FORT WORTH — Stephanie Hockridge, a former local TV news anchor in Phoenix, was found guilty Friday of conspiracy in connection with what the government calls a $300 million pandemic-era fraud.
Jurors in the court of U.S. District Judge Reed O’Connor found her not guilty of four mail fraud counts with which she was also charged.
Hockridge and her husband, Nathan Reis, were indicted in November 2024. Her trial began with jury selection on June 9; Reis’s trial, also before Judge O’Connor, is scheduled for August.
The jury returned its verdict on the first day of its deliberations.
In closing arguments Friday morning, Hockridge’s lawyer, Richard Finneran of Bryan Cave in St. Louis, said his client was herself a victim of fraud — by, among others, her husband.
Finneran described Hockridge as a conscientious, “detail-oriented person” who took pains to ensure that the thousands of applications for federally guaranteed loans processed by a Scottsdale, Arizona, company that she and Reis helped found were on the up-and-up.
Finneran accused Reis and his associates of “gaslighting” her into believing that the loan applications their company, Blueacorn, processed for themselves and others were sincere and lawful attempts to seek economic relief under the federal Paycheck Protection Program, established by Congress in March 2020 to help struggling businesses stay afloat during the COVID-19 pandemic.
“She is not responsible for the deeds of her husband,” the defense lawyer said.
In the government’s closing argument, Philip Trout, a Department of Justice attorney from Washington, D.C., said Hockridge and Reis were in cahoots from the beginning and that she knew what they were doing was illegal.
“She was at the center of it,” Trout told the jurors, adding, “None of this fraud could have taken place without Stephanie Hockridge.”
The indictment claimed that the couple, with others, submitted what they knew were phony applications for forgivable, federally backed loans under the PPP. It said Reis and Hockridge “fabricated documents, including payroll records, tax documentation, and bank statements” to make fraudulent loan applications appear legitimate. In exchange for Blueacorn’s illegal services, the indictment said, the company received both kickbacks from their borrower-clients and percentage fees from the private lenders making the loans under the auspices of the U.S. Small Business Administration.
A superseding indictment issued this May lists more than $131,000 in loans that Hockridge and Reis are alleged to have fraudulently obtained for themselves and more than $486,000 in loans they are alleged to have helped others obtain.
And those figures represent only a sliver of what the government contends the couple stole. According to a December 2022 report by the U.S. House Select Subcommittee on the Coronavirus Crisis, Blueacorn took in nearly $300 million in profits while spending “less than one percent of the fees it received for its PPP work … on its fraud prevention program.”
In 2021 alone, the report said, Blueacorn received more than $1 billion from lenders for its PPP services. That year, the company processed and submitted more than 739,000 PPP loan applications — an average, if Blueacorn operated seven days of every week, of about 2,025 applications per day.
Personnel hired by Blueacorn to review loan applications “were told ‘the faster the better,’ and that each loan application should take you less than 30 seconds,” the congressional report said.
On one loan application, the report said, Reis claimed to be black and a military veteran. He is neither. Beginning in early 2021, businesses owned by veterans or minorities were given priority over certain others in obtaining PPP loans.
In addition to Finneran, Hockridge is represented at trial by, among others, Gregg Gallian of Dallas.
Prosecuting Hockridge with Trout are Matthew Weybrecht of the U.S. attorney’s office in Fort Worth, and Elizabeth Carr and Ryan McLaren, DOJ lawyers from Washington.
The House subcommittee report said Hockridge, in a promotional appearance, described the PPP as “100 billion dollars of free money.”
In a Slack message, the report said, she instructed loan-application reviewers to prioritize “monster loans [that] will get everyone paid,” while expressing disdain for applicants seeking smaller loans, writing “delete them,” “ who fucking cares?” and “We’re not the first bank to decline borrowers who deserve to be funded … they go elsewehre [sic].”
In a trial brief filed on June 11, Hockridge’s lawyers said her goal in helping to found Blueacorn and related entities was never to defraud the government but, rather, to guide small businesses applying for PPP assistance through a morass of red tape.
“To call the regulatory framework surrounding the PPP complex is an understatement,” the brief said. It noted that a March 2022 report by the U.S. Government Accountability Office concluded that the Small Business Administration, which administered the program, “issued too many rules regarding the PPP, which was ‘extremely confusing for lenders and borrowers.’”
Hockridge and Reis, the trial brief said, “created and grew a business aimed at helping others. The American economy was teetering, small business owners were suffering, and the government program aimed at keeping them in business was, as government programs often are, unnecessarily confusing and failing to meet its objectives of getting the needed support out to main street.”
If some of Blueacorn’s many thousands of clients provided the company — and, ultimately, the government — with phony documentation, that’s not on her, her lawyers said.
In packaging and submitting applications for others seeking PPP loans, the brief said, she relied on “borrower-provided information” and “reasonably understood” that the SBA placed “the legal obligation for ensuring eligibility on the lender, and the risk of liability for any inaccurate statements on the borrower.”
Hockridge, it added, “did not have any of the due diligence obligations that the PPP program imposed on lenders, nor was it required to provide any of the certifications that borrowers did regarding the accuracy of their applications.”
Nonetheless, the brief said, she tried “to detect and discourage suspicious applications from being processed. … Ms. Hockridge had no tolerance for potentially fraudulent loan applications.”
Their case is part of a broad effort by federal law enforcement agencies to prosecute widespread fraud related to pandemic relief programs, including the PPP. The COVID-19 Fraud Enforcement Task Force, established by then-Attorney General Merrick Garland in May 2021 with the cooperation of other federal agencies, reported in April 2024 that task force efforts had led to criminal charges against more than 3,500 defendants responsible for losses of more than $2 billion, civil actions resulting in more than 400 judgments or settlements totaling more than $100 million and more than $1.4 billion in assets seized or forfeited.