Pandemic relief fraud report says online financial company CEOs, family got rich

Elev8 Advisors owner Adam Spencer with his new $154,000 Porsche. Spencer was named in a Congressional report about companies that facilitated fraud in the Paycheck Protection Program.
Elev8 Advisors owner Adam Spencer with his new $154,000 Porsche. Spencer was named in a Congressional report about companies that facilitated fraud in the Paycheck Protection Program.

A congressional subcommittee issued its final report Thursday about financial fraud supercharged by online lending during the pandemic, which alleged executives and their families enriched themselves through government relief programs.

Rep. James Clyburn, D-S.C., chairman of the Select Subcommittee on the Coronavirus Crisis, focused much of the 130-page report on Womply and Blueacorn, both of which emerged as major players that fused tech and financing to speed up lending through the government’s Paycheck Protection Program.

Womply had no lending experience before COVID-19 and Blueacorn did not exist, yet together the companies captured more than $3 billion in fees – eclipsing their direct competitors.

The startups are not banks but worked as middlemen, marketing to struggling businesses and quickly approving loans with partner banks, backed by the Small Business Administration. The companies make their money through a government-paid fee for facilitating the loans.

Clyburn called the fraud his committee unveiled, “inexcusable misconduct” and asked the SBA, its oversight watchdog and the Department of Justice to further probe the company’s conduct.

“Even as these companies failed in their administration of the program, they nonetheless accrued massive profits from program administration fees, much of which was pocketed by the companies’ owners and executives,” Clyburn said in a statement. “On top of the windfall obtained by enabling others to engage in PPP fraud, some of these individuals may have augmented their ill-gotten gains by engaging in PPP fraud themselves.”

How much did these companies and their executive make?

The report says Blueacorn captured more than $1 billion in taxpayer-funded processing fees and spent about $8.6 million on fraud prevention while funneling nearly $300 million in profits to its ownership.

Womply had a net revenue in 2021 of more than $2 billion and received a $5 million loan that SBA later rescinded.

Executives, family enriched themselves with relief program

In addition to their $120 million cut of processing fees, Blueacorn’s founders – Nathan Reis and Stephanie Hockridge – personally received $300,000 in PPP loans, the report says. In one loan application, Reis falsely claimed to be an African American veteran.

Blueacorn’s consulting partner, Elev8 Advisors secured more than $200,000 in PPP loans for operators Adam and Kristen Spencer, their companies and their families, according to the report. Investigators pointed out at the same time the couple purchased a series of high-end cars and an $8 million mansion with cash near Scottsdale, Arizona.

The report indicates Elev8 hired 30 of the owner’s friends and family members to work as underwriters. In a text message obtained by the committee, Kristen Spencer wrote, “We are doing this for the people we hired to make money. Our friends and family. That is where the money is going. And it will be life changing money for anyone who does it.”

More: Ariz. company co-founded by newscaster made millions on fraudulent PPP loans

Womply’s CEO and president each received PPP loans despite taking a salary of more than $400,000, the report said.

Representatives for Blueacorn and Womply did not immediately respond to USA TODAY.

Elev8 posted a response to the report on its website and accused the subcommittee of misleading the company and its owners about the rollout of the report.

"Elev8 did not engage in any self-dealing and their own loans were completely appropriate and would pass muster in any objective review," the company posted Thursday.

Gangs and fraudsters targeted PPP companies

The report said criminal organizations specifically used the the two companies for fraudulent loan applications. It included text message exchanges from drug gangs in Florida discussing them, “show me Blueacorn,” while another described Womply as “the website that’s really hittin” and that “everybody in the hood” was using it.

In August, USA TODAY spotlighted a University of Texas, Austin paper that identified more than 1.8 million loans with indications of potential fraud by borrowers. Some of the most egregious examples cited by the researchers involved Kabbage, Womply and Blueacorn.

As of October, the Justice Department’s fraud section has charged 235 defendants with pandemic fraud charges across 162 cases. It has estimated the total loss in those cases to be about $336 million. U.S. Attorneys charged an addition 1,600 defendants representing $1.2 billion in alleged losses.

The report issued Tuesday provided evidence that loan reviewers received little or no training and began submitting PPP loans the “first minute of the first day” on the job.

“The faster the better,” the reviewer told the committee. “(Each application) should take you less than 30 seconds.”

Nick Penzenstadler is a reporter on the USA TODAY investigations team. Contact him at or @npenzenstadler, or on Signal at (720) 507-5273.

This article originally appeared on USA TODAY: PPP fraud enriched online lending CEOs, families, new report says