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PPP fraud found among Illinois state workers leaves investigator 'disappointed but not surprised'

Illinois Executive Inspector General Susan Haling
State of Illinois
Illinois Executive Inspector General Susan Haling

Illinois Executive Inspector General Susan Haling says 177 state employees appear to have defrauded the federal Paycheck Protection Program designed to help struggling businesses during the COVID-19 pandemic.

The watchdog for state agencies under Illinois Gov. J.B. Pritzker’s control says she’s “disappointed but not surprised” that her investigators have found at least 177 state employees who appear to have defrauded the federal Paycheck Protection Program.

“It’s especially disappointing that these individuals had full-time employment,” Susan Haling, the state’s executive inspector general, said Tuesday. “The program was designed to help people who were struggling and no longer had employment because of COVID.”

The 177 workers suspected of defrauding PPP — one of the federal government’s COVID-19 relief efforts — have been referred to the Illinois attorney general’s office for possible prosecution. None has been charged with any crime “as of yet,” according to Haling, who said her investigation is “far from being finished.”

Of those employees, 132 worked for the Illinois Department of Human Services, one of the state’s largest agencies,with more than 13,000 employees.

At one DHS facility, Ludeman Developmental Center in Park Forest, 20 employees were fired, 14 resigned, and three faced disciplinary action because of evidence they might have obtained PPP loans fraudulently, state officials said last month.

“Since IDHS was notified of staff involvement in PPP loan fraud at Ludeman Developmental Center, we have been working to hire more staff,” the agency said in a written statement on Aug. 2.

Haling said she couldn’t say how many of the 177 employees flagged in her investigation have been fired, resigned or now face internal discipline.

Her Office of Executive Inspector General has launched 438 investigations into possible PPP fraud and concluded 204.

The Paycheck Protection Program provided loans for struggling businesses to cover payroll and other expenses during the coronavirus pandemic. Most of the loans were forgiven, meaning they didn’t have to be repaid if the money was used as it was supposed to be used.

Haling’s office focused initially on loans of $20,000 or more. To qualify for a loan that size, a business generally would need to have had gross income of more than $100,000 the previous year.

In Illinois and across the country, investigators have found that the program was rife with fraud. In the Chicago area, hundreds of employees of local and county agencies have been flagged by government investigators for possible fraud.

A top Chicago Public Schools official resigned after the school system’s inspector general found that she inflated her income to wrongfully increase the amount of her loan for a side business.

Contributing: Lauren FitzPatrick