A co-founder of a lender service provider that claimed to help small businesses secure pandemic relief funds was sentenced Friday to 10 years in federal prison for orchestrating a scheme that stole more than $63 million from the Paycheck Protection Program.
Stephanie Hockridge, also known as Stephanie Reis, 42, of Rio Grande, Puerto Rico, and formerly of Arizona, was also ordered to pay over $63 million in restitution. A jury convicted her in June of conspiracy to commit wire fraud.
Federal prosecutors say Hockridge helped launch Blueacorn in April 2020 as the PPP rolled out under the CARES Act. Instead of assisting legitimate borrowers, she and her co-conspirators used the company to mass-produce fraudulent loan applications, fabricating payroll documents, tax forms and bank statements to inflate loan amounts.
Investigators said Hockridge also promoted what she called “VIPPP” services, offering personalized coaching to help applicants submit false information. She recruited referral agents to bring in more borrowers and taught them how to falsify records. Borrowers were charged kickbacks based on a percentage of the loan funds they received, and Blueacorn collected increased lender fees from the SBA for the larger, fraudulent loans.
In total, the group processed more than $63 million in fraudulent PPP loans.
“These defendants exploited a national crisis to enrich themselves,” U.S. Attorney Ryan Raybould said in a statement announcing the sentence. “We are committed to bringing to justice those individuals who steal taxpayer dollars and undermine our federal programs through fraud and deceit.”
FBI Dallas Special Agent in Charge R. Joseph Rothrock said Hockridge “used deceptive practices to exploit a government program for her own personal gain,” adding that the FBI will continue to pursue cases involving pandemic relief fraud.
The case was investigated by IRS Criminal Investigation, the Special Inspector General for Pandemic Recovery, the Federal Reserve Board-CFPB Office of Inspector General, the SBA Office of Inspector General and the FBI. Prosecutors from the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Northern District of Texas handled the trial.
According to the Justice Department, since the CARES Act passed in 2020, federal prosecutors have brought charges against more than 200 defendants in over 130 PPP fraud cases and seized more than $78 million in cash, as well as property and luxury items purchased with stolen funds.
