A co-founder of a lender service provider was sentenced to 10 years in federal prison for participating in a scheme that defrauded the Paycheck Protection Program (PPP) out of more than $63 million. Stephanie Hockridge, also known as Stephanie Reis, 42, from Rio Grande, Puerto Rico and formerly of Arizona, was also ordered to pay over $63 million in restitution.
According to evidence presented at trial, Hockridge co-founded Blueacorn in April 2020 with the stated purpose of helping small businesses and individuals obtain PPP loans. However, she and her co-conspirators fabricated documents such as payroll records, tax forms, and bank statements to secure larger loans for certain applicants. They also charged borrowers kickbacks based on a percentage of the funds received.
Hockridge and others provided a personalized service called “VIPPP” to help potential borrowers complete PPP loan applications. She recruited others as referral agents who coached clients on how to submit false information. The group submitted applications they knew contained materially false information in order to receive more kickbacks from borrowers and increase their share of lender fees from the SBA. In total, they processed over $63 million in fraudulent loans.
On June 20, a jury found Hockridge guilty of conspiracy to commit wire fraud.
“These defendants exploited a national crisis to enrich themselves in this multimillion-dollar, taxpayer-funded fraud scheme,” said U.S. Attorney Ryan Raybould. “This office and our law enforcement partners are committed to bringing to justice those individuals who steal taxpayer dollars and undermine our federal programs through fraud and deceit.”
“The defendant used deceptive practices to exploit a government program for her own personal gain. This program was meant to protect small businesses and promote economic stabilization in a critical time of need,” said FBI Dallas Special Agent in Charge R. Joseph Rothrock. “The public can rest assured that the FBI is committed to holding accountable those who attempt to defraud the United States government and steal opportunities from honest, hardworking business owners.”
The case was investigated by IRS Criminal Investigation (IRS-CI), Special Inspector General for Pandemic Recovery, Federal Reserve Board-CFPB Office of Inspector General, SBA OIG, and FBI.
Acting Assistant Chief Philip Trout of the Criminal Division’s Fraud Section; Trial Attorneys Elizabeth Carr and Ryan McLaren; and Assistant U.S. Attorney Matthew Weybrecht prosecuted the case.
The Justice Department has prosecuted over 200 defendants related to PPP fraud since the CARES Act was enacted, resulting in seizures exceeding $78 million along with various assets purchased with illegal proceeds.
Individuals with information about COVID-19 relief fraud can report it through the Justice Department’s National Center for Disaster Fraud via its Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
