16 CHA employees fired, 1 resigns after being accused of defrauding federal Payroll Protection Program

The Chicago Housing Authority has fired 16 employees accused of submitting false and allegedly fraudulent reports to obtain loans under the federal Paycheck Protection Program, created to keep small businesses alive during the pandemic.

A 17th employee accused of the same misconduct resigned.

The mass firing follows an internal investigation by the CHA’s inspector general.

The IG found all 17 employees “committed federal program fraud” by submitting “falsified” applications to the Small Business Administration “in order to receive SBA COVID-19 relief funds to which they were not entitled.”

The investigation was conducted by comparing a list of all active CHA employees “identified as having obtained a PPP loan” to those who had “obtained authorization for secondary employment or disclosed business income” on their Statement of Financial Interest, officials said.

“As a result of this investigation, 16 CHA employees were terminated from service on Friday, July 15, 2022. The 17th employee resigned before action could be taken,” the CHA said in a statement.

The names, job titles and salaries of those fired was not released, nor was the precise value of the PPP loans fraudulently obtained.

A CHA spokesperson had no immediate comment when asked whether services provided to public housing residents would be impacted by the mass firing.

The fraudulent loan scandal is the first major embarrassment for CHA CEO Tracey Scott.

The agency has most recently been under fire for swapping land with Chicago Public Schools to make way for a new, $120 million high school on the Near South Side.

“As a mission-driven organization that serves families, seniors and people experiencing housing insecurity, everyone who works at CHA must operate from a place of integrity,” Scott was quoted as saying in statement to the Sun-Times.

“When one of us violates that trust, whether on the job or outside the job, it affects us all. While this is a difficult and disappointing moment for CHA, we will use it as an opportunity to hold ourselves to a higher standard and recommit to our values of integrity, consistency and accountability.”

Facing protests by neighbors and housing advocates, the Chicago Housing Authority’s board of commissioners voted last week to pursue a controversial deal with CPS at 24th and State streets, the site of the former Harold L. Ickes Homes, which the CHA began shutting down in 2007 amid promises of new public housing.

The vote allows the CHA to submit applications to the federal government to lease the land for school construction and receive from CPS a couple of vacant parcels across the street. The resolution calls for “resident and community engagement” before those steps are taken — but officials will not need to seek further approval before proceeding with the lease for up to 99 years.

The former public housing complex was supposed to be redeveloped into mixed-income housing and retail stores. About a quarter of the nearly 900 planned units are complete — 58 of them public housing units, 26 affordable units and 112 at market rate — on the northern half of the land. The southern half would be leased to CPS.

The plan has faced opposition on two fronts: those who believe the city is breaking promises to Black residents by building a school rather than promised housing, and those who fear a new school in a shrinking district will hurt nearby under-enrolled majority Black schools.

Housing advocates protested the proposal Monday, accusing the city of failing to properly engage the community — much less take their input into consideration.

“This has been a problem with the city of Chicago,” Roderick Wilson, executive director of the community organization Lugenia Burns Hope Center, said Monday. “We thought we were going to get something different when we got Lori Lightfoot, but we got the same playbook.

“Ultimately, what CHA is doing is contributing to the gentrification of our community and contributing to the displacement of Black people.”

Despite protests, Scott said she had heard favorable reviews from CHA residents who want a new school.

Scott told the agency’s board that CPS initially asked to purchase the land from CHA, but that a lease would allow officials to adjust their plans and build the rest of the public housing on the northern half of the former Ickes site, creating a denser housing complex than originally planned.

“We can still do what we need to do with housing on the parcel and still ultimately fit a school,” she said. “We can still put our housing on the Ickes site.”

In exchange for the 1.7 acres of land at 24th and State, the CHA would receive 2 acres down the street on Wabash Avenue in what would effectively be a land swap with CPS.