Illinois just gained another data point for its reputation for public corruption. New revelations found that nearly 400 state employees improperly obtained federal Paycheck Protection Program (PPP) loans intended to keep small businesses afloat during the pandemic.
PPP was created as part of the CARES Act to provide federally backed, forgivable loans to small businesses during the COVID-19 pandemic. It was signed into law on March 27, 2020.
According to the Illinois Office of the Executive Inspector General, investigators found “reasonable cause” in 378 PPP-fraud cases involving state workers through June 2025 — about three-quarters of all cases reviewed, the Chicago Tribune reported. More than 200 employees resigned or were fired, and some have been referred for criminal prosecution. Workers across major agencies — including Human Services, Corrections, and Children and Family Services — collectively received over $2.8 million in fraudulent loans, often using fabricated businesses or false income claims.
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The inspector general sharply condemned the conduct, stressing that public employees are expected to protect — not exploit — taxpayer funds. One state worker claimed she misunderstood the loan as debt consolidation; another admitted paying a stranger to fabricate a fake business application. The Illinois Attorney General’s office has secured guilty pleas in several cases, typically resulting in probation, restitution, or community service — including a Human Services employee who obtained $49,000 for a nonexistent catering company.
The problem extended beyond the state government. Cook County watchdogs documented 65 PPP-related findings, most resulting in resignations or firings. The Cook County sheriff’s office reviewed 163 cases, sustaining violations against 62 employees. Chicago’s inspector general initially flagged nearly 1,000 potentially problematic loans involving city staff and has so far found nine substantiated cases, with more investigations ongoing.
These scandals unfolded against a national backdrop of widespread PPP fraud, with federal watchdogs estimating tens of billions lost and the Department of Justice charging thousands of defendants while seizing over $1.4 billion in stolen relief funds.
Illinois’ recurring ethical failures have measurable social costs. The Archbridge Institute’s Social Mobility Index ranked Illinois 40th in the nation — and the worst in the Midwest — partly due to persistent perceptions of corruption, including both illegal bribery and “legal” pay-to-play politics through campaign money and influence-trading.
“The perception of the state’s corruption is one factor that dragged it down,” Illinois Policy reported. “The social mobility index measures perceptions of corruption using the 2018 Corruption in America Survey, which ranks Illinois among the most corrupt states in the country in both legal and illegal corruption – legal corruption describing a culture of pay-to-play in the form of campaign contributions made to or endorsements of a particular politician in exchange for favors or influence.”
Even as leaders stress that most public employees act honorably, the breadth of PPP fraud involving government workers reinforces Illinois’ stubborn image as one of America’s most corruption-ridden states — an image that, evidence suggests, drags down both governance and the state’s broader prospects for upward mobility.
