The Division of Justice has unsealed an indictment charging Nathan Reis, 45, and Stephanie Hockridge, 41, co-founders of Blueacorn, with orchestrating a fraudulent scheme to acquire hundreds of thousands in COVID-19 aid funds by the Paycheck Safety Program (PPP). The indictment, filed within the Northern District of Texas, accuses the married couple of submitting false mortgage purposes and amassing unlawful kickbacks from debtors.
Allegations of Fraudulent Practices
Based on courtroom paperwork, Reis and Hockridge, who beforehand lived in Arizona and now reside in Puerto Rico, are alleged to have fabricated paperwork, together with payroll data, tax documentation, and financial institution statements, to safe PPP loans for themselves and their companies.
Blueacorn, which they co-founded in April 2020, purportedly aimed to help small companies and people in acquiring PPP loans. Nonetheless, prosecutors allege that Reis and Hockridge exploited their position by recruiting co-conspirators and training debtors to submit fraudulent mortgage purposes.
The indictment additionally claims the duo charged debtors unlawful kickbacks primarily based on a proportion of the funds acquired. To facilitate their operations, they entered into lender service supplier agreements (LSPAs) with two lenders, permitting Blueacorn to gather and assessment PPP purposes and obtain a proportion of the SBA charges paid to the lenders.
VIPPP Program and Fraudulent Mortgage Functions
The couple allegedly expanded their operations by a personalised service referred to as “VIPPP,” which supplied debtors tailor-made help with mortgage purposes. Prosecutors allege that Hockridge and others in this system actively guided candidates on easy methods to falsify paperwork, enabling them to acquire loans for which they weren’t eligible.
To extend the amount of loans and related kickbacks, Reis, Hockridge, and their co-conspirators allegedly submitted purposes containing materially false data, benefiting from each borrower kickbacks and a higher share of SBA lender charges.
Expenses and Potential Penalties
Reis and Hockridge face one rely of conspiracy to commit wire fraud and 4 counts of wire fraud. Every rely carries a most penalty of 20 years in jail if convicted.
Ongoing Investigation and Prosecution
The investigation is led by the FBI, IRS Legal Investigation, the Particular Inspector Common for Pandemic Restoration (SIGPR), the Workplace of Inspector Common for the Board of Governors of the Federal Reserve System and the Shopper Monetary Safety Bureau, and the Small Enterprise Administration Workplace of Inspector Common.
Principal Deputy Assistant Legal professional Common Nicole M. Argentieri of the DOJ’s Legal Division highlighted the significance of holding people accountable for exploiting pandemic aid applications.
The case is being prosecuted by Performing Assistant Chief Philip Trout of the Legal Division’s Fraud Part, Trial Attorneys Elizabeth Carr and Ryan McLaren of the Cash Laundering and Asset Restoration Part (MLARS), and Assistant U.S. Legal professional Matthew Weybrecht for the Northern District of Texas.
Background on PPP Fraud Enforcement
Because the enactment of the CARES Act, the DOJ’s Fraud Part has prosecuted over 200 defendants in additional than 130 instances involving PPP fraud, recovering over $78 million in money proceeds and quite a few property, together with luxurious gadgets and actual property bought with stolen funds.
In Might 2021, the Legal professional Common launched the COVID-19 Fraud Enforcement Job Pressure to reinforce efforts to fight pandemic-related fraud. The duty pressure coordinates investigations throughout federal companies and works to forestall fraud by improved oversight of aid applications.