Chicago officials are joining the effort to crack down on cases of COVID aid fraud
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If you took out a dodgy government business loan during the pandemic, you might be wondering if it'll ever catch up with you. And you might have a lot of company. Investigators now say they have questions about $200 billion worth of federal business aid, which includes the PPP loans issued during the depth of the crisis. That is way too many cases for the feds to look into, but local investigators have joined the effort, and your likelihood of getting caught may come down to where you work. NPR's Martin Kaste has the story from Chicago.
MARTIN KASTE, BYLINE: The thing about those millions of forgivable pandemic loans - they're searchable. During the pandemic, news organizations sued the government to make sure it would post basic information such as names, addresses and dollar amounts. And when you dig into that data, it can take you to some interesting places...
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UNIDENTIFIED PERSON #1: Hi.
KASTE: ...Such as Matthew House, a small day shelter for the homeless on Chicago's South Side. A couple of men are watching TV. Tia Singleton is the shelter's director of case management.
TIA SINGLETON: They can come in and get out of the elements.
UNIDENTIFIED PERSON #2: (Laughter).
SINGLETON: They could stay all day, take two showers, have two hot meals.
KASTE: There's also a free mail room here. Anyone, homeless or not, can give out this address. And 50 people did when they applied for pandemic business loans. Records show that more than half of them got the money, usually $20,000, which was the standard amount for a one-person business with $100,000 in revenue. Singleton looks at the list of names.
SINGLETON: And I'm sure maybe 99% of the people on here don't have a business.
KASTE: She says nobody in government ever contacted Matthew House to ask about the 50 businesses supposedly based here.
SINGLETON: No. And that's why this is very concerning to me because if these people all have the same address, I think that should have been questioned, right?
KASTE: But to be fair, investigators have their hands full. That PPP list is full of suspicious patterns like this. There's repeated addresses, repeated names and the recurrence of certain kinds of one-person businesses that are hard to prove didn't exist. Catering comes up a lot. One study showed that Chicago had a higher rate of these suspicious loans than other big cities. It's not clear why. Lisa Noller says you have to be realistic about what the feds can do about it.
LISA NOLLER: Well, there's a resource issue.
KASTE: Noller is a lawyer who used to prosecute financial crimes for the U.S. Attorney's office in Chicago. She says the feds tend to look for cases with a good return on investment, egregious cases where someone claimed to have multiple employees and stole millions. These one-person business loans are just less interesting.
NOLLER: The federal government does not have so many prosecutors that they can pursue people who got $20,000. There's also no jail time for a $20,000 offense.
KASTE: So does this mean the small fry will get off scot-free? Not necessarily because this is where the inspectors general come in.
WILL FLETCHER: I'm Will Fletcher. I'm the inspector general for Chicago Public Schools.
KASTE: Inspectors general for public agencies often investigate fraud committed by their employees. Fletcher knew that he'd have his hands full when he saw how, during the pandemic, the feds were handing out money with few questions asked.
FLETCHER: When that happened, when we saw how little information was being collected, we knew that people would go for it.
KASTE: So Fletcher's office ran that PPP data against the list of Chicago schools' 30,000 employees.
FLETCHER: While they may have correctly assessed that the chances of an FBI agent showing up at their door were rather low, what they probably didn't count on was that local oversight agencies would be looking into these loans because they have to protect the integrity of the government entity that they work for.
KASTE: He says so far, they've identified 15 cases of fraud among school employees, and more cases are open. Things are even further along over at the Chicago Housing Authority. The inspector general there is Kathryn Richards. Her office overlooks a noisy junction for the L train.
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KASTE: Last year her office identified 23 housing authority employees who had suspicious loans or got loans for real businesses that they'd been hiding from their employer. Sixteen employees ended up being fired.
KATHRYN RICHARDS: We had a good handful say they were using the money to start a business (laughter). Others just, you know - like, my sister told me to do it. I didn't read it, but I signed it - some things like that.
KASTE: NPR reached out to the fired employees. Most didn't want to talk. One did but not on tape. We're not using her name because she's admitting to a crime. I did get caught up in it, she said. But she also said she had decades with the housing authority, and, quote, "I was a d***** good employee. The residents loved me, and I felt like what happened didn't have nothing to do with our jobs," unquote. But the IG says this does have to do with their jobs, especially since the housing authority doles out federal money.
RICHARDS: You can't administer a federal program if you've defrauded another federal program, so...
KASTE: Other public agencies are also running investigations. Chicago IG Deborah Witzburg won't say how many of the city's 36,000 employees are under scrutiny or which ones, but she says she has certain priorities.
DEBORAH WITZBURG: We are appropriately more concerned about potential abuses by people in positions of public trust - high-ranking people, you know, city officials, people in positions where they interact with or control some piece of city finances, etc.
KASTE: And this isn't just about public employees, either. People on government aid are now under suspicion. Dennericka Brooks is with Chicago Legal Aid.
DENNERICKA BROOKS: The Chicago Housing Authority is affirmatively looking at that online ledger to see which families have received PPP loans. And the CHA is using that information to terminate the subsidies of those families.
KASTE: The CHA has identified almost 9,000 loans linked to people in subsidized housing. And it's telling residents to explain pandemic aid that potentially disqualifies them for their low-income benefits. But Brooks says this is unfair, making them justify their PPPs when so many big businesses didn't have to. She says it's making people anxious.
BROOKS: The worries are, when will they start looking? When is the cutoff? Am I safe? And what can I do? And who's going to be able to help me actually preserve my subsidy if I need help?
KASTE: As to the question of how long this will hang over people's heads, Will Fletcher thinks it's going to be a while.
FLETCHER: I don't know that that concern ever gets stale.
KASTE: Besides being the IG for Chicago schools, Fletcher is also president of the Association of Inspectors General. They just had their conference in Chicago. He says around the country, every local or state IG he knows has some kind of PPP investigation going. He also predicts that the question of bogus pandemic loans will now become a permanent part of public agencies' vetting process.
FLETCHER: We think that it should be. We think that when you're hiring a new employee in any kind of a position of trust, it should be part of the standard background check - where you went to school, whether you've had an arrest. You should also look for indicators of pandemic fraud, including PPP fraud.
KASTE: So if you did bend the truth about having a small business during the pandemic, the feds are probably not coming for you. But that searchable list is not going away. Martin Kaste, NPR News, Chicago.
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