Conversation (May 2, 2022).
423

Id.

424

Email from Metta Smith, Chief Lending and Client Experience Officer, DreamSpring, to Connie
Spencer-Adams, Vice President of Partnerships, Womply, Inc. (Mar. 20, 2021) (House_Select_000013707-08).
425

Email from Francisco Lopez, Chief Operations and Innovation Officer, DreamSpring, to Cory Cappocia
and Connie Spencer-Adams, Womply, Inc. (Mar. 30, 2021) (House_Select_000013734-35).
426

Id.

427

Id.

428

Email from Francisco Lopez, Chief Operations and Innovation Officer, DreamSpring, to Cory Capoccia,
Womply, Inc. (Mar. 31, 2021) (House_Select_000013734-35).
429

Email from Cory Capoccia, Womply, Inc., to Connie Spencer-Adams, Womply, Inc. (Apr. 13, 2021)
(House_Select_000013897-907).
430
Email from Francisco Lopez, Chief Operations and Innovation Officer, DreamSpring, to Cory Capoccia,
Womply, Inc. (Apr. 13, 2021) (House_Select_000013897-907).
431

Id.

432

Id.

111


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 270

Page 115 of 131 PageID

433

Email from Everett K. Sands, Chief Executive Officer, Lendistry, to Adam Seery, Harvest Small
Business Finance, LLC, and Toby Scammell, Womply, Inc. (June 8, 2021) (House_Select_000013805).
434
Email from Adam Seery, Harvest Small Business Finance, LLC, to Everett K. Sands, Chief Executive
Officer, Lendistry (June 8, 2021) (House_Select_000013805).
435

Emails Between Toby Scammell, Founder and Chief Executive Officer, Womply, Inc., to Cory
Capoccia, Womply, Inc, and Bernie Navarro, Benworth Capital Partners, LLC (Apr. 8, 2021 – May 10, 2021)
(BWSSCCResp0000034-52).
436

Email from Bernie Navarro, Benworth Capital Partners, LLC, to Toby Scammell, Womply, Inc. (May
10, 2021) (BWSSCCResp0000034-52).
437

Id.

438

Id.

439

Email from Bernie Navarro, Benworth Capital Partners, LLC, Toby Scammell, Womply, Inc. (May 7,
2021) (BWSSCCResp0000034-52).
440

Id.

441

Id.

442

Email from Bernie Navarro, Benworth Capital Partners, LLC, to Toby Scammell, Womply, Inc. (May
10, 2021) (BWSSCCResp0000034-52).
443

Email from Bernie Navarro, Benworth Capital Partners, LLC, to Toby Scammell, Womply, Inc. (May 7,
2021) (BWSSCCResp0000034-52).
444
Email from Toby Scammell, Founder and Chief Executive Officer, Womply, Inc., to Bernie Navarro,
Benworth Capital Partners, LLC (Apr. 8, 2021) (BWSelect SubcommitteeResp0000034-52).
445

Id.

446

Email from Toby Scammell, Founder and Chief Executive Officer, Womply, Inc., to Bernie Navarro,
Benworth Capital Partners, LLC (Apr. 8, 2021) (BWSelect SubcommitteeResp0000034-52). This warning email
was widely mocked on PPP applicant internet message boards. Reddit, r/EIDLPPP (online at
https://reddit.com/r/EIDLPPP/comments/n44i19/this_is_whats_going_on_theyre_being_investigated/?utm_source=s
hare&utm_medium=web2x&context=3) (accessed Nov. 17, 2022); Reddit, r/EIDLPPP (online at
https://reddit.com/r/EIDLPPP/comments/n2h2ka/womply_email/?utm_source=share&utm_medium=web2x&contex
t=3) (accessed Nov. 17, 2022).
447

Email from Bernie Navarro, Benworth Capital Partners, LLC, to Toby Scammell, Womply, Inc. (May
10, 2021) (BWSSCCResp0000034-52).
448

Id.

449

Letter from Benworth Capital Partners, LLC to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (Aug. 5, 2022).
450

Id.

451

Id.

452

Email from Bernie Navarro, Benworth Capital Partners, LLC, to Toby Scammell, Womply, Inc. (May 7,
2021) (BWSSCCResp0000034-52).
453
13 C.F.R. § 103.4(f) (2022) states: “Engaging in any conduct indicating a lack of business integrity or
business honesty, including debarment, criminal conviction, or civil judgment within the last seven years for fraud,
embezzlement, theft, forgery, bribery, falsification or destruction of records, false statements, conspiracy, receiving

112


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 271

Page 116 of 131 PageID

stolen property, false claims, or obstruction of justice” is good cause for suspension or revocation of the privilege to
conduct business with the SBA.
454

Opinion of the Commission, In the Matter of Toby G. Scammell, No. 3-15271 (S.E.C. Oct. 29, 2014).

455

Letter from Oto Analytics, Inc., d/b/a Womply, to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (Apr. 14, 2022).
456

Federal Bureau of Investigations, Bay Area Man Sentenced to Federal Prison for Insider Trading in the
Walt Disney Company’s Acquisition of Marvel Entertainment in August 2009 (Aug. 7, 2014) (online at
https://fbi.gov/contact-us/field-offices/losangeles/news/press-releases/bay-area-man-sentenced-to-federal-prison-forinsider-trading-in-the-walt-disney-companys-acquisition-of-marvel-entertainment-in-august-2009).
457

Securities and Exchange Commission, SEC Charges Former Investment Fund Associate with Insider
Trading (Aug. 11, 2011) (online at https://sec.gov/litigation/litreleases/2011/lr22066.htm).
458
Judgement of Permanent Injunction and Other Relief as to Defendant Toby G. Scammell, Securities and
Exchange Commission v. Toby G. Scammell, No. 2:11-cv-6597 (C.D. Cal. June 15, 2012).
459

Opinion of the Commission, In the Matter of Toby G. Scammell, No. 3-15271 (S.E.C. Oct. 29, 2014);
San Francisco Man Gets Jail for Insider Trading, Associated Press (Aug. 7, 2014) (online at
https://apnews.com/article/a684fc4c3532487588dd9e39c5ee6aa5); Bureau of Prison, Find an Inmate – Bureau of
Prison Register Number 67087-112 (online at www.bop.gov/mobile/find_inmate/byname.jsp#inmate_results)
(accessed Nov. 18, 2022) (According to the Bureau of Prisons website, Toby G Scammell (Bureau of Prison
Register Number: 67087-112) was released from federal prison on December 18, 2014).
460

Opinion of the Commission, In the Matter of Toby G. Scammell, No. 3-15271 (S.E.C. Oct. 29, 2014).

461

Id. (indicating that the start-up company that Scammell was now involved in was Womply).

Division of Enforcement’s Memorandum of Points and Authorities in Opposition to Respondent’s
Motion for Summary Disposition, In the Matter of Toby G. Scammell, No. 3-15271 (S.E.C. Aug. 5, 2013). Stating
that Scammell's assertions regarding his financial condition at the time of the insider trading were false; Scammell's
purported explanations for his interest in Marvel were contradicted by the evidence; and Scammell's arguments
regarding the timing of his girlfriend's work on the Marvel acquisition were misleading, among other falsehoods.
462

Division of Enforcement’s Memorandum of Points and Authorities in Opposition to Respondent’s
Motion for Summary Disposition, In the Matter of Toby G. Scammell, No. 3-15271 (S.E.C. Aug. 5, 2013).
463

464

Id.

465

Id.

