Former Delaware state employee stole $181K from unemployment trust fund

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A former Delaware Department of Labor supervisor embezzled more than $181,000 from the state’s unemployment insurance trust fund in 2023. The state did not reveal the theft publicly until officials were contacted by WHYY News, following a tip that money had been stolen from the trust fund.

Delaware employers pay into the fund, which pays out jobless benefits. After being contacted by WHYY News, the state’s DOL 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.

Some state officials were dismayed that this incident was not made public.

“I’m not sure how or why they tried to keep it quiet other than they don’t want to bring attention to the fact that everything is really screwed up,” said Laura Henderson, a tax collection manager for the state’s Unemployment Insurance Office. “It’s really crazy there, really crazy.”

Brittingham, who was 37 years old when he died, joined the state DOL in February 2019 as a field agent. He graduated from the University of Delaware in 2008 with a bachelor’s degree in business and a minor in theological studies, according to his obituary. His Facebook page and LinkedIn page said he was also a past member of a few local volunteer firefighter associations and on the integrity steering committee for the National Association of State Workforce Agencies.

Delaware’s Auditor of Accounts Lydia York said the fund was “unauditable” because independent auditors could not prove how much money was actually in the state’s UI trust fund for Fiscal Year 2023. York’s report comes after accounting firm CliftonLarsonAllen issued a “disclaimer of opinions,” meaning it couldn’t rely on the state’s documentation to confirm bank statements that there was about $390 million in the reserve.

There was no mention of a theft of taxpayer funds in York’s report, which came nearly a year after the theft was discovered. AOA spokesperson Samuel Barry said office policy  is to neither confirm or deny whether there’s an active investigation. He would not answer whether the investigation had been closed.

WHYY News requested interviews with York, DOL Secretary Karryl Hubbard and UI Office Director Darryl Scott, but was told they were unavailable.

The DOL said a background check was done upon Brittingham’s hire in early 2019, which is required for people with access to federal tax information. Yet, a Delaware State Police arrest warrant stated Brittingham had been making hundreds of illegal transactions as treasurer of the Chimney Hill Homeowners Association in Felton. The warrant said payments were made to various stores, banks and NEWAGE Management LLC, his company dating back to the summer of 2018. Brittingham’s name and address on the LLC paperwork filed with the Delaware Division of Corporations match the Superior Court records.

The August 2019 warrant alleges that he stole nearly $42,890 between June 2018 and April 2019. Brittingham pleaded guilty to a Class G felony for theft of $1,500 or more. He received a two-year suspended prison sentence and spent a year on probation, court filings stated. Superior Court Judge Jeffrey Clark ordered Brittingham remain on probation until he repaid the HOA the money he owed them.

Brittingham’s wages were garnished by the Superior Court, but it’s unclear how much restitution the HOA members received. Board President Mary Fallon said they got some of the money back, but didn’t respond to further requests for information. Other board members declined to comment or didn’t return calls seeking comment. The state court system declined to give the amount of restitution he paid, citing exemptions to open records.

While he was serving his sentence for felony theft, Brittingham was promoted to supervisory roles within the state agency, becoming unemployment insurance office administrator in 2021. DOL said employees are expected to self-report criminal convictions.

Ashley Ronan, a childhood friend who knew Brittingham for 31 years, said she got a message out of the blue from him in the fall of 2022 asking if she was looking for a job. He was seeking to hire an assistant.

“I’m like, ‘I have zero experience in this field,’ and he was like, ‘That’s okay, I’ll teach you everything,’” she said. “Obviously, he’s a businessman. He works for the state. He’s a friend. I had no reason to doubt him.”

Ronan said she was hired through a staffing company without a single interview. Her job began with checking Brittingham’s emails and taking notes in meetings, Then it expanded to tasks that some UI employees said contractors had no place doing, such as cutting refund checks and processing stop payments.

Employers have tax accounts with the Department of Labor and they pay into the UI trust fund based on the wages of their employees. If they pay too much, they get credits, which entitles them to a refund.

Brittingham told some of his UI subordinates in January 2023 that an employer bought a closed LLC and acquired the credits on the unemployment account, Laura Henderson stated in a written statement given to retired Delaware State Police Sgt. Evan Holmes as part of the theft investigation and reviewed by WHYY News. DOL said credits in this case were added to the fraudulent account established by Brittingham.

According to statements given to Delaware State Police, internal DOL emails and check registries, he insisted they change the name of the business’ tax account in the system to a new name: NEWAGE Management LLC.

“The accountant is upset and they have a screaming match with Michael (Brittingham), who is trying to bully us to change the name on the account,” Henderson’s police statement said.

Delaware State Police denied an open records request for a copy of the police report.

The documents obtained by WHYY News reveal that after Brittingham got another UI accountant to change the name on the account, he moved to have his friend Ashley Ronan trained to cut refund checks.

Ronan said she was asked by Brittingham to make two checks out to NEWAGE Management LLC, one for $86,827 and another for $94,357. She said she was not aware until she was interviewed by state police that the checks went to Brittingham’s company. She believes she was put in that position because of their longtime friendship.

“I think that he knew that I would trust him,” Ronan said. “That I wouldn’t question it because I wouldn’t know what I was supposed to question. I didn’t know what was not normal, or what flags to look for. And I think that he knew that. I think that he knew that I would be the perfect person.”

She and Henderson said between the fall of 2022 and April 2023, Brittingham took his family on a cruise and bought a truck and camper.

The UI Office connected the fraudulent account to Brittingham’s LLC in late March after seeing the 2019 arrest warrant listed his old address and reported it to top DOL leadership.

Ronan said she was let go on from her job as a contractor with DOL on April 3 of last year.

“I was working from home that day,” she said. “I couldn’t get into my computer. So I was messaging [Brittingham] and I received a phone call. I said, ‘Hey, I can’t get in.’ So then he said, ‘Alright, I’ll send a message.’ And then I got the phone call that my contract was terminated with the state.”

Brittingham took his life later that day. Henderson said she was told Brittingham was placed under investigation on April 3.

Ronan said he was working from Dover that day. She said Holmes also interviewed her as part of the investigation and believes she was considered a target at one point.

“I felt that I was being set up and I was gonna go to jail,” Ronan said. “And it was really scary because you never know at what point, if their decision changed, they could have arrested me. So just having to deal with that not knowing and then knowing that I didn’t do anything wrong. And I was just waiting for the hammer to drop.”

DOL said the money Brittingham stole has not been returned to the fund. Ronan said the state needs to be held accountable.

“The legal processes to recover fraudulently obtained funds takes time, but the DOL continues to work with our legal team to recoup funds from the fraudulent transaction,” spokeswoman Natasha Percival-Rawlins said.

It’s unclear whether there have been any steps taken to prevent a similar type of trust fund embezzlement from happening again.

Auditor Lydia York’s special report called out an ongoing lack of “robust internal controls,” over the fund. She also cited mounting problems over several years that failed to be addressed due to factors including a lack of oversight and outdated systems. York took the heads of DOL and the Division of Accounting to task in her report.

“Management contributed to a critical accounting situation in the months and years preceding the current fiscal year,” the report said.

The AOA Office, UI Office and Department of Finance said efforts are ongoing to modernize the office’s antiquated system. State law changed in June 2023 to align with federal IRS policy that shortens the time between background checks from 10 years to five years. That took effect in June 2023.

Henderson said she hopes state leaders give more oversight over the trust fund and address other issues within the office.

“We would love for there to be transparency,” she said. “For us to just put it out in the open like, ‘Hey, we’re drowning and let’s come up with a plan here.’”