❓WHAT HAPPENED: Nearly 400 Illinois state employees improperly obtained federal Paycheck Protection Program (PPP) loans intended for small businesses during the COVID-19 pandemic.
👤WHO WAS INVOLVED: Illinois state employees across key agencies, including Human Services, Corrections, and Children and Family Services, as well as Cook County and Chicago city employees.
📍WHEN & WHERE: Fraud cases reviewed through June 2025, primarily in Illinois, with broader implications nationwide.
🎯IMPACT: Over $2.8 million in fraudulent loans obtained by state workers, contributing to Illinois’ reputation as one of the most corruption-prone states in the U.S.
Nearly 400 Illinois state employees allegedly attained federal Paycheck Protection Program (PPP) loans through fraudulent means, according to a state government watchdog. The Illinois Office of the Executive Inspector General reported “reasonable cause” in 378 PPP fraud cases involving state workers through June 2025, with the loans designed to assist small businesses during the COVID-19 pandemic.
The alleged fraud cases involving state workers account for approximately three-quarters of those reviewed by the Illinois Office of the Executive Inspector General. In response to the findings, over 200 state government employees have either been fired or forced to resign, with a number being referred for criminal prosecution.
According to the report, state workers at major agencies, including Human Services, Corrections, and Children and Family Services, collectively received more than $2.8 million in fraudulent loans, often by submitting fabricated business or income claims. Notably, the Illinois Attorney General’s office has secured guilty pleas in multiple cases, typically resulting in probation, restitution, or community service.
Among the fraud schemes exposed was one in which a Human Services employee fraudulently obtained $49,000 for a nonexistent catering business. In another case, an Illinois state worker claimed she misunderstood the loan as debt consolidation, while another admitted to paying someone to create a fake business application for her.
Additionally, Cook County, Illinois watchdogs have found PPP-fraud cases extending beyond state government workers to county officials as well. An estimated 65 PPP-related cases have resulted in resignations and firings. Meanwhile, the Cook County Sheriff’s Office reports that it has reviewed 163 cases, with 62 violations confirmed to have been committed by employees. The city inspector general for Chicago has uncovered upwards of 1,000 potentially fraudulent loans granted to city staff, with nine cases initiated so far.
Since the COVID-19 pandemic, the U.S. Department of Justice (DOJ) and federal inspectors general have recovered over $1.4 billion in stolen pandemic relief funds, resulting in the prosecutions of thousands of suspects. However, it is estimated that tens of billions of taxpayer dollars are yet to be recovered.
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