PPP fraud investigation by state watchdog finds $7.2 million in improper loans

More than four years after the outbreak of COVID-19, a state watchdog is continuing to investigate public employees ripping off millions of dollars from the federal Paycheck Protection Program intended for businesses that struggled during the pandemic.

Since the coronavirus pandemic began here in early 2020, the Office of Executive Inspector General has found 277 cases of wrongdoing involving PPP loans, which were typically forgiven, meaning they didn’t have to be repaid. The investigators focused on loans of more than $20,000 and found about $7.2 million in improper ones, according to a new report by the office.

Most of the confirmed fraud cases — 175 — involved Department of Human Services employees. There were 31 cases in the Department of Corrections, 27 in the Department of Children and Family Services and three in the Illinois State Police.

The inspector general, who also investigates misconduct in the Chicago Transit Authority, confirmed three employees of that agency had fraudulently obtained PPP loans.

Often, people who scammed the federal PPP program would pay a kickback to an illegal broker, who’d then fill out and process applications asking for financial help for phony businesses.

According to the inspector general’s office, that’s what two DHS employees and a DCFS worker did.

They admitted paying brokers fees ranging from $600 to $4,000 for fraudulent loans that averaged about $20,000 each. All three have been fired, records show.