State watchdog investigating employees accused of bilking federal
pandemic aid program
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[August 03, 2023]
MOLLY PARKER
Capitol News Illinois
mparker@capitolnewsillinois.com
Dozens of state employees across multiple agencies are under
investigation by a state watchdog for claims they fraudulently obtained
payments from a federal pandemic-era loan program, Capitol News Illinois
has learned.
Neil Olson, general counsel at the Illinois Office of the Executive
Inspector General, confirmed that “OEIG has been investigating
allegations of Paycheck Protection Program fraud by state employees
under our jurisdiction.” The review, he said, is “systematic,” involving
multiple state agencies and the other governing bodies under OEIG’s
jurisdiction, which include state universities, boards and commissions,
and regional transit boards.
Congress intended for the loans issued by the U.S. Small Business
Administration, most of which were later forgiven, to keep small
businesses afloat and their employees on the payroll as COVID-19
resulted in lockdowns and interrupted commerce.
Fraud in the PPP program has been widespread across the United States.
In a June report, the inspector general for the SBA estimated that the
agency paid out more than $200 billion in “potentially fraudulent” aid
during the pandemic – about 17 percent of the $1.2 trillion that was
dispersed through the PPP and other similar programs.
In the rush to swiftly disburse funds, the federal agency “weakened or
removed the controls necessary to prevent fraudsters from easily gaining
access to these programs,” the report stated. “The allure of ‘easy
money’ in this pay and chase environment attracted an overwhelming
number of fraudsters to the programs.”
The OEIG typically does not comment on ongoing investigations, and Olson
declined to say how many employees could face disciplinary action – up
to and including termination – as a result of the widespread probe or
provide any additional details.
The scandal has ensnared numerous employees who work at the Illinois
Department of Human Services, including at state-run facilities for
people with disabilities that are facing staffing shortages. In late
June, a spokesperson for the agency confirmed that at least 30 IDHS
employees were in various stages of the disciplinary process for
inappropriately taking PPP loans. At the time, eight IDHS employees had
been fired, six had resigned and 16 were pending disciplinary action.
In a statement, the agency said that it is “committed to safeguarding
the public” and takes the outcomes of the OEIG’s investigations
seriously.
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Credit: Alexander Grey, Unsplash.com
“Falsifying a federal loan document, for significant and improper
personal gain, calls into question one’s character, honesty, and ability
to act ethically,” the statement read. “While the vast majority of IDHS’
roughly 14,000 state employees are hard-working people of strong
character who work tirelessly to help the most vulnerable, it is deeply
concerning any time an employee takes advantage of public programs.”
The agency said it will continue to work to detect and punish fraud
committed by its workers, in cooperation with the OEIG, law enforcement
and federal authorities.
The fraud was not limited to IDHS. Collectively, state employees may
have obtained millions of dollars in fraudulent payments. A spokesperson
for Gov. JB Pritzker declined to provide specifics about how many
employees have faced disciplinary action for PPP fraud, saying that the
governor’s office does not comment on ongoing investigations. While some
employees have already received notices of their termination, they have
a right to appeal that decision.
Not every state employee who claimed a PPP loan committed fraud. Some
may have had legitimate outside employment that made them eligible for
the federal loan program. Those individuals would not be disciplined.
State policies require employees to disclose secondary income, and
certain state employees, such as agency managers and people who are
responsible for procurement and other financial dealings, must also file
statements of economic interest with the secretary of state’s office
that would detail outside income. The investigations may center around
whether they filed fraudulent paperwork to obtain the loan, thereby
acting in a way unbecoming of a state employee, or failed to follow
ethical guidelines disclosing such income – or both.
The OEIG is not a criminal law enforcement authority. In general, it
investigates state employees for breaches of ethics and other misconduct
and makes recommendations that could range from retraining to
termination, depending on the seriousness of the offense. If conduct is
criminal in nature, OEIG has the authority to share its findings with
law enforcement.
Other public sector employees in Illinois have also come under scrutiny
for PPP fraud. Numerous Cook County government workers have been
terminated or resigned for bilking the program of hundreds of thousands
of dollars over the past year.
Capitol News Illinois is a nonprofit, nonpartisan news
service covering state government. It is distributed to hundreds of
print and broadcast outlets statewide. It is funded primarily by the
Illinois Press Foundation and the Robert R. McCormick Foundation, along
with major contributions from the Illinois Broadcasters Foundation and
Southern Illinois Editorial Association. |