Co-Founder Sentenced for $65M COVID-19 Relief Fraud in Paycheck Protection Program
A significant case in financial crime concluded recently, highlighting the abuse of federal relief programs during the COVID-19 pandemic. A co-founder of Blueacorn, Nathan Reis, 47, was sentenced to ten years in prison for his involvement in a scheme that fraudulently acquired over $65 million in Paycheck Protection Program (PPP) loans, guaranteed by the U.S. Small Business Administration (SBA) under the CARES Act.
Details of the Fraud Scheme
Reis, along with his co-conspirators, submitted more than 530 false loan applications. They fabricated documents, including tax returns and bank statements, to support their fraudulent claims. In connection with these loans, they charged borrowers fees based on the loan amounts, enriching themselves at the expense of small businesses in need.
Responses from Authorities
The court’s decision was reinforced by statements from several authorities. Acting Assistant Attorney General Matthew R. Galeotti emphasized the seriousness of defrauding taxpayer-funded relief efforts. He stated that such actions undermine the aid provided to struggling businesses during critical times.
U.S. Attorney Ryan Raybould for the Northern District of Texas made it clear that those who exploit federal funding would face prosecution. He pointed out that Reis’s actions added to the economic distress caused by the pandemic.
Kelly Loeffler, the SBA Administrator, affirmed their dedication to recovering stolen funds. She noted that their office actively collaborates with law enforcement to hold accountable those who take advantage of government resources.
The Investigation and Legal Proceedings
The extensive investigation involved multiple agencies, including the FBI and IRS Criminal Investigation. Reis pleaded guilty to conspiracy to commit wire fraud in August 2025. As a result of the coordinated efforts among federal law enforcement bodies, significant strides have been made in addressing pandemic-related fraud.
Key Statistics
- Total funds fraudulently obtained: Over $65 million
- Number of fraudulent loans processed: Over 530
- Sentencing duration: 10 years in prison
- Total restitution ordered: Over $66 million
The Fraud Section of the Criminal Division has prosecuted over 200 defendants in more than 130 cases related to PPP fraud since the CARES Act implementation. Furthermore, more than $78 million in cash and various assets have been seized as part of these ongoing investigations.
Report Suspected Fraud
The Justice Department encourages anyone with information on suspected COVID-19 fraud to report it. Reports can be made via the National Center for Disaster Fraud (NCDF) Hotline or through their web complaint form.
