Failure to report embezzlement was a big mistake

The Delaware Coalition for Open Government – a nonprofit organization that promotes transparency and accountability in government – believes that it’s about time some elected and appointed Delaware officials provide forthright answers about the embezzlement problem at the Department of Labor’s Division of Unemployment Insurance Trust Fund.  

Transparency and trust are the operative words here: the citizens of Delaware have the right to know how, and how well, state and federal funds are managed by our state offices and agencies in order to have full confidence and trust in our state government. We need more transparency because things don’t add up.

Here’s a timeline of the embezzlement:

January 2023: Embezzlement of $181,000 in state and federal funds occurred at the Division of Unemployment Insurance Trust Fund

March 2023: The embezzlement was discovered by a Department of Labor employee

April 2023: The Department of Labor reported the embezzlement to a few state offices and to the U.S. Department of Labor’s Inspector General.  

August 2023: Law enforcement concluded its investigation

March 2024: The Division of Accounting and the Office of the Auditor of Accounts had yet to mention the embezzlement either in their 2024 written reports (published on the Office of the Auditor of Accounts website) or as a separate item, as required by the Delaware Code

May 6, 2024: For more than a year, facts of the embezzlement had been kept under wraps by the Department of Labor, the Department of Finance and the Office of the Auditor of Accounts. But when a whistleblower came forward, the embezzlement was disclosed in a May 6 WHYY news article, the first time the public and the entirety of the General Assembly learned about the crime

May 29, 2024: The Delaware Coalition for Open Government requested an investigation by the General Assembly

May 31, 2024: The Republican Senate Caucus called for an investigation

June 4, 2024: A letter to the General Assembly, signed by the state auditor, stated the news media had caused misunderstandings amongst the Delaware public

June 4, 2024: A letter to the leadership of the General Assembly, signed by the secretaries of labor and finance, pointed fingers at the news media for causing confusion by conflating the outside auditor’s inability to report appropriate audit evidence (because of deficient internal controls in the Division of Unemployment Insurance) with the failure to report a crime: the embezzlement of $181,000

June 5, 2024: The Republican House Caucus called for an investigation

June 24, 2024: The Civic League for New Castle County requested an investigation by the Public Integrity Commission. 

The only misunderstanding and confusion seem to be on the part of state officials who don’t seem to get the point. The news media, the members of the General Assembly and the public clearly do understand the difference between written reports about the Unemployment Insurance Trust Fund’s deficient accounting practices and our not having been informed about embezzlement of state and federal funds. 

Yes, embezzlement is a sensitive matter. Yes, time was needed for law enforcement to mount and complete an investigation. Yes, it was important to try to recoup the stolen funds. And yes, it is important to institute proper procedures to get on top of the poor internal controls and lack of proper accounting in the Division of Unemployment Insurance.  

But regardless of the timeline, the actions taken and recent calls for further investigation, two questions remain unanswered: 

• Was it merely coincidental that, for more than a year after the theft was known, state officials in three separate offices – labor, finance and accounting – failed to specifically report the embezzlement of $181,000 to the General Assembly and to the public?
• Why would state officials ignore the Delaware Code, which requires the disclosure of illegal activity? 

The secretaries of labor and finance (appointed by and directly reporting to the governor), and the state auditor (elected to serve the people of Delaware) each swear or affirm the oath of office to act in the public interest. Yet, their failure to report the theft of funds, especially after law enforcement ended its investigation in August 2023, does not enhance the public’s confidence or trust in our state government.

With numerous calls for investigation, it seems that failure to report the embezzlement was a big mistake. 

It’s time for a full accounting by all concerned, including the secretary of labor, the secretary of finance, the state auditor, as well as the governor, to provide a clear explanation and full disclosure of why an illegal act was not reported to all of our state legislators and to the public for more than a year. The citizens of Delaware deserve no less.