466

13 C.F.R. § 103.4(f) (2022).

467
Emails between Michael Bland, Chief Operating Officer, Fountainhead Small Business Finance, and
Staff, Staff, Small Business Administration, Office of Inspector General (June 7, 2021) (House_Select_00000605965).
468
Email from Toby Scammell, Womply, Inc., to Michael Bland, Fountainhead Commercial Capital (June
10, 2021) (House_Select_000006066-69).
469

Email from Staff, Small Business Administration, Office of Inspector General, to Michael Bland,
Fountainhead Commercial Capital, (June 7, 2021) (House_Select_000006059-65); Email from Toby Scammell,
Womply, Inc., to Staff, Small Business Administration, Office of Inspector General (May 24, 2021)
(House_Select_000007380-83). In another incident, Benworth required data from Womply to aid the SBA OIG in
an investigation and Womply again resisted providing the information to Benworth. In correspondence to the SBA
OIG, Toby Scammell wrote that, “We provide certain data to lenders already, and in general if additional info is
requested beyond that (especially if research services are needed) then we need to receive a request from the
government to obtain that info.” In response, a counsel with the SBA emphasized to Womply that the fintech was
required to provide information directly to the lenders and wrote, “The information on borrowers, IP addresses and

113


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 272

Page 117 of 131 PageID

documentation--while gathered and apparently retained by Womply- belongs to the lenders. Lenders bear the
primary responsibility for cooperating with SBA and meeting their BSA/AML requirements, including establishing
risk parameters and profiles that will identify fraud. This would include conducting active searches of IP addresses
to identify fraudulent activity. Thus, I recommend that all requests for information under 13 CFR 120.197 be made
directly to the lenders vs. Womply. Lenders should be directing Womply to gather this information.”
470

Email from Michael Bland, Fountainhead Commercial Capital, to Toby Scammell, Cory Capoccia, and
Connie Spencer-Adams, Womply, Inc. (June 10, 2021) (House_Select_000006066-69).
471
Email from Toby Scammell, Womply, Inc., to Michael Bland, Fountainhead Commercial Capital (June
10, 2021) (House_Select_000006066-69).
472

Id.

473

Id.

474
Email from Michael Bland, Fountainhead Commercial Capital, to Toby Scammell, Womply, Inc. (June
11, 2021) (House_Select_000006066-69).
475

Email from Michael Bland, Fountainhead Commercial Capital, to Staff, Small Business Administration
(June 16, 2021) (House_Select_000006750-51).
476

Email from Staff, Small Business Administration, to Toby Scammell, Womply, Inc. (June 16, 2021)
(House_Select_000006750-51).
477

Id.

478
Call between Staff, Fountainhead Commercial Capital, and Majority Staff, Select Subcommittee on the
Coronavirus Crisis (May 2, 2022).
479

Id.

480

Email from Staff, Small Business Administration, Office of Inspector General, to Bernie Navarro,
Benworth Capital Partners, LLC (Apr. 27, 2021) (House_Select_000008800-03).
481
Email from Bernie Navarro, Benworth Capital Partners, LLC, to Staff, Small Business Administration,
Office of Inspector General (Apr. 27, 2021) (House_Select_000008800-03).
482

Email from Staff, Small Business Administration, Office of Inspector General, to Connie SpencerAdams, Womply, Inc. (May 17, 2021) (House_Select_000008800-03).
483

Email from Chief Compliance Officer, Benworth Capital Partners, LLC, to Staff, Small Business
Administration, Office of Inspector General (May 21, 2021) (House_Select_000007444-46).
484

Email from Staff, Small Business Administration, Office of Inspector General, to Toby Scammell,
Founder and Chief Executive Officer, Womply, Inc. (May 24, 2021) (House_Select_000007444-46).
485
Email from Counsel, Womply, Inc., to Staff, Small Business Administration (June 17, 2021)
(House_Select_000006754-62).
486

Letter from Staff, Small Business Administration, to Toby Scammell, Founder and Chief Executive
Officer, Womply, Inc. (June 11, 2021) (House_Select_000006717-18).
487

Id.

488

Id.

489

Id.

490

Call between Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC, and Staff,
Select Subcommittee on the Coronavirus Crisis (Apr. 4, 2022).
491

13 C.F.R. § 103.4(d) (2022) states that unlawful or unethical activity. which is good cause for
suspension or revocation of the privilege to conduct business with the SBA. includes: “Implying or stating that the

114


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 273

Page 118 of 131 PageID

work to be performed for an Applicant will include use of political or other special influence with SBA. Examples
include indicating that the entity is affiliated with or paid, endorsed or employed by SBA, advertising using the
words Small Business Administration or SBA in a manner that implies SBA’s endorsement or sponsorship, use of
SBA’s seal or symbol…”.
492

Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022).
493

Id.

494

Facebook, Womply (Jan. 26, 2021) (House_Select_000011862); Facebook, Womply
(House_Select_000009813).
495

Text Message from Toby Scammell, Founder and Chief Executive Officer, Womply, Inc., to William
Briggs (Jan. 15, 2021) (House_Select_000009270).
496
Call between Staff, Small Business Administration, Office of Inspector General, and Staff, Select
Subcommittee on the Coronavirus Crisis (Apr. 13, 2022).
497

Id.

498

Id.

499

Id.

500

Call between Staff, Small Business Administration, Office of Inspector General, and Majority Staff,
Select Subcommittee on the Coronavirus Crisis (May 5, 2022).
501

Id.

502
Call between Staff, Small Business Administration, and Staff, Select Subcommittee on the Coronavirus
Crisis (June 9, 2022).
503

Letter from Oto Analytics, Inc., d/b/a Womply to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (May 20, 2022). Womply is currently expending significant resource as part of a legal battle
against Blueacorn and Capital Plus to secure for itself $75 million more taxpayer dollars related to the PPP program.
Plaintiff’s First Amended Complaint, Oto Analytics, Inc. d/b/a Womply v. Capital Plus Financial, LLC, Crossroads
Systems, Inc., Eric Donnelly, BA Fin Orion, LLC d/b/a Blueacorn, and Barry Calhoun, No. 3:21-cv-02636-B (N.D.
Tex. Dec. 23, 2021).
504
Letter from Oto Analytics, Inc., d/b/a Womply to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (May 20, 2022).
505

Id.

506

Excerpt from IRS e-file Signature Authorization for Form 1120 for Oto Analytics, Inc. (Oct. 10, 2019)
(HARVEST_SSCC_000008).
ProPublica – Tracking PPP, Oto Analytics, Inc. (Apr. 13, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/oto-analytics-inc-5187557106); Promissory Note for Oto
Analytics, Inc., d/b/a Womply Loan (Apr. 24, 2020) (HARVEST_SSCC_002472-80) (Note for PPP loan in the
amount of $3,103,440, signed by Toby Scammell and dated April 24, 2020, with accompanying payment
instructions to Oto Analytics.); ProPublica – Tracking PPP, Oto Analytics, Inc. (Feb. 7, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/oto-analytics-inc-4959988403).
507

508

Paycheck Protection Program Borrower Application Form for Oto Analytics, Inc. (Apr. 6, 2020)
(HARVEST_SSCC_000001-04).
ProPublica – Tracking PPP, Oto Analytics, Inc. (Apr. 13, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/oto-analytics-inc-5187557106); ProPublica – Tracking
509

115


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 274

Page 119 of 131 PageID

PPP, Oto Analytics, Inc. (Feb. 7, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/otoanalytics-inc-4959988403).
510
Email from Toby Scammell, Chief Executive Officer, Womply, Inc., to Jeremy Osaki, Senior Vice
President, Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC (May 12, 2020)
(HARVEST_SSCC_002465-68) (Scammell emailing Adam Seery and other Harvest executives about the loan
application); Email from Jeremy Osaki, Senior Vice President, Harvest Small Business Finance, LLC, to Toby
Scammell, Chief Executive Officer, Womply, Inc. (Apr. 23, 2020) (HARVEST_SSCC_002471); Email from Cory
Capoccia, President, Womply, Inc., to Staff, Harvest Small Business Finance, LLC (Feb. 11, 2021)
(HARVEST_SSCC_002508-20) (Mr. Capoccia was notified that Womply’s PPP loan was approved and he
responded, “Great news.”) Email from Toby Scammell, Chief Executive Officer, Womply, Inc., to Jeremy Osaki,
Senior Vice President, Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC (May 13, 2020)
(HARVEST_SSCC_002525-28).
511

