New details released in insurance theft first uncovered by WHYY News. Del. lawmakers question lack of transparency

From Philly and the Pa. suburbs to South Jersey and Delaware, what would you like WHYY News to cover? Let us know!

Delaware Senate Republicans continue to call for legislative hearings despite a new report from Gov. John Carney administration giving additional details on last year’s theft of taxpayer funding by a former state employee.

The document, which the administration only gave to Senate and House leadership, was circulated to all legislators and made available to the public by top lawmakers.

The report confirmed an exclusive report by WHYY News in May, which revealed former unemployment insurance administrator, Michael Brittingham, stole 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.

Brittingham took his own life the day he was placed on administrative leave after a supervisor with the Employer Contribution Office informed the Department of Labor’s Human Resources that Brittingham had his assistant, a contractor, issue checks to his LLC, which had the same address as a warrant issued for his arrest. Brittingham, who had been hired by DOL in February 2019, pleaded guilty to stealing nearly $42,890 from the Chimney Hill Homeowners Association in Felton. He underwent a background check shortly after being hired, which is required for people with access to federal tax information.

DOL and the Department of Finance say in the report the investigation ended in August 2023, but the heads of those departments did not report the embezzlement to state lawmakers or the public.

“They answered a lot of questions that nobody asked,” said John Flaherty, spokesperson for the Delaware Coalition for Open Government. “The two questions that we had asked, they ignored, about why they did not report this embezzlement in a timely fashion, why the news media is the one that reported it and whether there are any other instances of embezzlement that they haven’t reported.”

Senate Minority Whip Brian Pettyjohn said there wasn’t a lot of new information in the report and hearings were needed to determine why the embezzlement wasn’t disclosed to lawmakers when it was discovered.

“There are probably still some questions that some members have. There may be questions that, if we announced the hearings, the public ends up contacting us with that we can ask the departments,” he said. “But I think we have a duty as that equal branch of government … to engage in a dialogue and have these questions answered to our satisfaction.”

Senate Majority Leader Bryan Townsend said he wasn’t shutting the door on hearings, but said they would likely be held next year, if at all.

“In some ways to me, legislative hearings do not seem necessary because I think we have a path forward as outlined in the report,” he said. “But there might be other questions that we want to ask. I’m happy to hear from legislative colleagues about that.”

Labor Secretary Karryl Hubbard and Finance Director Rick Giesenberger said that DOL has become the administrator of Brittingham’s estate. His probate assets total approximately $101,700. However, the assets are tied up, meaning it’s unclear how much the state can ultimately recover in stolen funds. The estate is expected to close later this year.

Townsend and House leaders said this looks like an isolated incident. However, former state Auditor Tom Wagner, who held the position for about 30 years, recently said current state Auditor Lydia York’s investigators are likely looking into the real possibility that this kind of embezzlement of the UI trust fund could happen again.

“That’s a big pool of money. And to me, it’s very vulnerable money because if you don’t have the controls in place and you work there, you’re gonna know if the controls are good or not,” Wagner said. “If you don’t get greedy, you can steal $50,000 to $80,000 a year and nobody’s going to notice.”

The department heads said work is underway to modernize the existing outdated systems, using $60 million in COVID-19 funding for that work, which is expected to take until 2027 to put into place. The agencies blamed the pandemic for stressing an already antiquated system, but a review of state governments dating back to 2019 show flat state and federal funding for the unemployment insurance office.

“The division was critically underfunded and operating in a structural deficit relying on funds from penalties and interest collected from delinquent employers to fill the funding gap,” the report states.

The Unemployment Insurance Office does not receive money from the state’s general fund and the report said the U.S. Department of Labor supports about 70% of its operations. The office relies on relying on funds from penalties and interest collected from delinquent Delaware employers to fill that funding gap. The UI office was downsizing when the pandemic hit.

The two agencies offer several ideas to make sure a similar theft by a state worker doesn’t happen again. Those include future legislation allowing DOL to be notified of criminal activity of a current employee reported to the State Bureau of Identification or FBI and expand the availability of ethics training to state workers.