Blueacorn PPP Fraud: Am I In Trouble

Blueacorn PPP Fraud: Am I In Trouble

You used Blueacorn because it was the biggest. Millions of applications. Household name during the pandemic. Easy process. Fast approval. You thought size meant legitimacy. You thought scale meant safety. Here’s what nobody explains: Blueacorn processed $4.7 billion in PPP loans. The Senate determined at least $1 billion were questionable or fraudulent. Both founders – Stephanie Hockridge and Nathan Reis – were just convicted and sentenced to 10 years in federal prison each. They’re not protecting anyone. They’re naming clients to reduce their sentences. Every single application that went through their system is now suspect. The scale that made you trust Blueacorn is exactly what makes you a target.

Welcome to the Spodek Law Group resource on what happens when you used a PPP processor that turned out to be a convicted fraud operation. Our goal is to show you exactly why your Blueacorn application is now under enhanced scrutiny – and what that means for your personal exposure. You might think: “I just used a popular platform. Millions of people did. I’m not responsible for what Blueacorn did.” The law sees it differently. If your application contained false information – whether you knew it or not – you’re liable. And if you participated in Blueacorn’s “VIPPP” premium service, prosecutors have evidence that you were coached on how to submit a false application.

That’s the reality Todd Spodek and the Spodek Law Group team explain to clients who come in after reading about the Blueacorn prosecutions. The initial reaction is always the same: “But I just used their platform – they’re the criminals, not me.” The problem is that prosecutors aren’t investigating Blueacorn in isolation. They’re investigating everyone who used Blueacorn. The founders have already been sentenced. They’re cooperating. They’re providing information about every client, every application, every payment. Your name is in those files.

You Chose Blueacorn Because It Was the Biggest – That’s the Problem

Heres the paradox that defines your situation. You chose Blueacorn because it was the most prominent PPP processor in America. That prominence is now what makes your loan suspicious.

During the pandemic, Blueacorn processed more PPP applications than almost any other service provider. They were everywhere. Social media ads. Referrals from friends. The name everyone knew. You figured: if there are millions of people using this platform, it must be legitimate.

That’s exactly backward. The size of Blueacorn is what attracted federal attention. A Senate subcommittee determined that at least $1 billion of Blueacorn’s $4.7 billion in processed loans were questionable or outright fraudulent. Not questionable by some technicality. Questionable because the applications contained false information.

When a company processes a billion dollars in fraudulent loans, every application becomes suspect. Investigators don’t assume most were fine and a few were bad. They assume the entire operation was designed to process fraudulent applications – because that’s what the evidence shows.

Your Blueacorn application isn’t viewed as one of the good ones surrounded by bad ones. It’s viewed as part of a billion-dollar fraud scheme. The burden is on you to prove your application was legitimate.

$1 Billion in Fees, $8.6 Million on Fraud Prevention

Heres the irony that should make you understand exactly what kind of company you used. Blueacorn collected over $1 billion in government processing fees for handling PPP applications. One billion dollars. Paid by taxpayers.

How much did they spend on fraud prevention? $8.6 million. Less then 1% of their revenue.

Let that sink in. The company you trusted to handle your PPP application spent less then one penny of every dollar they recieved on making sure applications were legitimate. They made more money from processing questionable loans then they ever spent trying to prevent fraud.

This wasn’t an oversight. This was the business model. Blueacorn’s own loan reviewers reported receiving “poor training and were pressured to push through PPP loans.” The speed and ease that made Blueacorn attractive wasn’t efficiency. It was the deliberate absence of fraud controls.

The reason your loan went through so fast is the same reason it’s now suspicious. Blueacorn wasn’t carefully reviewing applications. They were rubber-stamping them to collect processing fees.

10 Years for Hockridge, 10 Years for Reis – And They’re Talking

The founders of Blueacorn have both been sentenced. This isn’t an ongoing investigation where charges might or might not come. This is a completed prosecution with 10-year federal prison sentences.

Stephanie Hockridge was convicted by a federal jury in June 2025 of conspiracy to commit wire fraud. She was sentenced to 10 years in federal prison and ordered to pay over $63 million in restitution.

Nathan Reis pleaded guilty in August 2025 to conspiracy to commit wire fraud. He was sentenced to 10 years in federal prison and ordered to pay over $66 million in restitution.

Heres what matters for you: both founders are now cooperating with federal prosecutors. After sentencing, the cooperation intensifies. Prosecutors want names. They want to understand every aspect of the fraud scheme. They want to identify everyone who participated.

Reis and Hockridge aren’t protecting Blueacorn clients. They’re protecting themselves by providing information about clients. Every name earns cooperation credit. Every detail about how applications were processed, who was involved, what payments were made – all of it is being shared with federal investigators.

Your application went through their system. Your name is in their files. The question isn’t whether they have information about you. The question is when that information reaches investigators who are building individual cases.

What VIPPP Actually Was: A Coaching System for False Applications

Did you use Blueacorns “VIPPP” service? Premium service for personalized attention? Heres what VIPPP actualy was according to the Department of Justice.

