Four Cook County employees committed “financial fraud directed at the federal government” by wrongly collecting roughly $120,000 in payroll protection plan loans intended to help businesses survive the pandemic, according to a new report from the county’s inspector general.
The allegations stem from the first of several pending investigations “involving dual employment and PPP Loan applications taken by employees in all offices of Cook County government,” Patrick Blanchard, head of the Office of the Independent Inspector General, said in an email to the Tribune.
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Blanchard’s office recommended the four employees be placed on the county’s “do not rehire” list, and has been “in contact with both federal and state officials regarding this line of OIIG investigations,” Blanchard said.
The employees were not named in the report. But it noted that three work in offices under Cook County Board President Toni Preckwinkle that handle sensitive financial matters, while a fourth works at the county’s Board of Review.
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The federal paycheck protection program was rife with fraud, with some experts estimating $80 billion in loans was stolen nationally as the government rushed to get financial relief to struggling businesses during the height of the pandemic.
As of March, a Justice Department crackdown has led to just 120 defendants being charged with PPP fraud.
The county IG’s investigation looked into whether county employees who filed for PPP loans complied with the county’s rules on outside employment or any other personnel rules.
They found that a Department of Revenue employee received two PPP loans that totaled nearly $39,000 by saying she was “self-employed,” according to the report. That employee later admitted “that she falsely claimed to own a business that did not exist in order to obtain funds through a federal PPP loan,” and “improperly spending those funds on personal expenses,” the report stated.
The worker violated county’s personnel rules around “conduct unbecoming” of employees, the report said. She also violated the county’s use of technology policy, admitting she used the county printer and computers to “perpetuate her PPP loan fraud activities,” according to the report.
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Two employees of the county comptroller’s office, which handles payroll and other financial matters, were cited in the report.
One of the employees obtained a $20,832 PPP loan by claiming to be the sole proprietor of an unnamed business. That employee admitted that she misrepresented information about her business and its operations in her PPP application, including inflating its gross receipts “so she would qualify for a larger PPP loan,” the report said.
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“All the figures she conveyed about her business …. were arbitrary figures which did not represent any actual business that she conducted in 2020,” according to the report.
The employee admitted using the money “for personal family vacations … on several occasions,” the report says. She also had failed to report to the county that she had a second job, the report said.
The second employee at the comptroller’s office, a payroll supervisor, “signed two loan applications falsely stating that she owned a business” that paid her a salary of $107,000 in order to obtain $41,510 in PPP loans. The supervisor “is experienced in tax and financial matters” and knew it would be wrong for her to spend the loan money, the report said.
The Board of Review employee admitted to making “false statements” on an application to get $18,750 in PPP loan funds, and “falsified information” in a second application when the first was denied. After it was accepted, she spent the money “on travel,” according to the report.
In an email, Preckwinkle spokesman Nick Shields said, “We typically do not discuss personnel matters. We just received the report and are reviewing it accordingly. We will subsequently assess how to move forward.”
William O’Shields, a spokesman for the Board of Review, said the employee in question “voluntarily” resigned in June without mentioning the investigation. The office will follow up with county human resources officials about placing that employee on the “do not hire” list, he said.
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Blanchard said the county has 45 days to act on the recommendations, and that he has “been informed that the disciplinary proceedings are underway.”