SBA to Drop Its Review of PPP Loans of $2 Million and Above, Inc. Magazine (July 9, 2021) (online
at https://inc.com/diana-ransom/small-business-administration-ppp-loan-necessity-questionnaire.html); Department
of the Treasury, Paycheck Protection Program Loans Frequently Asked Questions (FAQs) (July 29, 2021) (online at
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf).
512

Paycheck Protection Program PPP Loan Forgiveness Application Form for Oto Analytics, Inc. (Aug. 19,
2021) (HARVEST_SSCC_001293-95); Email from Brian Sheffield, Senior Assistant Controller, Womply, Inc, to
Staff, Harvest Small Business Finance, LLC (Aug. 23, 2021) (HARVEST_SSCC_002410-22); Email from Brian
Sheffield, Senior Assistant Controller, Womply, Inc., to Staff, Harvest Small Business Finance, LLC (Aug. 24,
2021) (HARVEST_SSCC_002423-34).
513

Paycheck Protection Program PPP Loan Forgiveness Application Form for Oto Analytics, Inc. (Sept. 10,
2021) (HARVEST_SSCC_001657-59).
514

Letter from Small Business Administration, Office of Capital Access, to Staff, Harvest Small Business
Finance, LLC Regarding SBA Loan No. 4959988403 (Sept. 1, 2022); Letter from Small Business Administration,
Office of Capital Access, to Staff, Harvest Small Business Finance, LLC Regarding SBA Loan No. 5187557106
(Sept. 1, 2022).
515

Letter from Small Business Administration, Office of Capital Access, to Staff, Harvest Small Business
Finance, LLC Regarding SBA Loan No. 4959988403 (Sept. 1, 2022); Letter from Small Business Administration,
Office of Capital Access, to Staff, Harvest Small Business Finance, LLC Regarding SBA Loan No. 5187557106
(Sept. 1, 2022).
516

Letter from Small Business Administration, Office of Capital Access, to Staff, Harvest Small Business
Finance, LLC Regarding SBA Loan No. 5187557106 (Sept. 1, 2022).
517

Letter from Small Business Administration, Office of Capital Access, to Staff, Harvest Small Business
Finance, LLC Regarding SBA Loan No. 4959988403 (Sept. 1, 2022); Letter from Small Business Administration,
Office of Capital Access, to Staff, Harvest Small Business Finance, LLC Regarding SBA Loan No. 5187557106
(Sept. 1, 2022).
518

Letter from Small Business Administration, Office of Capital Access, to Staff, Harvest Small Business
Finance, LLC Regarding SBA Loan No. 4959988403 (Sept. 1, 2022); Letter from Small Business Administration,
Office of Capital Access, to Staff, Harvest Small Business Finance, LLC Regarding SBA Loan No. 5187557106
(Sept. 1, 2022).
ProPublica – Tracking PPP, Oto Analytics, Inc. (Apr. 13, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/oto-analytics-inc-5187557106); ProPublica – Tracking
PPP, Oto Analytics, Inc. (Feb. 7, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/otoanalytics-inc-4959988403); ProPublica – Tracking PPP, Chasm LLC (May 6, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/chasm-llc-2717287407); ProPublica – Tracking PPP, Cory
Capoccia (March 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia519

116


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 275

Page 120 of 131 PageID

5769978600); ProPublica – Tracking PPP, Cory Capoccia (April 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia-4874638807).
520
Letter from Oto Analytics, Inc., d/b/a Womply to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (May 20, 2022).
521

The ownership shares provided by Womply to the SBA as part of their PPP applications differ from the
ownership shares provided by Womply to the Select Subcommittee. Womply would not tell the Select
Subcommittee the identity of their shareholders and only provided anonymized data. Nonetheless, Womply stated
that “Shareholder 1” owned 16.47% of the company. The Select Subcommittee staff assesses that Shareholder 1 is
most likely Mr. Scammell, who in his company’s PPP application claims to own 18% of Womply. Womply
identified the second largest shareholder, “Shareholder 2,” as holding 9.5% of the company. The Select
Subcommittee staff assesses that Shareholder 2 is likely Mr. Capoccia since Mr. Capoccia listed himself as the
second largest shareholder in Womply’s PPP application documents. The Select Subcommittee used the ownership
percentages reported by Womply to the SBA in their PPP applications when estimating the amount that Scammell
and Mr. Capoccia stood to personally gain in profits from the PPP. Paycheck Protection Program Second Draw
Borrower Application Form for Oto Analytics (Jan. 18, 2021) (HARVEST_SSCC_002486-91); Letter from Oto
Analytics, Inc., d/b/a Womply to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (May
20, 2022); Email from Staff, Harvest Small Business Finance, LLC, to Thom Keyes, Director of Finance, Womply,
Inc. (Jan. 17, 2021) (HARVEST_SSCC_002481-85) (Email from Harvest to Womply confirming that Scammell
owned 18% of the company).
ProPublica – Tracking PPP, Chasm LLC (May 6, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/chasm-llc-2717287407).
522

523

Cory Capoccia Loan Support Documents (Fountainhead_SSCC_01-12); ProPublica - Tracking PPP,
Cory Capoccia (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia5769978600); ProPublica - Tracking PPP, Cory Capoccia (Apr. 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia-4874638807).
524
Letter from Womply, Inc, to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022); ProPublica – Tracking PPP, Chasm LLC (May 6, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/chasm-llc-2717287407).
525

Cory Capoccia Loan Support Documents (Fountainhead_SSCC_01-12); ProPublica - Tracking PPP,
Cory Capoccia (Mar. 20, 2021) (online at https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia5769978600); ProPublica - Tracking PPP, Cory Capoccia (Apr. 16, 2021) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/cory-capoccia-4874638807); Letter from Womply, Inc, to
Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Jan. 14, 2022).
526

Letter from Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, to Mr. Toby
Scammell, Womply, Inc (June 27, 2022); Letter from Chairman James E. Clyburn, Select Subcommittee on the
Coronavirus Crisis, to Mr. Cory Capoccia, Womply, Inc (June 27, 2022).
527

Email from Counsel, Womply, Inc., to Majority Staff, Select Subcommittee on the Coronavirus Crisis
(July 6, 2022) (“During our call, we also shared that our client would be unavailable on that date because he would
be in Europe. From July 10 – July 20, he is hosting an in-person summit – an event that has been planned for a year.
He will be staying in Europe beyond that time to continue working on a product launch that is scheduled for August
and to visit family.”).
528

Solo Global, Inc., About (online at https://solo.co/about/) (accessed Nov. 17, 2022).

529

Id.; Open Corporates, Solo Global, Inc. (online
at https://opencorporates.com/companies/us_nv/E21220962022-2) (accessed Nov. 23, 2022).
530

Womply, Inc., Privacy Policy (May 20, 2022) (online at https://www.womply.com/legal/privacy/).

117


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 276

Page 121 of 131 PageID

531

Email from Toby Scammell, Chief Executive Officer, Womply, Inc., to Staff, Small Business
Administration, Office of Inspector General (Apr. 26, 2021) (House_Select_000000234-38).
532

Womply, Inc., Privacy Policy (May 20, 2022) (online at https://womply.com/legal/privacy/).

533

5 U.S.C. § 552a; Department of Justice, Office of Privacy and Civil Liberties, Overview of the Privacy
Act of 1974: 2020 Edition (Oct. 12, 2022) (online at https://justice.gov/opcl/overview-privacy-act-1974-2020edition) (summarizing protections); Small Business Administration, Privacy Act (online at www.sba.gov/aboutsba/open-government/privacy-act) (accessed Nov. 17, 2022).
534

5 U.S.C. 552a; Small Business Administration, Paycheck Protection Program Borrower Application
Form (Mar. 18, 2021) (online at www.sba.gov/sites/default/files/202103/BorrowerApplication2483ARPrevisions%20%28final%203-18-21%29-508.pdf).
535

See Department of Justice, Office of Privacy and Civil Liberties, Overview of the Privacy Act: 2020
Edition, Definitions (Oct. 22, 2022) (online at www.justice.gov/opcl/overview-privacy-act-1974-2020edition/definitions#agency) (summarizing cases).
536

Email from Counsel, Oto Analytics, Inc. d/b/a Womply, to Majority Staff, Select Subcommittee on the
Coronavirus Crisis (Sept. 15, 2022).
537
Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0); 13 C.F.R. § 103.1(d) (2022).
538

See Section C.1.

