A businessman who was paid millions of dollars by the state of Illinois to help children, addicts and other needy people actually did little or no work for the money, investigators said Monday, and he got away with it partly because of his close relationship with "Mac" — Erwin McEwen — the recently departed head of the state's child-welfare agency.
State inspectors report that George E. Smith billed several government agencies for work done by non-existent employees, submitted fake papers, forged people's signatures, turned in fraudulent expense accounts and falsely claimed he was a psychiatrist. They also found that he administered psychotropic drugs to children without permission and without determining the proper dosages.
The report by the state's executive inspector general found that George E. Smith and his various organizations collected $18 million in state grants from 2008 through 2011. Smith often rebuffed questions from employees at the Department of Children and Family Services by saying he only answered to "Mac."
"Director McEwen created a situation that was ripe for a vendor such as Dr. Smith to enrich himself and inflate costs by billing for 'ghost' positions and billing various agencies for the same services," said the report, a result of an investigation by the DCFS inspector and the state's executive inspector general.
McEwen, who described Smith as his "personal friend and mentor," stopped cooperating with investigators in May, the report said, although state employees are required to aid such probes. He announced his resignation in August and left DCFS at the end of September.
Gov. Pat Quinn said Monday that McEwen "was given the opportunity to resign and he took that opportunity." Quinn, appearing at an unrelated news conference, did not take any other questions on the issue and did not explain why he didn't publicly disclose the reason for McEwen's departure.
Brooke Anderson, a spokeswoman for the Democrat, said the law barred Quinn from disclosing the misconduct. However, that law applies to early release of "investigatory files and reports" from the inspector general; it does not prohibit a governor from saying he believes a member of his Cabinet is mismanaging an agency.
Anderson said all contracts and grants to Smith were halted and that DCFS is taking steps to make sure nothing like this happens again. She could not describe the steps that are being taken.
McEwen and Smith did not return messages seeking their comment on the allegations.
Inspectors recommended the state seek criminal prosecution of Smith and take him to court in an effort to recover the grant money.
The misconduct went beyond DCFS, investigators said. Chicago State University, the Department of Human Services and the State Board of Education all "paid Dr. Smith grant funds with little or no effort to determine whether services were actually provided."
The investigators concluded that Smith:
— submitted the same documents as proof that he had done work on two different grants for two different agencies.
— claimed payment for therapists and consultants who apparently did not exist.
— described himself as a psychiatrist in official forms, even though he is not a medical doctor or psychologist.
— overstated expenses and collected reimbursement for improper expenses like liquor and cable TV.
"Dr. Smith's fraud continued for so long, in part, due to lack of DCFS oversight. At least one annual $450,000 DCFS grant awarded to him went completely unmonitored for years," investigators reported.
DCFS spokesman Kendall Marlowe said the agency has begun a review to determine how such a problem can be prevented in the future. He said the lax oversight found by investigators is "unacceptable."
Marlowe said DCFS will "take whatever measures are available to make the taxpayers whole." He said he could not comment on whether criminal charges are being discussed.
Marlowe also said he did not know yet what disciplinary steps would be taken against three DCFS employees, not including the former director, who were cited for misconduct in the report.