Through its VIPPP program, Blueacorn offered personalized service to potential PPP borrowers. Sounds helpful. Sounds like you were getting premium treatment. According to the DOJ indictment and conviction, VIPPP was actualy a coaching system where Blueacorn staff taught borrowers how to submit FALSE applications.

The personalized attention wasn’t about making sure your application was accurate. It was about making sure your application would get approved – regardless of whether the information was true.

If you used VIPPP, you have a specific problem. Prosecutors have evidence that VIPPP clients were coached on what numbers to put on their applications. They were coached on what documents to provide. They were coached on how to make false information look legitimate.

The “premium service” you paid for is now evidence of your participation in fraud. You weren’t getting extra help. You were getting instruction on how to commit a federal crime.

Why Your Loan Went Through So Fast

Think back to your Blueacorn experience. The application was easy. The approval was fast. You probly thought that was good customer service.

Now you know why it was so fast. Blueacorn’s loan reviewers reported receiving poor training and being pressured to “push through” applications. They weren’t carefully reviewing anything. They were processing volume to collect fees.

The speed wasn’t efficiency. The ease wasn’t good design. It was the deliberate absence of the fraud controls that would have flagged problems with your application.

Here’s the problem this creates for you. If your application contained ANY inaccuracies – any payroll number that was too high, any employee count that didn’t match your tax records, any revenue figure that couldn’t be verified – Blueacorn didn’t catch it. They pushed it through anyway.

Now investigators are catching it. They’re comparing your PPP application to your tax returns. They’re checking whether the numbers match. And because Blueacorn didn’t do any real review, the discrepancies are there for investigators to find.

The SBA Barred Blueacorn in 2022 – After Your Loan Was Processed

Heres a timeline fact that should concern you. In December 2022, the SBA barred Blueacorn from working with the government. A House subcommittee identified them as among “the most lax PPP participants in regard to anti-fraud standards.”

Your PPP loan was probly processed in 2020 or 2021. The official finding that Blueacorn was a fraud-prone operation came in 2022. The founders were indicted in 2024 and convicted in 2025.

What this means: the system that approved your application has been officially condemned as fraudulent. The platform you trusted has been barred from government work. The people who ran it are serving 10-year federal sentences.

Your loan was processed by a company that the government has now determined was operating a fraud scheme. The approval you recieved from Blueacorn dosent mean your application was legitimate. It means your application went through a system designed to approve applications regardless of accuracy.

The 10% Fee You Paid Is Evidence

How did you pay Blueacorn for their services? This matters more then you think.

Some Blueacorn clients paid flat fees. Others paid percentage fees – 10% or 20% of the loan proceeds they recieved.

Heres the problem with percentage fees: charging borrowers a percentage of their PPP loan was an explicit violation of SBA rules. PPP processors were not allowed to charge borrowers percentage-based fees. If you paid a percentage, that payment violated federal regulations.

But it gets worse. Prosecutors see percentage payments as kickbacks. Your not just paying for a service – your sharing the proceeds of fraud with the people who helped you commit it.

If you paid Blueacorn 10% of your loan, prosecutors will argue you knew something was wrong. Why else would you pay $2,000 for help getting a $20,000 loan? The payment structure itself suggests participation in fraud rather then legitimate use of a service.

Check your records. How did you pay Blueacorn? If it was a percentage of your loan, that payment is evidence against you.

1,300 Applications, One Referral Agent – The Karnezis Prosecution

Lets look at what happend to people who worked with Blueacorn as referral agents. Eric and Anthony Karnezis admitted guilt in May 2025.

Eric Karnezis submitted around 1,300 fraudulent applications through Blueacorn totaling $178 million. He collected about $3 million in fees. His brother Anthony handled over 140 applications, securing nearly $4 million in loans and collecting $957,000 in fees.

These weren’t the founders. These were referral agents – people who brought clients to Blueacorn. They got prosecuted anyway. They’re facing federal charges for every fraudulent application they facilitated.

Heres what this means for you: if your Blueacorn application came through a referral agent, that agent is now being investigated or prosecuted. And like the founders, they’re cooperating. They’re naming every client they referred. They’re providing information about every application they helped submit.

You might not have known you were using a referral agent. But if someone helped you with your Blueacorn application – guided you through the process, provided assistance with the paperwork – that person may have been a referral agent who is now providing your name to prosecutors.

The Cooperation Timeline: They’re Naming Clients Now

Lets map out where we are in the prosecution timeline and what that means for Blueacorn users.

November 2024: Reis and Hockridge indicted on federal fraud charges.

June 2025: Hockridge convicted by federal jury.

August 2025: Reis pleads guilty to conspiracy.

November 2025: Hockridge sentenced to 10 years.

December 2025: Reis sentenced to 10 years.

We’re in December 2025. The founders have both been sentenced. Their cooperation is now in full swing.

After sentencing, defendants have maximum incentive to cooperate. Every name they provide, every detail they share, every client they identify – all of it can potentialy reduce their sentence through post-sentencing cooperation motions. They’re not protecting you. They’re trading information about you for their own benefit.

