Investigation into Paycheck Protection Program fraud continues in Illinois

[September 12, 2023]  By Kevin Bessler | The Center Square

(The Center Square) – In the wake of news that nearly 40 Illinois state workers committed fraud in the Paycheck Protection Program, the investigation remains ongoing.

The employees, who worked at the Ludeman Developmental Center in Park Forest, are accused of receiving PPP loans for businesses that did not exist.

“Anybody that has committed PPP fraud in our administration or not in our administration does not deserve to have a job working for the people of the state of Illinois,” Gov. J.B. Pritzker said in August.

The fraud cases might be just the tip of the iceberg. Fourteen Chicago Public School employees, some making 6-figure salaries, also fraudulently obtained PPP loans, according to the CPS inspector general.

Earlier this year, interim Cook County Inspector General Steven Cyranoski made public a quarterly report where he highlighted that his office has found six other county employees who have also defrauded federal relief programs.

In March, a federal grand jury in Chicago charged two suburban residents with a total of 15 counts of wire fraud for fraudulently obtaining $742,000 in small business loans and grants.

"As part of the scheme, the indictment alleges the defendants submitted to the [Small Business Administration] numerous applications for loans on behalf of businesses and entities purportedly owned by the defendants," prosecutors said in announcing the charges. "The applications are alleged to have contained materially false statements and misrepresentations concerning, among other things, the purported entities’ number of employees, gross revenues, payroll, operating expenses, type of business, and existence as companies with ongoing operations."

There are red flags in public loan data. In one case reported by NPR, 50 applications for small business loans reportedly listed the same address: a day shelter in Chicago where workers and the homeless can pick up their mail.

Nationwide, more than $200 billion of pandemic business loans have been deemed potentially suspicious.

During a recent U.S. Senate Small Business Committee hearing, U.S. Sen. Joni Ernst, R-Iowa, said she is not sure the SBA is committed to going after PPP fraudsters.

“I am concerned about the SBA’s lack of attentiveness to ensuring law enforcement has everything it needs to pursue those who have defrauded the taxpayers,” said Ernst.

Patrick Kelley with the SBA admitted that loan applications were not thoroughly checked out.

“There were choices made to prioritize speed at all costs that in my opinion did not need to be made and are the outlier event that has caused the challenges that we all regret,” said Kelley.

According to the SBA’s inspector general, $3.6 billion in loans mistakenly were given to people on the Treasury's “Do Not Pay” list.

In the meantime, the Paycheck Protection Program has contributed to the country’s over $30 trillion in federal debt, an amount some fear will lead to higher taxes in the future.