539

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0); see also 13 C.F.R. § 103.1(a) and (d) (2022).
540

See Section C.1.

541
Email from Toby Scammell, Chief Executive Officer, Womply, Inc., to Michael Bland, Fountainhead
Commercial Capital (June 10, 2021) (House_Select_000006066-69).
542

Letter from Womply, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Jan. 14, 2022).
543

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0); 13 C.F.R. §§ 103.1 (2022); 13 C.F.R. § 103.4(f) (2022)
Plaintiff’s First Amended Complaint, Oto Analytics, Inc. d/b/a Womply v. Capital Plus Financial, LLC,
Crossroads Systems, Inc., Eric Donnelly, BA Fin Orion, LLC d/b/a Blueacorn, and Barry Calhoun, No. 3:21-cv02636-B (N.D. Tex. Dec. 23, 2021).
544

545

Letter from Benworth Capital Partners, LLC to Chairman James E. Clyburn, Select Subcommittee on
the Coronavirus Crisis (Nov. 21, 2022).
546

Id.

547

Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022).
548

Id.

549
Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022); Briefing by Adam Seery, Chief Operating Officer, Harvest Small
Business Finance, LLC, to Staff, Select Subcommittee on the Coronavirus Crisis (Apr. 4, 2022).

118


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 277

Page 122 of 131 PageID

550

Briefing by Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC, to Staff,
Select Subcommittee on the Coronavirus Crisis (Apr. 4, 2022).
551
Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022).
552

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0).
553

Briefing by Adam Seery, Chief Operating Officer, Harvest Small Business Finance, LLC, to Staff,
Select Subcommittee on the Coronavirus Crisis (Apr. 4, 2022).
554

Id.

555
Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 31, 2022).
556

Id.

557

See Harvest Small Business Finance, LLC, Monthly Class A Member Meeting Notes
(HARVEST_SSCC_002573-90).
558
Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 2, 2022).
559

Letter from Harvest Small Business Finance, LLC to Chairman James E. Clyburn, Select Subcommittee
on the Coronavirus Crisis (Aug. 31, 2022).
560

Id.

561

Id.

562

Id.

563

Harvest Small Business Finance, LLC, Monthly Class A Member Meeting Notes (May 20, 2020)
(HARVEST_SSCC_002573-90) (Minutes of Harvest's Monthly Class A Members Meeting, May 20, 2020).
564

Call between Staff, Small Business Administration, Office of Inspector General, with Majority Staff,
Select Subcommittee on the Coronavirus Crisis (May 5, 2022).
565

Id.

566

Is Womply Getting Whomped with PPP Fraud?, Frank on Fraud (May 2, 2021) (online at
https://frankonfraud.com/fraud-trends/is-womply-getting-whomped-with-ppp-fraud/).
567

Id.

568
Email from Toby Scammell, Chief Executive Officer, Womply, Inc., to Staff, Small Business
Administration (May 3, 2021) (House_Select_000000157-61).
569

Federal Aid for Businesses Struggling During Pandemic Helped Fund Orange County Gangs, Records
Show, WFTV9 (Aug. 11, 2021) (online at https://wftv.com/news/local/orange-county/federal-aid-businessesstruggling-during-pandemic-helped-fund-orange-county-gangs-recordsshow/D5GVV4XO6REJVBKYD6ADTAB43U/).
570

Id.

571

Id.

572

Metropolitan Bureau of Investigation Case Number: 20N-2049.

573

Id.

119


Case 1:25-cv-00117-FB-CHK

574

Id.

575

Id.

Document 1-14 Filed 01/07/25
#: 278

Page 123 of 131 PageID

576

Kabbage: The Care and Feeding of a Fintech Unicorn, Forbes (Oct. 30, 2019) (online at
www.forbes.com/sites/geristengel/2019/10/30/kabbage-the-care-and-feeding-of-a-fintechunicorn/?sh=4539667bc212); Small Business Loan Platform Kabbage Nabs $250M From Softbank, TechCrunch
(Aug. 3, 2017) (online at https://techcrunch.com/2017/08/03/small-business-loan-platform-kabbage-nabs-250mfrom-softbank/).
577
Kabbage: The Care and Feeding of a Fintech Unicorn, Forbes (Oct. 30, 2019) (online at
www.forbes.com/sites/geristengel/2019/10/30/kabbage-the-care-and-feeding-of-a-fintechunicorn/?sh=4539667bc212); Small Business Loan Platform Kabbage Nabs $250M From Softbank, TechCrunch
(Aug. 3, 2017) (online at https://techcrunch.com/2017/08/03/small-business-loan-platform-kabbage-nabs-250mfrom-softbank/).
578

CARES Act Section 1102 Lender Agreement for Kabbage, Inc. (Apr. 9, 2020) (AMEX-SSCC00000001-06).
579

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Nov. 15, 2021).
580

With the PPP Fintech Comes of Age, Fintech Nexus News (June 24, 2020) (online at
https://news.fintechnexus.com/with-the-ppp-fintech-comes-of-age/).
581

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (August 12, 2021).
582

Project on Government Oversight, Lamborghinis, Strip Clubs, Bogus Companies, and Lies (Oct. 8,
2020) (online at www.pogo.org/investigation/2020/10/lamborghinis-strip-clubs-bogus-companies-and-lies).
583
How Newbie Firms Got PPP Loans Through Quickie Lender Kabbage, Miami Herald (Sept. 10, 2020)
(online at www.miamiherald.com/news/state/florida/article245599035.html).
584

Hundreds of PPP Loans Went to Fake Farms in Absurd Places, ProPublica (May 18, 2021) (online at
www.propublica.org/article/ppp-farms).
585

How Newbie Firms Got PPP Loans Through Quickie Lender Kabbage, Miami Herald (Sept. 10, 2020)
(online at www.miamiherald.com/news/state/florida/article245599035.html).
586

Criminal Indictment, United States of America v. Jason Lawrence Geiger, No. 4:22-CR-110 (E.D. Tex.
May 12, 2022) (online at https://int.nyt.com/data/documenttools/power-ranger-charges/4e48d1f00476d0a7/full.pdf).
587
Alvarez & Marsal Holdings, LLC, Paycheck Protection Program Assessment of Kabbage, Inc. (June 11,
2020) (KAB_SUBC_0000000102-31).
588

Id.

589

Id.

590
Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Aug. 12, 2021).
591

Alvarez & Marsal Holdings, LLC, Paycheck Protection Program Assessment of Kabbage, Inc. (June 11,
2020) (KAB_SUBC_0000000102-31).
592

Email from Staff, Kabbage, Inc., to Staff, Kabbage, Inc. (July 20, 2020) (AMEX-SSCC-00020140-45).

593

Id.

120


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 279

Page 124 of 131 PageID

594

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Aug. 12, 2021); Letter from American Express Travel Related Services Company, Inc. to Chairman James E.
Clyburn, Select Subcommittee on the Coronavirus Crisis (July 28, 2021).
595

Slack Messages between Staff, Kabbage, Inc. (July 16, 2020) (AMEX-SSCC-00019821-25).

596

Id.

597

Id.

598

Id.

599

Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection
Program, 85 Fed. Reg. 20811 (Apr. 15, 2020) (interim final rule).
600

How Kabbage Saved its Small Business Lending Operation in the Middle of the Pandemic, CNBC (June
17, 2020) (online at www.cnbc.com/2020/06/17/kabbage-turned-to-doling-out-ppp-loans-to-save-its-lendingbusiness.html); Unforgiven: Two Years Later, Small Businesses Still Waiting for Promised PPP Loan Forgiveness,
Stars and Stripes (Mar. 2, 2022) (online at www.stripes.com/covid/2022-03-02/two-years-later-small-businesseswait-ppp-loan-forgiveness-coronavirus-5201865.html).
601
Letter from American Express Travel Related Services Company, Inc. to Chairman James E. Clyburn,
Select Subcommittee on the Coronavirus Crisis (Aug. 9, 2021).
602

Id.

