COVID Relief Fraud Case Highlights Pandemic Misuse of Funds

Former Phoenix news anchor Stephanie Hockridge has been sentenced to 10 years in prison for her role in a fraudulent $63 million COVID-19 relief scheme. Hockridge, along with her husband Nathan Reis, co-founded a company called Blueacorn in April 2020, which was purportedly designed to assist small businesses and individuals in securing Paycheck Protection Program loans backed by the U.S.

Small Business Administration. After a jury convicted Hockridge in June 2023, her husband Reis pleaded guilty to conspiracy to commit wire fraud in August. The U.S. Justice Department reported that Hockridge and Reis, along with co-conspirators, fabricated critical documents such as payroll records, tax documentation, and bank statements to secure over $63 million in PPP loans.

They charged borrowers kickbacks based on the amount of funds received, furthering their fraudulent activities. Their operation included a service referred to as VIPPP, which misled clients on how to submit loan applications with false information.

Hockridge further recruited others to act as referral agents to push these fraudulent applications, aiming to maximize kickbacks and their share of lender fees. The Justice Department highlighted that Blueacorn generated over $1 billion in taxpayer money for processing loans during the pandemic.

A congressional report indicated that Blueacorn's partner lenders issued nearly three times more PPP loans in 2021 than major banks like JP Morgan Chase and Bank of America combined. Hockridge's communications included instructions to delete sensitive Slack messages and showed a disregard for smaller loans, emphasizing a focus on more lucrative applications.

She directed a contractor to approve a VIPPP loan without thorough review, stating there was no need for careful checking, as long as someone other than her approved it. The case illustrates significant challenges in managing public health funding during the pandemic, highlighting the potential for abuse of financial aid systems designed to support struggling businesses.

The convictions serve as a stark reminder of the need for stringent oversight in public health funding, particularly in times of crisis. This case not only reflects individual wrongdoing but raises broader questions about the integrity of financial assistance provided during the COVID-19 pandemic.