PPP fraud in Illinois sees nearly 375 government workers implicated, state watchdog finds
Nearly 375 workers in government agencies across Illinois engaged in misconduct related to the federal Paycheck Protection Program, a long-running investigation by the state executive inspector general's office has found.
They either put in for and got PPP loans they didn't qualify for or didn't disclose to their government employers the side businesses they claimed to be running to get the money, according to the inspector general's office.
Susan Haling, the executive inspector general, began the investigation in 2022. Her office investigates wrongdoing involving state workers and employees of some local government agencies, including the CTA and PACE.
The agency said Friday that it has found 373 people — out of 501 cases it has investigated involving suspected PPP fraud — engaged in some type of wrongdoing.
Investigations involving 54 workers were closed in the year that ended June 30, state records show. Those cases involved about $1.19 million in suspicious PPP loans, according to the state agency. Two of those 54 employees ended up being fired. The rest resigned.
About half of them admitted they had paid an underground broker to submit falsified loan applications on their behalf in exchange for kickbacks that ranged from $500 to $10,000.
A CTA bus driver told investigators he met his broker in a bowling league and paid him $10,000 to get $41,666 in shady loans, according to the state report. Other workers said they used tax preparers to fill out phony PPP applications.
A bus driver for PACE, the suburban transit agency, admitted she spent most of her $20,000 in fraudulent loan proceeds on repainting her house and redoing her floors.
An Illinois Department of Corrections employee told investigators she used some of her loan proceeds to buy a sport-utility vehicle.
Some state employees implicated in PPP fraud, including police officers, have been charged with crimes. But the criminal cases involves only a small fraction of those implicated by investigators.
The same holds true for the illicit brokers who filled out many of the fraudulent applications. Deborah Witzburg, the city of Chicago's inspector general, has about 20 long-term investigations into suspected PPP fraud involving city employees that remain open, according to her office's latest quarterly report.
PPP was created to help business owners struggling in the face of the pandemic survive, giving them loans to stay afloat, with qualifying expenses that included paying their workers and utility bills. As long as they filed papers saying they used the money properly, the loans would be forgiven — they wouldn't have to repay a dime.
Rampant fraud followed. Nationally, the program has been found to have been defrauded out of billions of dollars by people who applied for and got money under false pretenses, like by inflating the actual amount of their businesses' lost income.