603

Letter from American Express Travel Related Services Company, Inc. to Chairman James E. Clyburn,
Select Subcommittee on the Coronavirus Crisis (July 28, 2021); Letter from American Express Travel Related
Services Company, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Aug. 9,
2021).
604

Letter from American Express Travel Related Services Company, Inc. to Chairman James E. Clyburn,
Select Subcommittee on the Coronavirus Crisis (Aug. 9, 2021); Briefing by Staff, KServicing, to Staff, Select
Subcommittee on the Coronavirus Crisis (Mar. 29, 2022); Emails between Staff, Kabbage, Inc. (AMEX-SSCC00020672-76).
605

Email from Staff, Kabbage, Inc., to Staff, Kabbage, Inc. (Apr. 8, 2020) (AMEX-SSCC-00020672-76).

606
Email from Staff, Kabbage, Inc., to Spencer Robinson, Head of Strategy, Kabbage, Inc. (July 7, 2020)
(AMEX-SSCC-00020917-18); Email from Spencer Robinson, Head of Strategy, Kabbage, Inc., to Staff, Kabbage,
Inc. (July 8, 2020).
607

Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection
Program, 85 Fed. Reg. 20811 (Apr. 15, 2020) (interim final rule).
608

Slack Messages between Staff, Kabbage, Inc. (June 26, 2020) (AMEX-SSCC-00018972-74).

609

Slack Messages between Staff, Kabbage, Inc. (June 3, 2020) (AMEX-SSCC-00019816-20).

610

Slack Messages between Staff, Kabbage, Inc. (June 16, 2020) (AMEX-SSCC-00019821-25).

611

Id.

612

Slack Messages between Staff, Kabbage, Inc. (Apr. 20, 2020) (AMEX-SSCC-00019569-78).

613

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Aug. 12, 2021).
In response to a request for American Express to confirm whether Kabbage had “committees,
subcommittees, or formal meetings of any kind that addressed financial crime, financial crime compliance, or fraud
risks,” American Express stated that it’s “current understanding from discussions with former Kabbage employees is
the following: Although there were no committees at Kabbage dedicated solely to discussing and addressing fraud
and financial crime-related issues, senior leadership at Kabbage did hold regular meetings discussing fraud-related
614

121


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 280

Page 125 of 131 PageID

issues alongside other PPP-related issues.” Further American Express confirmed that there were no “minutes of
senior leadership meetings.” Letter from American Express Travel Related Services Company, Inc. to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Nov. 4, 2021); see, e.g., Department of the
Treasury, Office of the Comptroller of the Currency, Director’s Book: Role of Directors for National Banks and
Federal Savings Associations (Nov. 2020) (online at www.occ.gov/publications-and-resources/publications/bankereducation/files/pub-directors-book.pdf); Federal Deposit Insurance Corporation, Compliance Management System
(online at www.fdic.gov/news/financial-institution-letters/2006/2cep_compliance.pdf) (accessed Nov. 17, 2022).
615

Letter from Cross River Bank to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (Sep. 12, 2022), CRB_Subcom_0003445.
616

Email from Deepesh Jain, Head of Capital Markets and Treasury, Kabbage, Inc. (July 18, 2020)
(AMEX-SSCC-00020140-45).
617

Id.

618

Email from Staff, Wells Fargo Bank, to Deepesh Jain, Head of Capital Markets and Treasury, Kabbage,
Inc. (July 17, 2020) (AMEX-SSCC-00020140-45).
619

Email from Spencer Robinson, Head of Strategy, Kabbage, Inc., to Deepesh Jain, Head of Capital
Markets and Treasury, Kabbage, Inc. (July 17, 2020) (AMEX-SSCC-00020160-61).
620

Email from Scott Askins, General Counsel, Kabbage, Inc., to Deepesh Jain, Head of Capital Markets
and Treasury, Kabbage, Inc. (July 17, 2020) (AMEX-SSCC-00020160-61).
621
Email from Staff, Citibank, N.A., to Spencer Robinson Head of Strategy, Kabbage, Inc. (July 31, 2020)
(AMEX-SSCC-00020876).
622

Id.

623

Email from Kabbage, Inc., to Deely Nuts (KAB_SUBC_0000002327-29).

624
Department of the Treasury, Internal Revenue Service, 2021 Instructions for Schedule F (Dec. 16, 2021)
(online at www.irs.gov/pub/irs-pdf/i1040sf.pdf).
625

Schedule C for Deely Nuts (2019) (KAB_SUBC_000002332-33); Department of the Treasury, Internal
Revenue Service, 2021 Instructions for Schedule C (Dec. 21, 2021) (online at www.irs.gov/pub/irs-pdf/i1040sc.pdf).
626

Schedule C for Deely Nuts (2019) (KAB_SUBC_0000002332-33).

627

Id.

628

New York University, Operating and Net Margins (Jan. 2022) (online at
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html).
629

Schedule C for Deely Nuts (2019) (KAB_SUBC_000002332-33).

630
Paycheck Protection Program Borrower Application Form for Deely Nuts (July 30, 2020)
(KAB_SUBC_0000002394-401); Vacation Rentals LBI, Listing # 1933 (online at
www.vacationrentalslbi.com/listing.1933#overview) (accessed Nov. 17, 2022).
631

Email from Kabbage, Inc., to SHAILA BIG FRESH ORANGES (KAB_SUBC_0000004114-16).

632

Hundreds of PPP Loans Went to Fake Farms in Absurd Places, ProPublica (May 18, 2021) (online at
www.propublica.org/article/ppp-farms); Feds Approved PPP Loans for Likely Nonexistent Orange Groves in
Minnesota, Alpha News (May 21, 2021) (online at https://alphanews.org/feds-approved-ppp-loans-for-likelynonexistent-orange-groves-in-minnesota/).
633

Paycheck Protection Program Borrower Application Form for SHAILA BIG FRESH ORANGES (Aug.
20, 2020) (KAB_SUBC_0000002717-25); Schedule C for SHAILA BIG FRESH ORANGES (2019)
(KAB_SUBC_0000002738-39).

