FORT WORTH — Opening statements began before U.S. District Judge Reed O’Connor Thursday morning in a case where prosecutors allege the Arizona founders of a fintech firm stole millions of dollars through COVID-19 loans earmarked for small business relief.
Stephanie Hockridge and her husband, Nathan Reis, founded the fintech firm Blueacorn. Each has been charged with one count of conspiracy to commit wire fraud and four counts of wire fraud. Reis’ trial is scheduled to begin in August. The trial of Hockridge, a former Phoenix television news anchor, began Thursday.
Assistant U.S. Attorney Elizabeth Carr gave opening statements for the government and told jurors Hockridge had to “lie, steal” and “cheat” in order to carry out the scheme.
“We are here because Ms. Hockridge lied. Not just once but over and over,” Carr said to the jury.
The government said Hockridge falsified Paycheck Protection Program applications to inflate the incomes of her employees, thereby securing the maximum loan amount.
St. Louis defense attorney Richard Finneran, a partner with Bryan Cave Leighton Paisner, started opening statements by saying, “Context matters.”
He said the government was going to focus on a series of conversations but told the jury “the whole story” matters.
Finneran said the government trusted borrowers to be truthful in their applications.
“[Hockridge] did so in good faith,” Finneran said.
Hockridge and Reis allegedly submitted false and fraudulent PPP loan applications for themselves and expedited false and fraudulent PPP loan applications through Blueacorn.
Assistant U.S. Attorney Matt Weybrecht called James Flores as the first witness. Flores, who also founded Blueacorn, admitted to being a coconspirator of Hockridge and Reis.
The Dallas Morning News reported in November that after submitting an application for a PPP loan, Hockridge sent Reis a text message that said, “This is us trying to apply for free money — when we don’t qualify. Lol.”
Weybrecht questioned Flores about several Slack message exchanges and phone call recordings between him and Hockridge and Reis. The conversations included discussion about altering the loan applications.
Blueacorn Origins
Blueacorn was founded in Scottsdale in April 2020, around the same time the federal government began giving PPP loans to help small businesses during the COVID-19 global pandemic.
The fintech firm processed thousands of loan applications from small businesses and individuals on behalf of partner lenders. In return, the lenders would give Blueacorn a portion of the fees collected.
The PPP program ended in 2021, and in that time, The New York Times reported, Blueacorn received over $1 billion.
Congress released a report in December 2022 revealing that Blueacorn’s owners had profited over $300 million.
According to the indictment, the four counts of wire fraud are tied to transactions from bank accounts containing PPP funds that were sent from a bank in Texas.
What’s next?
The jury trial in Fort Worth is scheduled to continue into next week. The government plans to call several more witnesses.
If convicted, Hockridge and Reise face a maximum penalty of 20 years in prison on each count.
Reis’s trial will also be before O’Connor.
The case is USA v. Reis et al, 4:24-cr-287.