DOVER — Delaware lawmakers received a 20-page report Tuesday regarding the state’s unemployment insurance trust fund, which details how an administrator embezzled more than $181,000 from its coffers and how agencies have addressed the issue.
The report from secretary of labor Karryl Hubbard and finance secretary Rick Geisenberger outlines challenges the Division of Unemployment Insurance faced before and after the pandemic, a timeline of the 2023 theft of funds and state Auditor Lydia York’s March findings that determined the fund was “unauditable.”
Both secretaries acknowledge that the administrator died after the theft was discovered and that they did not include his name in the report out of respect for his surviving family.
The Department of Labor identified the administrator as Michael Brittingham in media reports in late May.
“It appears law enforcement does not intend to charge any party with a crime,” the letter accompanying the review reads. “As outlined in the report, our priorities are to put in place appropriate controls to prevent such events from reoccurring, maximize the prospect of recovery of amounts stolen, work toward an unmodified opinion of the (annual comprehensive financial report) as it relates to the UI Trust Fund, and address the issues impacting DOL financial systems and processes outlined in our original letter to you.”
Ms. Hubbard and Mr. Geisenberger also wrote that progress is being made, as the state and Division of Unemployment Insurance have contracted the nationally recognized accounting firm BDO USA to assist in “developing appropriate control systems, policies, and procedures.”
The issue of the stolen funds in 2023 was made public via media reports in May 2024 and garnered pushback about a lack of transparency from lawmakers and groups like the Delaware Coalition for Open Government.
The report released Tuesday explains, in part, why public disclosure of the stolen funds was not immediately made. It says the Department of Labor notified the Department of Justice, the Division of Accounting, the auditor of accounts and the U.S. Department of Labor and its inspector general within days of the discovery of the theft.
“As with any other investigation involving state personnel and particularly alleged criminal conduct, it was important to maintain an appropriate level of confidentiality and follow appropriate protocols to ensure a full and fair investigation, to determine the extent others may have been involved in the theft, to provide time to put in place appropriate controls and training programs to try to prevent such actions from reoccurring, and to maximize the prospect of recovery of the amounts stolen,” the report reads. “Many of these efforts remain underway.”
According to the findings, on March 31, 2023, a staff member in the Employer Contributions Unit of the Division of Unemployment Insurance informed the Department of Labor’s human resources division about suspicious activity from the administrator.
Specifically, the allegations were that he directed a temporary employee to issue a refund check to an employer account that shared his home address. The report also included a document that details alleged theft by the administrator while he was acting as treasurer of a homeowners association.
It also states that the division’s director was able to confirm that, in January and March 2023, two checks totaling over $181,000 had been issued to a business account at Mr. Brittingham’s home address.
Also March 31, the theft was reported to the secretaries of the departments of Human Resources and Safety and Homeland Security.
Two days later, DOL leadership finalized a plan to place the administrator on paid leave, so law enforcement could investigate. On April 3, the report says, division leadership met with the administrator to inform him of his suspension, and he denied any wrongdoing. Mr. Brittingham died later that day.
Following his death and the subsequent investigation, no one was charged with a crime because there “was not credible evidence that any other party knowingly assisted the perpetrator.”
The investigation then transitioned to a civil case Aug. 23, 2023, and the Department of Labor moved to recoup lost funds through Mr. Brittingham’s estate, the review says. The agency was appointed administrator of the estate Nov. 15, 2023, notice of which was posted in the Daily State News’ Nov. 29, Dec. 6 and Dec. 13 editions.
According to the account released Tuesday, the estate included assets of nearly $102,000 — 56% of the stolen funds. But, because the assets are unliquidated values and do not account for all the expenses that will come out of the estate, the exact amount the Labor Department will recover is unknown.
In addition to these ongoing remediation efforts, agencies are modernizing the Unemployment Insurance Division’s systems, including $60 million in American Rescue Plan Act funding to upgrade its tax, reporting and benefit structures.
Other efforts include House Bill 433, which awaits Gov. John Carney’s signature. It would update the benefit wage ratio methodology with one used in 19 other states. The report also urges lawmakers to pass legislation to implement record-of-arrest and prosecution checks for key employees and the restructuring of the division’s staff to support its accounting needs.
After the departments of Labor and Finance committed to releasing findings on the theft in June, Senate Republicans called for a legislative investigation into the matter.
No such meetings occurred during the final month of the legislative session, but House of Representatives’ Democratic leaders stated Wednesday that the process is “extensive and ongoing” and that lawmakers would “continue to work with DOL to ensure our UI system is robust, accountable, and most importantly, able to provide the necessary support to those in need.”
“After reviewing the detailed report, it is clear that the incident, while deeply troubling, was an isolated one. The Department of Labor, in conjunction with other state agencies and law enforcement, has taken comprehensive steps to address the issue, recover the stolen funds, and implement measures to prevent future occurrences,” their statement notes.
Meantime, on July 25, Delaware Coalition for Open Government board member John Flaherty wrote to the Office of Inspector General at the U.S. Department of Labor to request its oversight of the auditing and accounting problems for the trust fund.
The General Assembly’s full report can be found at legis.delaware.gov .
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