On June 20, 2025, Stephanie Hockridge, founder of service provider Blueacorn, received a federal jury conviction in connection with her fraudulent applications to the Small Business Association's Paycheck Protection Program ("PPP"). She was convicted of four counts of wire fraud as well as conspiracy to commit wire fraud, facing up to 20 years in prison.
Blueacorn's mission was, purportedly, to assist small businesses and individuals with applying for and obtaining PPP loans. In reality, Hockridge and her co-conspirators submitted factually incorrect PPP loan applications on behalf of Blueacorn's clients, utilizing falsified payroll and income information to obtain higher loan allocations that Hockridge knew the borrowers were not eligible for. In exchange, those clients paid Blueacorn kickbacks based on a percentage of the funds received. Hockridge had every incentive to secure higher PPP loan allocations for her clients—and, by extension, greater kickbacks for herself and her co-conspirators—and she acted on those incentives, defrauding the Government of tens of millions of dollars in COVID relief funds in the process.
Blueacorn created the "VIPPP" program in order to offer personalized services to clients, which involved Hockridge and co-conspirators acting as VIPPP referral agents and coaching borrowers on how to submit falsified and fraudulent PPP loan applications. Over the course of this scheme, Blueacorn processed tens of millions of dollars in fraudulent PPP loans.
What is PPP Fraud and How Does it Happen?
The Paycheck Protection Program was implemented by the U.S. Small Business Administration during the COVID-19 pandemic to aid vulnerable small businesses. In particular, the PPP loan program was designed to incentivize small businesses to retain employees and rehire employees that were laid off as a result of the pandemic. PPP loan proceeds were used to defray business costs such as payroll, interest on mortgage obligations, rent, and utilities.
In order to qualify for PPP loans, potential borrowers had to meet certain requirements, including a size requirement to verify that they are small businesses, and agree to use the loan funds only for the intended purposes. Since the conclusion of the program, it has come to light that certain businesses falsified their loan applications and the supporting documentation in order to fraudulently obtain PPP loans. Other businesses misused their PPP loan funds and falsely certified that they had been used for the approved purposes. Many of these fraudulent schemes were uncovered by whistleblowers, who identified incorrect information on loan applications, strange payment histories, or inconsistencies in payroll documentation.
How does the False Claims Act Apply to Pandemic Relief Fraud Cases?
The False Claims Act ("FCA") prohibits anyone from submitting false claims or statements to the Government in order to receive some sort of payment or reimbursement that they are not otherwise owed. FCA liability extends to situations where individuals or businesses have submitted fraudulent claims to pandemic relief programs. The Act enables the Government to pursue lawsuits against individuals and businesses that falsely obtained or misused PPP loan proceeds. It also enables whistleblowers known as "relators" to bring a lawsuit against fraudsters on behalf of the Government in qui tam lawsuits.
What Protections and Rewards are Available to Whistleblowers?
Under the FCA, relators are typically entitled to a portion of the Government's total recovery, in recognition of their contributions as whistleblowers. Whistleblowers in PPP cases have received substantial "relator's shares" in recent years. The size of this recovery is often dependent on the quality of information and the whistleblower's role in the litigation.
The Department of Justice ("DOJ") recovered over $2.9 billion in FCA settlements and judgments over the fiscal year 2024, in what was the busiest year for FCA lawsuits (consisting of 979 qui tam lawsuits) since the Act's inception. The Government has demonstrated a continued commitment to protecting taxpayer funds. The DOJ aims to prevent future fraud, incentivize corporate and individual behavioral changes, and hold the proper groups accountable for defrauding the government.
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