The client files from Blueacorn are now in federal custody. Investigators are going through them systematicaly. The VIPPP records show which clients recieved “coaching.” The payment records show who paid percentage kickbacks. The application records show what information was submitted.

Your file is in that collection. The only question is when investigators reach your name.

The Documents They Already Have

When Blueacorn was investigated, federal agents seized everything. Client files. Application records. Internal communications. Payment records. Email correspondence. Text messages between employees discussing how to process applications.

All of that is now in federal custody. And it’s being analyzed systematically.

Investigators have your PPP application – the one you submitted through Blueacorn. They have your payment records – how much you paid Blueacorn and whether it was a flat fee or percentage kickback. They have internal notes – anything Blueacorn employees wrote about your application during processing.

If you used VIPPP, they have the coaching communications. Whatever guidance Blueacorn staff gave you about what numbers to put on your application, whatever documents they helped you create, whatever conversations happened about making your application look more favorable – investigators have access to all of it.

They also have your tax returns. The IRS is a partner in these investigations. Comparing your PPP application to your tax filings is literally the first thing investigators do. If your PPP claimed $100,000 in payroll but your tax returns showed $40,000, that discrepancy is already documented in your case file.

You don’t know exactly what they have. But you can assume they have everything that went through Blueacorn’s systems – and the ability to cross-reference it with government records you filed years ago.

What “I Didn’t Know” Means in Federal Court

You might be thinking: “I didn’t know Blueacorn was committing fraud. I just used their service. I can’t be guilty of something I didn’t know about.”

Federal law is more complicated than that reasoning suggests.

First, there’s the doctrine of “willful blindness.” If you deliberately avoided learning facts that would have revealed the fraud – if you didn’t ask questions because you didn’t want to know the answers – courts can treat that as equivalent to actual knowledge. Not knowing because you chose not to know is still criminal.

Second, you knew your own business. You knew your actual payroll. You knew how many employees you had. You knew your real revenue. If the numbers on your Blueacorn application were dramatically different from reality, you either provided those false numbers or you knew the platform was inflating them for you.

Third, prosecutors build knowledge from circumstantial evidence. Did the loan amount seem suspiciously high? Did the process feel too easy? Did anyone mention that numbers were being adjusted? Did you pay a percentage fee that violated SBA rules? Each of these circumstances suggests you knew or should have known something was wrong.

The “I didn’t know” defense fails the common sense test that federal juries apply. How did Blueacorn know what numbers to put on your application? They got that information from somewhere. If it was false, you either provided false information or you watched them create it.

Your Application Is in a Convicted Fraud Operation’s Files

Heres the uncomfortable truth about your situation. Your PPP application exists in the files of a company whose founders are now serving 10-year federal sentences for PPP fraud.

That application contains information. Your name. Your business. Your reported payroll. Your employee count. Your claimed revenue. All of that information was submitted through a platform that has been proven to coach clients on submitting false applications.

Investigators aren’t looking at your application in isolation. They’re looking at it as part of a billion-dollar fraud scheme. The default assumption isn’t that your application was one of the good ones. The default assumption is that every Blueacorn application is suspect until proven otherwise.

To prove otherwise, the numbers on your PPP application need to match your tax records. Your claimed employees need to be real people who actualy worked for you. Your reported payroll needs to align with the payroll taxes you filed.

If there’s any discrepancy – and investigators will find discrepancies because Blueacorn didn’t check – your application moves from “under review” to “potential prosecution.”

What to Do If You Used Blueacorn

At Spodek Law Group, Todd Spodek and the federal defense team handle exactly this situation. Clients contact us after reading about the Blueacorn prosecutions wondering whether they’re at risk. Heres the advice we give.

First, understand that using Blueacorn doesn’t automatically mean you’re in trouble – but it does mean your application is under enhanced scrutiny. The platform you used has been exposed as a fraud operation. Your application will be examined more carefully than applications that went through legitimate processors.

Second, gather your records now. Find your tax returns from 2019 and 2020. Find your payroll records. Find any documentation of employees. You need to know whether the information on your PPP application matches reality.

Third, don’t destroy anything. If you have communications with Blueacorn, with referral agents, with anyone who helped you with your application – keep all of it. Destroying evidence after learning about an investigation is obstruction, which often carries worse penalties than the underlying fraud.

Fourth, consult an attorney before you receive contact. The worst position is waiting for federal agents to reach out. The best position is understanding your exposure and having a strategy before that contact comes.

If you used Blueacorn for your PPP application and you’re concerned about your exposure, call Spodek Law Group at 212-300-5196. The consultation is confidential. We can help you understand whether your application is likely to be flagged, what investigators will be looking for, and what options you have to address the situation before it escalates.

The founders who processed your application are cooperating with federal prosecutors right now. They’re naming clients. They’re providing files. They’re explaining how the fraud worked and who participated. Your name is in those records. The question is what you’re going to do about it.