122


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 281

Page 126 of 131 PageID

634

Schedule C for SHAILA BIG FRESH ORANGES (2019) (KAB_SUBC_0000002738-39); Zillow, 606
Clay St, Mantorville, MN 55955 (online at www.zillow.com/homedetails/606-Clay-St-Mantorville-MN55955/106646454_zpid/) (accessed Nov. 17, 2022).
635
Kabbage, Inc., Fraud Alert for Strawberry Joseph Schrempp – Fake Passport (July 29, 2020)
(KAB_SUBC_0000003165-67); Small Business Administration, Promissory Note for Strawberry Joseph Schrempp
PPP Loan (July 15, 2020) (KAB_SUBC_0000003179-84); Fraud Alert for Strawberry Joseph Schrempp – Business
and Personal Risk Indicators (June 27, 2020) (KAB_SUBC_0000003185).
636
Kabbage, Inc., Fraud Alert for Strawberry Joseph Schrempp – Fake Passport (July 29, 2020)
(KAB_SUBC_0000003165-67); Small Business Administration, Promissory Note for Strawberry Joseph Schrempp
PPP Loan (July 15, 2020) (KAB_SUBC_0000003179-84); Fraud Alert for Strawberry Joseph Schrempp – Business
and Personal Risk Indicators (June 27, 2020) (KAB_SUBC_0000003185).
637
FederalPay.org, PPP Loan Data – Strawberry Joseph Schrempp, Hartington, NE (online at
www.federalpay.org/paycheck-protection-program/strawberry-joseph-schrempp-hartington-ne) (accessed Nov. 17,
2022).
638
Schedule C for STRAWBERRY JOSEPH SCHREMPP (2019) (KAB_SUBC_0000002337-38);
Paycheck Protection Program Borrower Application Form for STRAWBERRY JOSEPH SCHREMPP (July 15,
2020) (KAB_SUBC_0000003171-78); Email from Kabbage, Inc. to STRAWBERRY JOSEPH SCHREMPP
(KAB_SUBC_0000003195-96); Schedule C for Tomato Cramber (2019) (KAB_SUBC_0000002343-44); Small
Business Administration, Promissory Note for Tomato Cramber PPP Loan (Aug. 14, 2020)
(KAB_SUBC_0000002526-33); Email from Kabbage, Inc. to Tomato Cramber (KAB_SUBC_0000003292-94 );
Schedule C for RITTER WHEAT CLUB (2019) (KAB_SUBC_0000002319-20); Schedule C for RITTER WHEAT
CLUB (2019) (KAB_SUBC_0000002386-87); Small Business Administration, Promissory Note for RITTER
WHEAT CLUB (July 9, 2020) (KAB_SUBC_0000002379-84); Email from Kabbage, Inc. to RITTER WHEAT
CLUB (KAB_SUBC_0000003057-59); Paycheck Protection Program Borrower Application Form for BEEFY
KING (Aug. 13, 2020) (KAB_SUBC_0000002488-93); Schedule C for BEEFY KING (2019)
(KAB_SUBC_0000002364-65); Small Business Administration, Promissory Note for BEEFY KING PPP Loan
(Aug. 13, 2020) (KAB_SUBC_0000002498-503); Email from Kabbage, Inc. to BEEFY KING
(KAB_SUBC_0000003100-01).
639

Email from Staff, Kabbage, Inc., to Danny Eidson, Chief Financial Officer, Kabbage, Inc. (May 19,
2021) (KAB_SUBC_0000000686-90).
640
Paycheck Protection Program Borrower Application Form for RITTER WHEAT CLUB (July 9, 2020)
(KAB_SUBC_0000002371-72).
641

Email from Sam Taussig, Head of Policy, Kabbage, Inc., to Paul Bernardini, Head of Communications,
Kabbage, Inc. (May 19, 2020) (AMEX-SSCC-00023170-73).
642

Id.

643
Redfin, 143 W New Jersey Ave, Long Beach, NJ 08008 (online at www.redfin.com/NJ/Long-Beach/143W-New-Jersey-Ave-08008/home/37424523) (accessed Nov. 17, 2022); Schedule C for BEEFY KING (2019)
(KAB_SUBC_0000002364-65).
644

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 17, 2021); Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(Sept. 9, 2022); AmEx in Advanced Talks to Buy SoftBank-Backed Kabbage, Bloomberg (Aug. 11, 2020) (online at
www.bloomberg.com/news/articles/2020-08-10/amex-said-to-be-in-advanced-talks-to-buy-softbank-backedkabbage?leadSource=uverify%20wall).
645

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 17, 2021).
646

Id.

123


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 282

Page 127 of 131 PageID

647

Letter from American Express Travel Related Services Company, Inc. to Chairman James E. Clyburn,
Select Subcommittee on the Coronavirus Crisis (May 20, 2022).
648
Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 17, 2021).
649

How Newbie Firms Got PPP Loans Through Quickie Lender Kabbage, Miami Herald (Sept. 10, 2020)
(online at www.miamiherald.com/news/state/florida/article245599035.html).
650

Email from Counsel, KServicing, Inc., to Majority Staff, Select Subcommittee on the Coronavirus Crisis
(Nov. 21, 2022) (“[T]he short answer is that KServicing just doesn’t have this information (funding, resources
following Amex transaction). The accounts KServicing was using post-Amex transaction were closed some time
ago and they don’t have access to those records.”).
651

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 17, 2021).
652

Id.

AmEx’s Purchase of Online Lender Kabbage Left Desperate PPP Borrowers in the Cold, CNBC (Apr.
7, 2021) (online at www.cnbc.com/2021/04/07/amex-acquisition-of-online-lender-kabbage-hurt-pppborrowers.html).
653

654

Two Years Later, Small Business Still Await PPP Forgiveness, Miami Herald (Mar. 2, 2022) (online at
www.miamiherald.com/news/business/banking/article258866193.html).
655

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 17, 2021).
656

Id.

657

Letter from Kabbage, Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(Aug. 12, 2021).
658

Declaration of Deborah Reiger-Paganis in Support of the Chapter 11 Petitioners and First-Day
Pleadings, In re Kabbage, Inc. D/B/A KServicing, et al, No. 22-10951 (Bankr. D. Del. Oct. 4, 2022).
659

Omni Agent Resolution, KServicing, Press Release: KServicing Announces It Will Implement Its
Winddown Through Streamlined Chapter 11 Proceedings (Oct. 3, 2022) (online at
https://casedocs.omniagentsolutions.com/cmsvol2/pub_47454/c90dc082-b15b-4cb7-a558efad86b79e04_kservicing-press-release.pdf).
660

Declaration of Deborah Reiger-Paganis in Support of the Chapter 11 Petitioners and First-Day
Pleadings, In re Kabbage, Inc. D/B/A KServicing, et al, No. 22-10951 (Bankr. D. Del. Oct. 4, 2022).
661
American Express, Kabbage Funding From American Express (online at
www.americanexpress.com/en-us/business/blueprint/business-line-of-credit/) (accessed Nov. 18, 2022).
662

Declaration of Deborah Reiger-Paganis in Support of the Chapter 11 Petitioners and First-Day
Pleadings, In re Kabbage, Inc. D/B/A KServicing, et al, No. 22-10951 (Bankr. D. Del. Oct. 4, 2022).
BlueVine, About Us – Small Business Banking (online at www.bluevine.com/about/) (accessed Nov. 18,
2022); BlueVine, About BlueVine (online at
http://web.archive.org/web/20200220155357mp_/https:/www.bluevine.com/about/) (accessed Nov. 18, 2022);
BlueVine, Paycheck Protection Program (online at www.bluevine.com/paycheck-protection-program/) (accessed
Nov. 18, 2022); Letter from BlueVine Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
Crisis (June 11, 2021).
663

664

Complaint, United States v. Keith Nicoletta, No. 8:20-MJ-02027-JSS (M.D. Fl. Oct. 9, 2020);
ProPublica – Tracking PPP, West Coast Cores LLC (May 15, 2020) (online at
https://projects.propublica.org/coronavirus/bailouts/loans/west-coast-cores-llc-6829417401).

124


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 283

Page 128 of 131 PageID

665

Id.

666

Report and Recommendation, United States v. Brenizer, No. 0:20-cr-00177-ECT-HB (D. Minn. Aug. 9,

667

Criminal Complaint, United States v. Augustin, No. 1:20-mj-02207-DAR (N.D. Ohio July 28, 2020).

668

Criminal Complaint, United States v. Bellamy, No. 20-mj-6428-AOV (S.D. Fl. Sept. 10, 2020).

2021).

“Biggest Fraud in a Generation”: The Looting of the Covid Relief Program Known as PPP, Yahoo!
(Mar. 28, 2022) (online at www.yahoo.com/now/biggest-fraud-generation-looting-covid-195900725.html);
Department of Justice, Office of Public Affairs, Press Release: Seven Members of Los Angeles-Based Fraud Ring
Sentenced for Multimillion-Dollar COVID-19 Relief Scheme (Nov. 16, 2021) (online at
www.justice.gov/opa/pr/seven-members-los-angeles-based-fraud-ring-sentenced-multimillion-dollar-covid-19relief); Government’s Sentencing Position for Defendant Richard Ayvazyan, United States v. Ayvazyan, No. 2:20-cr00579-SVW (C.D.C. Nov. 10, 2021).
669

670

Celtic Bank, Risk Committee Meeting Presentation (May 18, 2021) (Celtic_SSCC_000125-27).

