About 400 government employees investigated by the state of Illinois improperly tapped a federal pandemic relief fund program meant to keep small businesses afloat — part of a nationwide wave of Paycheck Protection Program fraud that siphoned tens of billions of dollars from taxpayers during the COVID-19 pandemic.

While more than 200 have lost their jobs or voluntarily resigned, some have been referred for criminal prosecution for fraudulently obtaining the taxpayer-funded forgivable business loans, according to an Illinois Office of the Executive Inspector General report.

As of June 30, the end of fiscal year 2025, the OEIG found “reasonable cause” in 378 investigations, concluding that many state employees acquired PPP loans “based on falsified information,” the watchdog’s annual report released earlier this month said.

Without naming individuals, the report listed more than 100 employees from Illinois state government departments, including Human Services, Juvenile Justice, Corrections and Children and Family Services, who received more than $2.8 million in PPP loans. Many loans were in the $20,000 range, while a few exceeded $41,000. The investigations date back to 2022.

“Regardless of the ease of procuring these PPP funds, this was not free money for the taking,” the inspector general’s office wrote. “These loans, as with any other, required truthful information as a basis for approval. State employees are expected, at minimum, to maintain the public’s trust and confidence. Misappropriating such funds is far from being ethical, professional, acting with integrity, or conducting oneself in a manner that reflects favorably upon the State.”

The Paycheck Protection Program was created during President Donald Trump’s first term under the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. It was administered by the U.S. Small Business Administration to support small businesses negatively affected by the pandemic. Sole proprietorships and self-employed people were eligible for the loans to help cover payroll, insurance, rent, utilities and other business expenses as the economy slowed significantly during the pandemic.

Applicants had to submit tax records or other documentation to establish eligibility, including proof of qualifying payroll or, later, gross income. Loans could be forgiven if at least 60% of the funds were used for payroll and for qualifying expenses.

The speed and scale of the program, however, made it vulnerable to abuse. An SBA inspector general report a few years ago estimated that as much as $64 billion in PPP loans nationwide may have been improperly paid.

State watchdog records detail a range of misconduct. One Department of Healthcare and Family Services employee falsely obtained more than $20,000, claiming she misunderstood the loan as a form of debt consolidation. A Department of Labor employee admitted receiving more than $20,000 using fabricated business information and paying a stranger $2,000 for help to complete the application — handing over her Social Security number, bank statements and a copy of her driver’s license in the process.

Another employee at the Department of Human Services obtained a $20,833 loan in 2021 after claiming to run a side catering business. Investigators found no documentation that the business existed, the records also show.

Workers found to have committed wrongdoing were recommended for termination, and many also failed to disclose outside businesses as required. Many employees resigned from their state jobs. Others were either fired “or the disciplinary actions are still ongoing,” the watchdog said.

The 378 substantiated cases account for approximately 75% of the 501 PPP fraud-related cases that the executive inspector general’s office completed by the end of the 2025 fiscal year.

The Illinois attorney general’s office has criminally prosecuted several individuals for receiving fraudulent PPP loans based on referrals from the OEIG. Some defendants have pleaded guilty, generally receiving probation, community service or agreeing to repay the improperly received loans, the OEIG said.

In February, Attorney General Kwame Raoul’s office announced a guilty plea from a Human Services employee convicted of felony theft by deception. Prosecutors said she obtained two PPP loans totaling about $49,000 for a nonexistent catering business. Both loans were forgiven. A Cook County judge sentenced her to 30 months of probation.

“Paycheck Protection Program loans were intended for struggling business owners during the COVID-19 pandemic, and it is unacceptable that anyone would take advantage of this crucial assistance program,” Raoul said in a statement in November in reference to another PPP loan fraud case. “I will continue to hold individuals, especially government workers, accountable if they exploited critical aid programs for their own financial benefit.”

The misconduct extended beyond state government.

Cook County’s independent inspector general has reported 65 PPP-related findings through September, spanning offices from Cook County Health to the Forest Preserves and the public defender. Most employees were terminated or resigned; some applied for positions on behalf of fictitious businesses, while others failed to disclose dual employment.

At the Cook County sheriff’s office, internal investigators examined 163 cases. Forty-nine employees resigned or retired before their cases concluded, and two died. All cases were referred to federal or state prosecutors, with 29 active criminal investigations underway, according to Cook County sheriff’s office spokesman Matt Walberg. The office sustained policy violations against 62 employees, firing 12 and moving to terminate dozens more.

The inspector general’s office for the Cook County Circuit Court clerk, under then-Clerk Iris Martinez, investigated 78 cases in four waves that concluded by July 2024. Of the first wave, 55 cases were referred for prosecution; 39 were sustained, three were not sustained, and the remaining cases were closed administratively when an employee resigned, retired, died or was otherwise terminated. In sustained cases, workers were let go. Current Clerk Mariyana Spyropoulos said her office is correcting failures to place some of the names of terminated employees on the office’s do-not-hire list.

At an unrelated news conference this month, Cook County Board President Toni Preckwinkle noted that of the roughly 22,000 Cook County employees, only a small percentage had been targeted over PPP loan irregularities.

“Any group of 22,000 people, there’s going to be the few people who aren’t going to play by the rules,” she said. “(An) overwhelming majority of our county employees work hard every day on behalf of the citizens of Cook County and I’m proud of them.”

In Chicago, Inspector General Deborah Witzburg said her office initially identified nearly 1,000 potentially problematic PPP loans involving city employees. The office has narrowed its focus, citing limited resources, and has reported nine findings so far. Sixty investigations have been open for more than a year, and two have been referred for criminal prosecution.

Her office has prioritized employees of the Chicago Police Department “whose credibility and truthfulness in statements is crucial,” and city workers “who occupy positions that make their financial circumstances of interest” — generally, employees who have to fill out statements of financial interest.

“We can say with some confidence that there were inadequate controls around the PPP loan program and widespread fraud,” Witzburg told the Tribune. “And I suppose it is not entirely surprising that a widespread problem would reach government employees. What is a little bit surprising is that people who have committed to working in public service and government would engage in defrauding the government.”

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