The Dallas Morning News, "Two fintech founders made millions facilitating PPP loans. Now, they're indicted for fraud"
Summary
A Dallas Morning News article by Sasha Richie, dated November 22, 2024, reporting that two founders of fintech firm Blueacorn were indicted in the Northern District of Texas, the Department of Justice announced. It says the unsealed indictment alleges that Stephanie Hockridge and Nathan Reis submitted false and fraudulent PPP loan applications for themselves and facilitated such applications through Blueacorn. The article states that each is charged with one count of conspiracy to commit wire fraud and four counts of wire fraud, and that each count carries a 20-year maximum prison sentence if convicted.
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“The Dallas Morning News, ‘Two fintech founders made millions facilitating PPP loans. Now, they're indicted for fraud.’”
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, SHA-256 f6809ed695b1e76a4cdcba0b461cab48627fe74b656b89123ce1ad8e67dd33bf.Full text
Business // Banking Two fintech founders made millions facilitating PPP loans. Now, they're indicted for fraud Blueacorn's founders are facing felony fraud charges after facilitating thousands of COVID-era business loans. By Sasha Richie , Breaking Business Reporter Nov 22, 2024 FILE - The logo for the Justice Department is seen before a news conference at the Department of Justice, Aug. 23, 2024, in Washington. (AP Photo/Mark Schiefelbein, File) Mark Schiefelbein/AP Two founders of fintech firm Blueacorn were indicted in connection to a widespread Paycheck Protection Plan fraud scheme in the Northern District of Texas, the Department of Justice announced Friday. Stephanie Hockridge , a former Arizona newscaster, has been summoned for a court appearance scheduled for Monday, and her husband Nathan Reis was arrested in Puerto Rico Thursday. The unsealed indictment alleges the pair submitted false and fraudulent PPP loan applications for themselves, earning thousands of dollars, and facilitated false and fraudulent PPP loan applications through Blueacorn. Advertisement Article continues below this ad According to the indictment, after submitting an application for a PPP loan, Hockridge sent Reis a text message that said, "This is us trying to apply for free money - when we don't qualify. lol." Reis and Hockridge have each been charged with one count of conspiracy to commit wire fraud and four counts of wire fraud. Each count comes with a 20-year maximum prison sentence if convicted. Attempts made through multiple avenues to reach Reis, Hockridge and Blueacorn were unsuccessful. Related: North Texas execs charged in $53 million PPP fraud scheme When the federal government launched the Paycheck Protection Plan in response to the COVID-19 pandemic in 2020, lenders favored established borrowers seeking larger loan amounts. This prompted Congress to raise lender fees for small loans in order to incentivize banks to help small businesses left out to that point. Blueacorn, founded in Arizona in 2020, seized on this opportunity and provided lender services, processing thousands upon thousands of loan applications from small businesses and individuals on behalf of partner lenders. Lenders would then give Blueacorn a cut of the fees collected through the PPP program. The New York Times calculated that Blueacorn netted over $1 billion in 2021 through this arrangement. Advertisement Article continues below this ad The problem: many of these applications contained false and fraudulent information, according to the indictment. A paper published by UT Austin McCombs School of Business researchers in 2022 first identified that fintech firms like Blueacorn may be facilitating PPP fraud. Congress released a report after that , ultimately recommending that the DOJ investigate Blueacorn and several other firms for fraud. The report also revealed that Blueacorn's owners profited over $300 million. "Reis, Hockridge, and their coconspirators fabricated tax documents, doctored bank statements, and made other material misrepresentations in order to deceive lenders and [the Small Business Administration] into issuing loans in amounts for which applicants were not eligible," the indictment alleges. They also, "charged borrowers kickbacks..., despite knowing that borrowers were prohibited from using PPP loan proceeds to make such payments." Four bank transactions involving fraudulently acquired PPP funds sent from a bank in the Northern District of Texas are singled out in the indictment. The case is being prosecuted by the Fraud Section of the DOJ's Criminal Division, which has seized over $78 million in connection to more than 130 other PPP fraud cases, according to the DOJ. Advertisement Article continues below this ad The 2022 UT Austin study identified more than 1.8 million PPP loans that showed signs of fraud, totaling $76 billion, or nearly 10% of the total money given out through the PPP program. Nearly 1 million of those loans, representing $21 billion, came through fintech companies like Blueacorn. Sasha Richie Breaking Business Reporter Sasha Richie is a business reporter for The Dallas Morning News, whose focuses include the local financial services sector, known as "Y'all Street," corporate legal issues like reincorporation, and breaking news. She has previously worked for the news department at Car and Driver magazine and served as the sports managing editor of The Duke Chronicle . She graduated from Duke University in 2023 with a degree in Russian, a certificate in Policy, Journalism and Media Studies, and a minor in political science. See more on: Banking Most Popular 1 . 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