671

Id.; When asked by Select Subcommittee staff, Celtic representatives acknowledged that Bluevine had
the highest rate of fraud among Celtic’s partners, but attributed that trend to Bluevine’s outreach to markets where
neither Celtic nor Bluevine had a preexisting, known client base with historical customer data. Briefing by Nissen
Liddiard, Senior Vice President, and Todd Boren, President and Chief Operating Officer, Celtic Bank, to Staff,
Select Subcommittee on the Coronavirus Crisis (Apr. 21, 2022).
672

Celtic Bank, Risk Committee Meeting Presentation (May 18, 2021) (Celtic_SSCC_R_000125-27).

673

Briefing by Nissen Liddiard, Senior Vice President, and Todd Boren, President and Chief Operating
Officer, Celtic Bank, to Staff, Select Subcommittee on the Coronavirus Crisis (Apr. 21, 2022); Small Business
Borrower Sues Kabbage, PYMNTS (Nov. 1, 2017) (online at https://pymnts.com/cryptocurrency/2022/ftx-uncovers1-24b-in-cash-ahead-of-bankruptcy-hearing/).
674

The Tiny Bank That Got Pandemic Aid to 100,000 Small Businesses, New York Times (June 30, 2020)
(online at www.nytimes.com/2020/06/23/business/paycheck-protection-program-cross-river-bank.html).
675

Letter from BlueVine Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(Sept. 9, 2022) (noting that, despite Bluevine also being approved as a direct PPP lender, Bluevine was not aware of
any outreach from SBA about its fraud controls outside of OIG requests for information concerning individual
applicants under investigation).
676

BlueVine Inc., Legal Team and Risk Team Employee Counts (BV_SSCC_0004092-93); BlueVine Inc.,
Employee Trainings (2019) (BV_SSCC_0004094-144); Letter from BlueVine Inc. to Chairman James E. Clyburn,
Select Subcommittee on the Coronavirus Crisis (Aug. 20, 2021).
Small Business Administration, Office of Inspector General, Improvement Is Needed in SBA’s Oversight
of Lender Service Providers (Mar. 12, 2015) (Rept. No. 15-06) (online at www.sba.gov/document/report-15-06audit-report-15-06-improvement-needed-sbas-oversight-lender-service-providers).
677

678

Department of the Treasury, Office of the Comptroller of the Currency, Third-Party Relationships: Risk
Management Guidance (Oct. 30, 2013) (OCC Bulletin 2013-29) (online at www.occ.gov/newsissuances/bulletins/2013/bulletin-2013-29.html). See, e.g., Emails between Staff, BlueVine Inc., and Staff, Cross
River Bank (Apr. 6, 2020) (BV_SSCC_0000414-15); Emails between Staff, BlueVine Inc., and Staff, Cross River
Bank (Apr. 6, 2020) (BV_SSCC_0000416-18); Emails between Staff, BlueVine Inc., and Staff, Cross River Bank
(Apr. 6, 2020) (BV_SSCC_0000425-27); Emails between Staff, BlueVine Inc., and Staff, Cross River Bank (Apr. 6,
2020) (BV_SSCC_0000428-64); Email from Matt Janiga, Director of Regulatory and Product Legal, BlueVine Inc.,
to Leslie Rinaldi, General Counsel, Celtic Bank (Apr. 15, 2020) (BV_SSCC_0000489); Loan Program Agreement
between Cross River Bank and BlueVine Capital Inc. (Apr. 5, 2020) (BV_SSCC_0001143-83).

125


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 284

Page 129 of 131 PageID

679

Department of the Treasury, Office of the Comptroller of the Currency, Third-Party Relationships: Risk
Management Guidance (Oct. 30, 2013) (OCC Bulletin 2013-29) (online at www.occ.gov/newsissuances/bulletins/2013/bulletin-2013-29.html). See e.g., Emails between Staff, BlueVine Inc., and Staff, Cross
River Bank (Apr. 6, 2020) (BV_SSCC_0000414-415); Emails between Staff, BlueVine Inc., and Staff, Cross River
Bank (Apr. 6, 2020) (BV_SSCC_0000416-18); Emails between Staff, BlueVine Inc., and Staff, Cross River Bank
(Apr. 6, 2020) (BV_SSCC_0000425-27); Emails between Staff, BlueVine Inc., and Staff, Cross River Bank (Apr. 6,
2020) (BV_SSCC_0000428-64); Email from Matt Janiga, Director of Regulatory and Product Legal, BlueVine Inc.,
to Leslie Rinaldi, General Counsel, Celtic Bank (Apr. 15, 2020) (BV_SSCC_0000489); Loan Program Agreement
between Cross River Bank and BlueVine Capital Inc. (Apr. 5, 2020) (BV_SSCC_0001143-83);.
680

Letter from BlueVine Inc. to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus
(June 11, 2021).
681

Email from Shawn P. Brock, Vice President of Strategic Lending Partnerships, Celtic Bank, to Staff,
BlueVine Inc. (May 2, 2020) (BV_SSCC_0000585-86).
682

Briefing by Nissen Liddiard, Senior Vice President, and Todd Boren, President and Chief Operating
Officer, Celtic Bank, to Staff, Select Subcommittee on the Coronavirus Crisis (Apr. 21, 2022).
683
Celtic Bank Corporation Compliance Committee Meeting Minutes (July 20, 2020)
(Celtic_SSCC_000014-15); Celtic Bank Corporation Compliance Committee Meeting Minutes (Oct. 23, 2020)
(Celtic_SSCC_000018-19); Celtic Bank Corporation Compliance Committee Meeting Minutes (Jan. 22, 2021)
(Celtic_SSCC_000022-23); LinkedIn, Todd Boren (online at www.linkedin.com/in/todd-boren-72818177) (accessed
Nov. 17, 2022); Celtic Bank Corporation Risk Management Committee Meeting Minutes (Aug. 5, 2020)
(Celtic_SSCC_000016-17); Celtic Bank Corporation Risk Management Committee Meeting Minutes (Nov. 20,
2020) (Celtic_SSCC_000020-21); Celtic Bank Corporation Risk Management Committee Meeting Minutes (Feb. 9,
2021) (Celtic_SSCC_000024-25); Celtic Bank, About Celtic Bank (online at www.celticbank.com/company)
(accessed Nov. 17, 2022).
684

See, e.g., Celtic Bank, Risk Committee Meeting Presentation (May 18, 2021) (Celtic_SSCC_R_00012527); Celtic Bank, Compliance Committee Presentation (July 20, 2020) (Celtic_SSCC_R_000098-101); Celtic Bank,
Risk Committee Meeting Presentation (Aug. 5, 2020) (Celtic_SSCC_000102-04).
685

Briefing by Nissen Liddiard, Senior Vice President, and Todd Boren, President and Chief Operating
Officer, Celtic Bank, to Staff, Select Subcommittee on the Coronavirus Crisis (Apr. 21, 2022).
686

Emails between Brad Ziegler, Vice President of Strategic Lending Partnerships, Celtic Bank, and Shawn
Brock, Vice President of Strategic Lending Partnerships, Celtic Bank (May 15, 2020) (Celtic_SSCC_001063-64);
Emails between Staff, Celtic Bank (Celtic_SSCC_001226-28); Emails between Staff, Celtic Bank, and Staff,
BlueVine Inc. (Celtic_SSCC_001021-29); Calendar Invite – Risk Controls for Fraud (May 21, 2020)
(Celtic_SSCC_001041).
687

Emails between Pooja Elhance, Head of Compliance Strategy and Operations, BlueVine Inc., and Todd
Boren, Chief Risk Officer, Celtic Bank (BV_SSCC_0000722-23); Emails between Staff, BlueVine Inc., and Staff,
Celtic Bank (Celtic_SSCC_001086-90); Email from Gil Rosenthal, Vice President of Risk Operations, BlueVine
Inc., to Staff, Celtic Bank (June 7, 2020) (BV_SSCC_0000744-47); Emails between Staff, Celtic Bank, and Staff,
BlueVine Inc. (Celtic_SSCC_001160-63).
688

See Celtic Bank, Risk Committee Meeting Presentation (May 18, 2021) (Celtic_SSCC_R_000125-27).

