CHICAGO — The Chicago Public School system’s free lunch program cost taxpayers more than $100 million last year. But a CBS 2 investigation with the Better Government Association has found apparent fraud. And as CBS 2 Investigator Pam Zekman reports, lax rules have made it easy.

The free lunch program was created to make sure poor children get the nutrition they need to learn.

A parent fills out an application listing the number of people living in their household and their family’s gross income.

By signing the form, the applicant certifies that all the information is accurate and all the income reported. The application warns that if they purposely give false information, they may lose benefits and may be prosecuted for fraud.

The U.S. Department of Agriculture has income caps that determine eligibility. For example, for a family of six, it’s $38,000 a year.

But CBS 2 learned school employees and others apparently get around the cap by under-reporting or failing to report their salaries, or the other parent’s salary.

For example, Maria Mouroukos, a math teacher at North Grand High School, who earned $66,404, according to 2009 CPS budget records.

And Virgilio Santos, another math teacher CBS 2 tried to talk to as he left North Grand. At first he denied he was even Santos. But his nametag confirmed he was.

“How can you qualify for the free lunch program with a salary like yours, more than $70,000?” Zekman then asked Santos, but he drove away.

Santos’ wife told CBS 2 she mistakenly failed to include his CPS income on the free lunch application she filed. He also earned about $30,000 more teaching English as a second language for City Colleges. Santos isn’t talking.

Neither is Danita Howze. As a CPS Instructional Supervisor, she earned $94,095 last year and $15,000 more for teaching an after school program — a total of $110,000, according to 2009 CPS budget records.

These are just a few of the examples found by the CBS 2 Investigators working in cooperation with the Better Government Association.

BGA Executive Director Andy Shaw said, “It’s disgraceful for people who work in a school system to be scamming that same system by putting their kids in a free lunch program when they’re not eligible.”

Parents of other children on the free lunch program include a deputy sheriff salaried at $61,000 last year, a $68,000 a year Chicago policeman, and an $88,000 year Chicago Park District foreman.

“Everyone who does that should be disciplined and punished in some way,” Shaw said.

Incredibly, USDA rules prohibit schools from verifying a parent’s income when they apply.

“This is bureaucracy run amuck,” Shaw said. “To have a program like this with no income verification is an invitation for everyone to jump on the bandwagon and get the free lunch.”

The federal rules do require that each year school districts verify the income on 3 percent of the applications and report the results to the Illinois State Board of Education.

Records we obtained from ISBE show that the most recent CPS audit of 1,500 suspect applications found 50 percent were ineligible.

A CPS spokeswoman says that with over 300,000 free lunch applications submitted each year, and USDA regulations that prohibit income verification, the school system “must rely on the applicant’s integrity and honesty regarding the reported income.”

But, she said, “We are troubled that district employees would try to circumvent the process and have launched an internal investigation into the matter.”

>> Read the partner story at CBS2 Chicago.