Why an open government group is calling on Delaware to investigate embezzlement problems

An open government group has asked the Delaware General Assembly to investigate an undisclosed embezzlement problem at the state Department of Labor's Division of Unemployment Insurance.

John Flaherty, Delaware Coalition for Open Government board member, said the investigation request follows a May 6 story by WHYY News about a former Delaware Department of Labor supervisor who embezzled more than $181,000 from the state's unemployment insurance trust fund in 2023.

The state did not reveal the embezzlement despite state law specifying the disclosure of illegal activity in their official reports, Flaherty said.

"The disclosure of all this came about through the article on WHYY radio," he said. "We felt that the news media should not have to be the one that would disclose these kinds of violations of public trust."

The Delaware Department of Labor and state Auditor's Office were working to provide statements regarding the issue Thursday morning.

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According to the WHYY News' May 6 story, the state's Labor Department "acknowledged that former unemployment insurance administrator, Michael Brittingham, stole the money last year. Brittingham took his own life in April 2023 shortly after he was told he was under investigation."

According to his obituary, Brittingham worked for the Delaware Department of Labor as a tax administrator. He was 37 at the time of his death on April 3, 2023. He'd been living in the Harrington area.

Embezzlement discovery

The Delaware Department of Labor did not provide a response to questions regarding this issue Thursday.

State officials say the missing unemployment insurance funds were initially discovered by a labor department employee last year, and the case was referred to the Department of Justice. The justice department did not respond to requests for comment Thursday.

When Delaware Auditor of Accounts Lydia York went to perform an annual comprehensive financial audit of the Division of Unemployment Insurance, internal and external auditors found “material weaknesses and deficiencies in the internal controls” of the division that prevented completing an audit, York’s policy advisor Sam Barry said.

That resulted in the auditor’s office releasing a “special report” in March that alerted state officials to “an unprecedented disclaimer of opinion” and independent auditors finding that the unemployment compensation fund was “not auditable for fiscal year 2023,” according to the report.

Barry said the office lacked adequate, detailed records on the “day-to-day accounting” of the fund, which, as of June 30, 2023, had reported cash assets of about $390 million through contributions from the federal government and Delaware workers.

“We don’t have detailed day-to-day records of money coming in and money going out, and we need those records to be complete and accurate in order for an audit to be completed,” Barry said.

He said that auditors are working with the Division of Unemployment Insurance and outside certified public accountants to piece together the accounting records, and once complete, the state auditor will go back and perform a comprehensive audit of the division.

A breach of public trust

According to the letter DelCOG sent to state lawmakers on Wednesday, it violates Delaware’s state code to withhold the disclosure of embezzled state funds. The failure to disclose this information “severely damages transparency, accountability and confidence” in state government, the group said. It’s also a breach of the public’s trust.

“Additionally troubling is that the embezzled funds consisted of contributions not only by Delaware employers, but also by the federal government,” according to the letter obtained by Delaware Online/The News Journal.

Flaherty said there could be more than one instance of staff embezzling for all they know.

“So we'd like to find out how this situation occurred, what they're doing to stop it now and what they plan to do in the future,” he said.

DelCOG put the onus on the auditor's office for having needed to flag issues of embezzlement in the report it issued in March.

Barry, the auditor's policy advisor, said the "special report" was not a "mandated report," and thus the office "chose to file and make public and send to the members of the General Assembly" in order to flag the "disclaimer of opinion" and explain why the office couldn't perform an audit on the division last year.

By asking the General Assembly to exercise its “legally allowable oversight” of these state agencies, Flaherty said the hope is to give the public some answer about why this incident happened and assurance that it will not happen again.

“We're not looking to know the details, because that's really of no value,” he said. “But we just want to make sure that our oversight agencies are acting in the public interest and not trying to cover anything up here.”

As of 11 a.m. Thursday, Flaherty said he’d not heard from any state lawmakers.

“Nobody has responded yet,” he said. “But we hope that they take this issue seriously and they give it the time and attention that it deserves to make sure that the public has full confidence that the public monies are being well protected and not just misused as it happened in this particular case here.”

State Sen. Laura Sturgeon, who is the lead sponsor on Senate Substitute 1 for Senate Bill 21 that would create an Office of the Inspector General, said while the General Assembly may have authority to investigate, lawmakers don’t have the expertise nor does the legislative body have the staff to do a true investigation.

Sturgeon said she is “incredibly sympathetic” and agrees that the issue should be investigated.

“This is the exact reason why I introduced Senate Bill 21 creating an Office of the Inspector General because situations like this keep coming up,” she said. “It would be incredibly helpful, and hopefully bring a greater sense of trust and confidence in government if we had a completely independent office whose sole job is to do these investigations.”

The Delaware senator noted that legislators could potentially convene hearings, similar to what lawmakers did following the botched school water testing for lead in 2022, that could take “them to task on what happened and what went wrong and what we could do better in the future.”

Got a tip? Contact Amanda Fries at [email protected]. Follow her on X at @mandy_fries. Send tips or story ideas to Esteban Parra at (302) 324-2299 or [email protected].

This article originally appeared on Delaware News Journal: Stolen money at Delaware labor department prompts investigation calls