Blueacorn founder Stephanie Hockridge was found guilty Tuesday for her role in a pandemic-era fraud scheme that allegedly netted her and her husband nearly $300 million.
Hockridge was convicted on one count of conspiracy to commit wire fraud after she colluded with others to submit fraudulent Paycheck Protection Program loan applications, including by manufacturing documents that lied about income and payroll, to receive loans for which they were ineligible.
She and her husband Nathan Reis started Blueacorn, a fintech that claimed to connect small business owners with PPP loans during the coronavirus pandemic, in 2020. According to its website, Blueacorn connected 808,000 small businesses to $12.5 billion in loans.
However, “[d]uring a time of crisis in our country, this defendant abused the generosity of the American people by stealing money dedicated to the survival of small businesses to fraudulently enrich herself,” Acting U. S. Attorney Nancy Larson for the Northern District of Texas said in a statement following Hockridge’s conviction.
Hockridge and Reis, who will be tried separately, fabricated payroll records, tax documentation and bank statements within the PPP applications they submitted on behalf of Blueacorn users. Hockridge and Reis personally enriched themselves by charging borrowers kickbacks based on a percentage of the funds received, the Department of Justice found.
They were indicted in November on four counts each of wire fraud and one count of conspiracy to commit wire fraud, with each count carrying a maximum of 20 years in prison. Hockridge was acquitted of the four counts of wire fraud.
“This verdict is a victory for justice, accountability, and the American public,” said Special Agent in Charge Christopher Altemus Jr. of the IRS Criminal Investigation Dallas Field Office, in a statement. “In a time of crisis, the Paycheck Protection Program was created as a lifeline to keep small businesses afloat and families fed. Ms. Hockridge saw it as an opportunity to enrich herself. Driven by greed, she used her business to steal millions of dollars intended for those in need.”
During the weeklong trial, Federal Bureau of Investigation Agent Collin Friedmann detailed the incriminating files found on Hockridge’s computer, and incriminating messages found in her texts and emails, Phoenix, Arizona-based ABC15 reported.
Two of the files found on Hockridge's computer were one Blueacorn borrower’s original 1099 tax form and one altered version of the same form. The borrower’s real 1099 showed $57,000 in earnings, while the fabricated one showed $157,000. The fabrication would allow the borrower to receive a higher PPP loan amount than the truth.
Friedmann also testified about a message in which Hockridge blamed Reis’ “poor Photoshop skills” for a loan application rejection, ABC15 reported, after the lender flagged that the tax document seemed altered. In another message detailed by Friedmann, Hockridge told her own father how to apply for PPP loans he wasn’t truly eligible for by “com[ing] up with a side job you did for extra cash.”
Hockridge will be sentenced on October 10 and faces up to 20 years in prison. She will be monitored by a GPS device as she awaits sentencing from her home in Puerto Rico, ABC15 reported.
