PPP Fraud Scheme Lands Co-Founder of Blueacorn with 10-Year Prison Sentence
A co-founder of a lender service provider has been sentenced to 10 years in prison for her role in a $63 million Paycheck Protection Program (PPP) loan fraud scheme. The case highlights the ongoing efforts to hold accountable those who exploited pandemic relief funds.
Stephanie Hockridge, 42, also known as Stephanie Reis, of Rio Grande, Puerto Rico, and formerly of Arizona, was sentenced after being found guilty on June 20th of one count of conspiracy to commit wire fraud. In addition to the prison term, the court ordered Hockridge to pay over $63 million in restitution.
According to evidence presented at trial, Hockridge co-founded Blueacorn in April 2020, ostensibly to help small businesses and individuals navigate the application process for PPP loans guaranteed by the U.S. Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. However, the operation quickly devolved into a scheme to fraudulently inflate loan amounts.
To secure larger loans for specific applicants, Hockridge and her associates fabricated crucial documentation, including payroll records, tax documentation, and bank statements. The scheme also involved charging borrowers kickbacks – a percentage of the funds they received – further enriching the conspirators.
A key component of the fraud was a “VIPPP” service, marketed as a personalized assistance program for PPP loan applications. Hockridge recruited agents to act as VIPPP referral agents, coaching borrowers on how to submit deliberately false applications. These efforts were aimed at maximizing both kickbacks and the percentage of lender fees received from the SBA. In total, the group processed over $63 million in fraudulent PPP loans.
“This sentencing demonstrates the Justice Department’s commitment to holding accountable those who exploited the PPP to enrich themselves,” stated a senior official from the Department of Justice.
The investigation was a collaborative effort involving IRS Criminal Investigation (IRS-CI), the Special Inspector General for Pandemic Recovery, the Federal Reserve Board-CFPB Office of Inspector General, and the SBA Office of Inspector General. The prosecution was led by Acting Assistant Chief Philip Trout of the Criminal Division’s Fraud Section, along with Trial Attorneys Elizabeth Carr and Ryan McLaren, and Assistant U.S. Attorney Matthew Weybrecht.
The Fraud Section of the Criminal Division has been at the forefront of prosecuting PPP fraud since the enactment of the CARES Act. To date, they have prosecuted over 200 defendants in more than 130 criminal cases, seizing over $78 million in fraudulently obtained funds, along with real estate and luxury items. The Money Laundering, Narcotics and Forfeiture Section’s Bank Integrity Unit also played a role, focusing on potential vulnerabilities within the financial system.
Individuals with information regarding COVID-19-related fraud are encouraged to report it to the Justice Department’s National Center for Disaster Fraud (NCDF) via their web complaint form: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form. This case serves as a stark reminder of the financial consequences and legal repercussions associated with defrauding government assistance programs.
