Embezzlement at the Delaware Department of Labor

Delaware public officials failed to disclose the embezzlement of $181,000 from the DOL Unemployment Insurance Trust Fund

More than a year after the 2023 embezzlement of $181,000 at the Delaware Department of Labor’s Division of Unemployment Insurance Trust Fund, and eight months after law enforcement concluded its investigation, the General Assembly and the public learned about the crime when a whistleblower came forward to the news media.  In other words, the embezzlement was kept secret from the General Assembly and from the public.

The Delaware Code has clear requirements that the Division of Accounting (Department of Finance) and the Office of the Auditor of Accounts must report illegal activity in their written reports. Their 2024 written reports did not disclose the embezzlement, as required by law.

Consequently, an investigation is needed to answer pressing questions.

  1. Why did high-ranking state officials fail to disclose the embezzlement?  
  2. Was there collusion?  
  3. Was there a cover-up? 
  4. Was there political pressure to hide the embezzlement?

The Delaware Coalition for Open Government has requested an investigation by the Delaware General Assembly, and the Civic League for New Castle County has requested an investigation by the Public Integrity Commission.  So far, no Delaware institution has investigated the “failure to disclose” problem.  The public has no answers about possible collusion, a cover-up, or political influence. 

Delaware state officials – elected and appointed – should be held to high standards of honesty and integrity and serve in the public interest.  When state officials, however, fail in their duties by ignoring laws which apply to their responsibilities of office,  DelCOG believes that it is necessary to hold officials accountable.  

Timeline

2023

  1. January 16 and March 16 – Embezzlement of $181,000 (in total) by a Delaware state employee occurred at the Delaware Department of Labor’s (DOL) Division of Unemployment Insurance Trust Fund.
  2. March 31 – Employee at the DOL’s Employer Contribution Office (ECO) discovers the embezzlement.
  3. March 31 – Numerous state officials at the DOL meet in the evening to discuss the embezzlement, including the Secretary of Labor, the Deputy Secretary of Labor, the Human Resources Administrator, and the Unemployment Insurance Administrator.
  4. March 31 – The Secretary of Labor reports the theft to the Secretary of Department of Human Resources and the Secretary of Safety and Homeland Security.
  5. April 3 – The alleged embezzler is placed on administrative leave, and subsequently, he takes his own life.
  6. April 3 and 4 – DOL officials informs the following offices about the embezzlement:
    • Office of the Governor
    • Department of Human Resources
    • Department of Finance 
    • Delaware State Police 
    • Department of Justice 
    • U.S. Department of Labor Office of the Inspector General (OIG)
    • A few members of the General Assembly who are on the Unemployment Insurance Advisory Council. (According to an interview with a state representative, the DOL told him that the embezzlement was not public information.)
  7. April 5 – DOL submits an Incidence Report to the U.S. Department of Labor OIG, since federal money is in the Trust Fund.
  8. April 6 – DOL informs the Office of the Auditor of Account about the embezzlement.
  9. April 14 – Delaware State Police Sergeant is put on the embezzlement case.
  10. August 14 – With approval by the Governor’s Office and Attorney General, the Department of Labor hires a law firm for estate litigation.
  11. August 23 – Law enforcement concludes its embezzlement investigation.

2024

  1. March – The Delaware Department of Finance’s Division of Accounting issues a written report of the accounting problems at the DOL Unemployment Insurance Trust Fund, but fails to disclose the embezzlement, as required by Delaware Code Title 29, Chapter 83, § 8304.
  2. March – Delaware State Auditor issues a written report of accounting problems at the Delaware Unemployment Compensation Fund, but fails to disclose the embezzlement, as required by the Delaware Code Title 29, Chapter 29, § 2920.
  3. May 6 – WHYY reports the embezzlement, based on information from a whistleblower, which is the first time the General Assembly and the public are aware of the embezzlement.
  4. May 29 – Delaware Coalition for Open Government (DelCOG) submits a request to the General Assembly to investigate the Department of Finance’s Division of Accounting and the Auditor of Accounts’ failure to disclose the embezzlement in their March 2024 written reports.
  5. May 31 – Senate Republican Caucus calls for a legislative investigation into the embezzlement.
  6. June 4 – A letter is sent to the leadership of the General Assembly, signed by the Secretary of Finance and the Secretary of Labor, stating that a full report about the embezzlement will be issued to the General Assembly in July 2024.
  7. June 4 – A letter is sent to the General Assembly, signed by the State Auditor, that the Office of the Auditor of Accounts is still auditing the embezzlement problem.
  8. June 6 – In a WHYY news article, leadership of the General Assembly’s Senate and House of Representatives said that they would review the upcoming “July Report” from the Secretary of Finance and Secretary of Labor before deciding to take action.
  9. June 24 – The Civic League for New Castle County submits a request to the Public Integrity Commission for an investigation of the Governor, Secretary of Finance, Secretary of Labor, and State Auditor for their failure to report and possible concealment of the embezzlement from the General Assembly and the public.
  10. July 29 – DelCOG submits a request to the US Department of Labor’s OIG for oversight of the embezzlement problem.
  11. July 30 – The “July Report” from the Secretary of Finance and Secretary of Labor was published. Originally, the July Report was to be delivered to the leadership of the General Assembly, but it was made public.  The July Report did not answer the question: why did the Division of Accounting and Office of the Auditor of Accounts fail to disclose the embezzlement in their 2024 written reports, as required by the Delaware Code?
  12. August 8 – In response to the July Report, the House Republican Party published a letter calling for an independent investigation.
  13. August 20 – The Public Integrity Commission denied a request from the Civic League for New Castle County to investigate violations of the public trust by high-ranking state officials, concerning the embezzlement problem at the Division of Unemployment Insurance Trust Fund.
  14. September 5 – Retired Delaware State Representative John Kowalko Jr. published an editorial about the embezzlement and lack of Democratic leadership to address the embezzlement problems.
  15. September 27 – The News Journal published a news article about the Public Integrity Commission’s refusal to investigate.
  16. September 29 – WHYY published a news article about the Public Integrity Commission’s refusal to investigate.