A state watchdog has revealed that over $7.2 million in fraudulent claims were made by state employees through the federal Paycheck Protection Program (PPP), designed to assist small businesses during the COVID-19 pandemic. The Office of the Executive Inspector General (OEIG) has identified more than 275 instances of misconduct across 13 state agencies, including allegations of fabricated or undisclosed small businesses.
The investigation, which began in 2022, found that 60% of implicated employees worked for the Illinois Department of Human Services (IDHS). To date, 43 IDHS employees have been fired, and 53 resigned amid allegations of fraud. Other affected agencies include the Departments of Corrections, Children and Family Services, Healthcare and Family Services, and public transit authority Pace.
The PPP, launched under the 2020 CARES Act, was intended to provide forgivable loans to struggling small businesses. However, due to self-certification requirements, the program became a target for widespread fraud, according to the Small Business Administration (SBA). The OEIG has focused on state employees who received loans of $20,000 or more, often by falsely claiming annual profits exceeding $100,000.
Illinois lawmakers recently extended the statute of limitations for prosecuting COVID-19-related fraud, allowing authorities up to five years from the discovery of misconduct. Fraudulent PPP claims can carry severe penalties, including up to 30 years in prison or fines of up to $1 million.
The OEIG continues to investigate and refers significant cases to the Attorney General for prosecution. While some schemes involved third-party intermediaries, it’s unclear how extensively these parties were used by state employees.
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