Ex-Blueacorn exec admits to COVID-era small business loan scheme

UPI

a day ago

Aug. 12 (UPI) -- An ex-financial executive is likely to spend years behind bars over wire fraud charges in an alleged pandemic-era financial scheme to defraud the federal government's small business loan program.
The U.S. Department of Justice said Monday that Nathan Reis, now of Rio Grande in Puerto Rico by way of Arizona, pleaded guilty in Texas to one count of conspiracy to commit wire fraud for his role as company chief at Scottsdale-based lender Blueacorn.
The plea was tied to attempts to fraudulently obtain relief money via the U.S. Small Business Administration's Paycheck Protection Program during the COVID-19 pandemic.
"This defendant had the opportunity to help small businesses overcome tremendous financial hardships during a time of national crisis but instead exploited the system to line his own pockets with taxpayer money," Nancy E. Larson, the acting U.S. attorney for the northern district in Texas, said in a statement.
Reis, 47, created the venture in 2020 with his wife, Stephanie Hockridge, a former KNXV television anchor in Phoenix, purportedly to help small businesses and owners to obtain the federal government's PPP loans.
"Blueacorn connects technology and financial expertise to help small businesses, independent contractors, self-employed individuals, and gig workers with their financial needs," the company's website reads.
In June, Hockridge was found guilty of conspiracy but acquitted on multiple counts of wire fraud.
His guilty plea was filed after an initial plea of not guilty.
The SBA's Paycheck Protection Program was part of the 2020 CARES Act singed by then-U.S. President Donald Trump during the virus outbreak in his first term. It was targeted to infuse money into small businesses to bankroll payroll and other business-related expenses.
According to court documents, Reis conspired with business associates to "submit false and fraudulent PPP loan applications." It included "fabricating documents that falsified income and payroll figures in order to receive loan funds for which they were not eligible."
Federal officials contend that Blueacorn was the vehicle through which Reis and co-conspirators submitted an undisclosed number of fraudulent PPP loan applications that, according to the Justice Department, "they knew contained materially false information to make more money."
"Reis and others fabricated documents, including tax documents and bank statements," the deparment added. "As part of the conspiracy, Reis and his co-conspirators charged borrower's fees based on a percentage of the funds received."
The SBA's well-intended PPP opened the door to waves of other similar acts of fraud.
"During a national emergency, this defendant exploited a taxpayer-funded program that individuals and small businesses desperately needed to survive," acting Assistant U.S. Attorney General Matthew Galeotti in DOJ's criminal division, said in a release.
The fraud section at Justice has seized nearly $80 million and prosecuted more than 200 defendants in over 130 separate PPP-related criminal cases.
In January, seven people were charged by a federal grand jury in a multi-state conspiracy that defrauded more than a half-billion dollars in over 8,000 bogus pandemic-era tax returns.
"Reis and others exploited a program meant to keep small businesses afloat during the pandemic," stated Assistant Director Jose A. Perez of the FBI's Criminal Investigative Division.
Any individual with info on COVID-related fraud attempts may contact the department.
Reis is schedule for sentencing November 21. He faces a max penalty of 20 years in prison contingent upon sentencing guidelines by a federal judge, and $250,000 in fines.