689

Id.

690

Emails between Todd Boren, Chief Risk Officer, and Staff, Celtic Bank (June 18, 2020)
(Celtic_SSCC_001140); Email from Staff, Celtic Bank, to Staff, BlueVine Inc. (July 21, 2020)
(BV_SSCC_0000832); Emails between Staff, Celtic Bank, and Staff, BlueVine Inc. (Celtic_SSCC_001011-14);
PPP 2 Fraud Mitigation Measures – High Level Overview Presentation (Jan. 2021) (Celtic_SSCC_001272-84);
Emails between Staff, Celtic Bank (Celtic_SSCC_001285); Emails between Staff, Celtic Bank, and Staff, BlueVine

126


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 285

Page 130 of 131 PageID

Inc. (Celtic_SSCC_001232-36); Emails between Staff, Celtic Bank, and Staff, BlueVine Inc. (BV_SSCC_000097388); Emails between Staff, Celtic Bank, and Staff, BlueVine Inc. (BV_SSCC_0000995-96).
691

Celtic Bank, Compliance Committee Presentation (Apr. 23, 2021) (Celtic_SSCC_R_000119-24).

692

Id. Based on subsequent data, Celtic informed the Select Subcommittee that its final estimates for
Bluevine’s fraud rate was roughly 11% (as a percentage of gross funds) for first-draw loans, declining to 1.7% for
second-draw loans. Letter from Celtic Bank Corporation to Staff, Select Subcommittee on the Coronavirus Crisis
(Sept. 6, 2022). While Bluevine-facilitated loans have featured heavily in public PPP fraud prosecutions, Bluevine
also entered the program earlier than Blueacorn and Womply, and (as noted above) partnered with banks that were
diligent in filing SARs. The University of Texas study shows that significantly fewer of Cross River’s loans (less
than 30%) ultimately exhibited potential fraud indicators than those issued by Blueacorn and Womply’s major
lending partners (which had rates of over 30% to over 50%), while an even smaller percentage of Celtic’s loans
(approximately 15%) showed fraud indicators; Celtic’s and Cross River’s loans were also less likely to have more
than one fraud indicator as compared to those of Blueacorn’s and Womply’s partners.
693

Emails between Staff, Celtic Bank, and Staff, BlueVine Inc. (Celtic_SSCC_001021-29); BlueVine Inc.,
PPP Fraud Controls Overview (June 2020) (Celtic_SSCC_001309-11); Emails between Staff, BlueVine Inc., and
Staff, Celtic Bank (Celtic_SSCC_001086-90); Emails between Staff, BlueVine Inc., and Staff, Celtic Bank
(Celtic_SSCC_001156-59); Emails between Staff, BlueVine Inc., and Staff, Celtic Bank (Celtic_SSCC_001114-19);
Emails between Staff, Celtic Bank, and Staff, BlueVine Inc. (BV_SSCC_0000744-47).
694

Loan Program Agreement between Cross River Bank and BlueVine Capital Inc. (Apr. 5, 2020)
(BV_SSCC_0001143-83); Amendment #1 to Loan Program Agreement Made and Entered by BlueVine Inc. (Jan. 6,
2021) (BV_SSCC_0001075-83).
695

BlueVine Inc., PPP 2021: Added Fraud Prevention Measures (CRB_Subcom_0003341).

696

Emails between Staff, Cross River Bank, and Staff, BlueVine Inc. (BV_SSCC_0001058).

697

Briefing by Herman Man, Chief Product Officer, and Gil Rosenthal, Vice President of Risk Operation,
BlueVine Inc., to Staff, Select Subcommittee on the Coronavirus Crisis (July 26, 2022).
698

John M. Griffin, Samuel Kruger, and Prateek Mahajan, Did FinTech Lenders Facilitate PPP
Fraud?, Journal of Finance, Forthcoming (Aug. 15, 2022) (online at http://dx.doi.org/10.2139/ssrn.3906395).
699

Id.

700

Briefing by Nissen Liddiard, Senior Vice President, and Todd Boren, President and Chief Operating
Officer, Celtic Bank, to Staff, Select Subcommittee on the Coronavirus Crisis (Apr. 21, 2022).
701

Department of the Treasury, Office of the Comptroller of the Currency, Suspicious Activity Reports
(SAR) (online at www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financialcrime/suspicious-activity-reports/index-suspicious-activity-reports.html) (accessed Nov. 18, 2022).
702

Although the Select Subcommittee did not receive similar correspondence regarding SARs from Cross
River, some evidence suggests that Cross River too was concerned regarding Bluevine’s timeliness on QAR filings.
When it re-signed with Bluevine in January 2021, Cross River updated its contract to require that Bluevine “assist
Bank, within seven (7) Business Days from receipt of all necessary information from Bank . . . with any and all
fraud review requests from Bank” and to require Bluevine to submit incident reports on suspected fraud within three
weeks. Amendment #1 to Loan Program Agreement Made and Entered by BlueVine Inc. (Jan. 6, 2021)
(BV_SSCC_0001075-83).
703

Celtic Bank, Compliance Committee Presentation (July 20, 2020) (Celtic_SSCC_00098-101).

704

Email from Staff, Celtic Bank, to Staff, BlueVine Inc. (July 21, 2020) (BV_SSCC_0000832-33).

705

Celtic Bank, Compliance Committee Presentation (Oct. 23, 2020) (Celtic_SSCC_R_000105-08).

706

Email from Nissen Liddiard, Vice President of Compliance, Celtic Bank, to Staff, BlueVine Inc. (Mar.
30, 2021) (BV_SSCC_0001028-30).

127


Case 1:25-cv-00117-FB-CHK

Document 1-14 Filed 01/07/25
#: 286

Page 131 of 131 PageID

707

Email from Nissen Liddiard, Vice President of Compliance, Celtic Bank, to Staff, BlueVine Inc.
(BV_SSCC_0001031-33); Celtic QAR Escalation Enhancements (BV_SSCC_0001049-50).
708
Small Business Administration, First Draw PPP Loan (online at www.sba.gov/fundingprograms/loans/covid-19-relief-options/paycheck-protection-program/first-draw-ppp-loan) (accessed Nov. 17, 2022)
(“Neither the government nor lenders will charge small businesses any fees.”).
709

13 C.F.R. § 103.3 (2022); 13 C.F.R. § 120.1500 (2022).

Small Business Administration, Office of Inspector General, Improvement Is Needed in SBA’s Oversight
of Lender Service Providers (Mar. 12, 2015) (Rept. No. 15-06) (online at https://oversight.gov/sites/default/files/oigreports/OIG_Report_15-06_Lender_Service_Providers.pdf).
710

711

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0).
To the extent that SBA’s Office of General Counsel concludes that SBA cannot enact further reforms to
mitigate risk of fraud to taxpayers within its current statutory framework, OIG should share that information with
Congress so that Congress can determine whether it can entrust any future emergency relief programs to SBA’s
stewardship without also passing legislative reforms of SBA’s mandate.
712

713

5 U.S.C. § 552a.

714

Small Business Administration, Office of Capital Access, Lender and Development Company Loan
Programs (Oct. 1, 2020) (SOP 50 10 6) (online at https://sba.gov/document/sop-50-10-lender-developmentcompany-loan-programs-0).
Small Business Administration, Office of Inspector General, SBA’s Handling of Potentially Fraudulent
Paycheck Protection Program Loans (May 26, 2022) (Rept. No. 22-13) (online at
www.oversight.gov/sites/default/files/oig-reports/SBA/SBA-OIG-Report-22-13.pdf).
715

716

31 U.S.C. § 3729.

128

File and source

File

gov.uscourts.nyed.525917.1.14.pdf

Size

9,792,661 bytes

SHA-256

380d165049026ed6c639a9dac872c018d940615cadd48c87d672841eb17dd307

Our copy

gov.uscourts.nyed.525917.1.14.pdf

Original

PACER (login required)