More than a dozen Chicago Public Schools employees and officials — some of whom were in leadership positions and earned six-figure salaries — fraudulently obtained Paycheck Protection Program loans worth up to $21,000, according to a district watchdog report.
The Office of CPS Inspector General (OIG) Will Fletcher published a significant activity report early Wednesday, which detailed fraud investigations into 14 district employees.
“Pandemic relief fraud by CPS employees causes significant reputational harm to CPS and diminishes trust in the school district,” Fletcher’s office wrote in the report. “This is especially true when the perpetrators are employees responsible for managing public funds.”
Of those 14 employees, the OIG found many are in leadership or central office positions according to the report. In each substantiated CPS case, the person who applied for a PPP loan claimed to be self-employed.
In one case, a district full-time employee who makes more than $140,000 per year claimed in their loan application to have earned more than $100,000 in 2019 alone by working as a chef.
“When interviewed by the OIG, however, the employee admitted that the information provided on the loan application was false,” the report states.
Of these employees, eight have resigned and four more were terminated, while CPS has moved to terminate the remaining two employees, according to the report. The OIG also indicated it is “engaged in ongoing discussions” with law enforcement regarding these investigations.
A central office administrator with a salary topping $200,000 allegedly fraudulently sought a forgivable PPP worth more than $15,000 by falsely claiming they’d earned $75,000 as a sole proprietor in 2020. This employee, who has since resigned, admitted in an OIG interview that they had misrepresented their income, the report states.
In another case, a regional administrator with a $165,000 salary obtained a $20,000 PPP loan by allegedly stating on their application that they had approximately $100,000 in annual income from their business. According to the report, the OIG found that income, and the business itself, did not exist.
According to the report, a CPS tech employee obtained a PPP loan worth more than $20,000 by lying on their loan application about making $125,000 in self-employment income. While the employee was making $110,000 per year from CPS, they admitted to the OIG they had no outside work and did not own a business.
While the OIG report does not include employee names, the Chicago Sun-Times has reported that Crystal Cooper, the district’s former head of school operations, was the highest-ranking CPS employee connected to the PPP loan fraud.
The OIG said it ran its investigation by cross-referencing loan recipient data published by the Small Business Administration and internal CPS personnel records. The investigation revealed that 780 full-time salaried CPS employees had received PPP loans, and while some of those were legitimate, others may have been the victims of identity theft.
During this process, additional fraud investigations arose while the OIG was investigating employees for unrelated misconduct, and “several more PPP fraud investigations” are nearing completion.
Fletcher’s office has recommended to CPS that it require prospective district employees to disclose whether they received any pandemic relief funding as part of the onboarding process. CPS said it will review that recommendation before determining whether any policy changes are made.
“As a District, we take seriously our responsibility to serve students and families with integrity and we will hold accountable individuals who breach CPS policies and the public’s trust,” a CPS spokesperson said in a statement Wednesday. “CPS will continue to ensure our District policies and procedures support the highest ethical standards to ensure our employees act in the best interest of our students and the District.”
PPP fraud was widespread throughout the pandemic, with the Small Business Administration — which managed such loans — estimating earlier this year that it had disbursed more than $200 billion in potentially fraudulent PPP and other loans tied to the COVID-19 pandemic.
In Chicago, more than 50 employees from the office of the Clerk of the Circuit Court of Cook County have either been fired or chosen to resign amid COVID-19 relief fraud allegations.