Cook County’s independent watchdog has rolled out another report finding four more county employees who fraudulently obtained federal loans designed to help small businesses survive the COVID-19 pandemic.
Since last July, the Office of the Independent Inspector General has singled out a total of 17 employees for a combination of fraud and violations of county rules around reporting outside jobs or ethical conduct. Thirteen of those cases have been referred to various prosecuting agencies, Interim IG Steven Cyranoski Cyranoski told the Tribune in an email. The most recent four in Friday’s report have either been “referred already or in the process of being referred.”
The OIIG investigations center around county employees who applied for the Payroll Protection Program, which allowed qualifying small businesses and other organizations to receive loans to get them through the COVID-19 pandemic. The money was meant to be used on payroll, interest on mortgages, rent or utilities. But over the course of several months, the OIIG has identified several county employees who received loans for businesses that did not exist or spent their loan on personal expenses.
In all, the OIIG has so far sustained PPP-related violations involving employees across county government, often finding workers violated county rules that require reporting secondary employment, had improperly used county computers to obtain the loans, refused to cooperate with the investigation, or other “conduct unbecoming” personnel rules.
Sustained findings have been made against employees of the Board of Review, the Comptroller’s office, the Assessor, the Department of Revenue and the Bureau of Technology. It is OIIG practice not to name any of the employees.
Other county offices not under the OIIG’s purview have also launched investigations of suspected PPP fraud: Chief Judge Timothy Evans hired an outside law firm to investigate whether his employees took part in PPP loan fraud, the Sun-Times reported late last year, and 48 employees have been fired or resigned from County Clerk Iris Martinez’s office after she asked the OIIG for help investigating suspected PPP fraud, the paper reported Friday.
In his office’s latest quarterly report, Cyranoski found an employee of the comptroller’s office, which handles payroll and other financial matters across the county, sought three PPP loans and won two, totaling $50,000, and got another $6,000 loan from the federal COVID-19 Economic Impact Disaster program. The OIIG investigation found “she provided false and misleading information about owning a catering business and the revenue the business generated” to receive the PPP loans, and “provided false information” and “made several contradictory representation” to receive the EIDL loan.
“After fraudulently obtaining the various loan funds,” that comptroller’s employee spent it on multiple plane tickets, hotels, home improvement items, fine dining, furniture, cash withdrawals, paying down a credit card, and Amazon purchases, the report said.
It is unclear if the employee owned the business or not: the OIIG reported she failed to turn over certain documents, leading the OIIG to conclude the documents “either did not exist” or “would contradict the information she provided to the OIIG and the federal government.”
Cyranowski’s report found the employee violated the county’s “conduct unbecoming” personnel rule, failed to cooperate with the investigation, and falsified employment records. The OIIG recommended she be fired and placed on the county’s ineligible for rehire list.
Another employee at the county’s Board of Review “falsely” stated she had earned $176,000 in revenue from a hairstyling business when she sought and won a $20,832 PPP loan, according to the report. That employee told the OIIG the business “was no longer in operation in early 2020,” a “direct contradiction” to the conditions of her PPP loan, according to the report. While the loan was intended to keep the business afloat, the employee admitted she used the money to pay her mortgage and other bills.
The OIIG found that Board of Review employee also filed for bankruptcy without disclosing that $176,000 in revenues, declined to explain why and otherwise failed to cooperate with the investigation, a violation of county rules. She also failed to disclose the hairstyling business to the county.
“Committing financial fraud directed at the federal government tarnishes the BOR employee’s reputation and brings discredit to the County as it can erode the public’s trust in Cook County government, the Board of Review, and their employees,” the report concluded. “This is especially true in this case, considering that the BOR employee is employed by an office of County government that handles property tax matters on behalf of Cook County residents.”
The BOR agreed with the OIIG’s finding and fired the employee.
Another employee at the county’s Department of Facilities Management applied for two PPP loans totaling roughly $32,500. The OIIG found that employee “falsely claimed” on the applications “that he owned a gardening business wherein he earned gross receipts of $82,000 in 2019,” and had used a county computer to establish a PPP loan account while clocked in for work.
He admitted “spending all that money on personal expenses. … None of which were related to a business” including his rent and car loan payments, the report found, amounting to “financial fraud directed at the federal government.”
That employee resigned after he found out the county had launched disciplinary proceedings against him.
Another employee from the county public defender’s office had submitted “false and misleading” information to receive a $20,000 PPP loan and “fraudulently obtained” a $10,000 EIDL loan for a real estate business.
She also admitted using that money to buy a personal vehicle, pay rent and credit card bills and “other personal expenses not related to any business listed on her loan applications,” a troubling finding considering the public defender’s office “requires a high level of ethics and integrity as well as trust by the residents of Cook County.”
That employee also failed to disclose a second job unrelated to the real estate business to the county and “committed fraud against the federal government while on County time,” the report said. That employee resigned after disciplinary proceedings were launched.
