Illinois state employees commit $8 million in loan fraud

SPRINGFIELD, Ill. (WAND) — It was a federal government program which was designed to help businesses keep the lights on and pay bills during the COVID pandemic. It turned into a magnet for dozens of Illinois state employees to commit massive fraud in the millions.

Dating back to 2022 the Office of the Executive Inspector General self-initiated a large-scale fraud investigation looking at state employees who improperly obtained forgivable Paycheck Protection Program (PPP) loans which were administered by the Federal Small Business Administration.

Through the end of Fiscal Year 2024, the OEIG had conducted 374 investigations of potential PPP fraud. It determined 305 of those investigations were founded with more than 40 additional cases reported in Fiscal Year 2025 across 18 state agencies.

Using falsified information on loan applications, employees obtained approximately $8 million in taxpayer funds. Often claiming to operate a business which did not exist.

“We need to root out these people,” former State Representative Dan Caulkins, (R-Decatur), told WAND News. “They’re bad apples. They’re giving government a bad name.”

State Representative Regan Deering, (R-Decatur), agreed. “Illinois citizens are just tired of mismanagement, overspending, potential corruption within our government.”

Some of the cases were very similar in nature. An Illinois Department of Healthcare and Family Services Office coordinator obtained a $20,832 loan for a beauty shop that purportedly earned $100,000 in income. In her interview, the employee admitted she never owned a beauty shop.

A DHS Mental Health Technician obtained a $20,832 loan for a beauty salon that had supposedly earned $104,807 in income in 2019. In reality, the business did not exist and was only a business on paper.

If the individuals were still on the payroll at the time reports of their fraud were issued the OEIG recommended termination from state employment. Most employees simply resigned in lieu of termination. The legislature passed a measure in 2023 which allows criminal prosecution for these types of cases for up to 5 years from when the fraud was discovered.