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Oklahoma AG calls for Secretary Zumwalt's resignation after release of investigative audit

An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission

Oklahoma AG calls for Secretary Zumwalt's resignation after release of investigative audit

An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission

ALL RIGHT. THANKS VERY MUCH, DAMON. APPRECIATE THAT. LATE BREAKING TODAY, MISMANAGEMENT AND A LACK OF TRANSPARENCY COSTING MILLIONS OF TAXPAYER DOLLARS. THAT IS ACCORDING TO OUR STATE’S AUDITOR THIS AFTERNOON, RIGHT NOW WE’RE JOINED BY KOCO ABIGAIL OGLE IN STUDIO AND ABBY, THE STATE’S ATTORNEY GENERAL, IS CALLING ON A RESIGNATION THIS EVENING. GUYS. THAT’S RIGHT. THIS AFTERNOON, STATE AUDITOR CINDY BIRD ANNOUNCED MILLIONS OF DOLLARS IN QUESTIONABLE COSTS, MOSTLY DEALING WITH PANDEMIC RELIEF MONEY. SHE ALSO CALLED INTO QUESTION THE PROCEDURE SET UP BY ON. YES, THAT’S THE STATE’S OFFICE OF MANAGEMENT AND ENTERPRISE SERVICES. THEY ARE SUPPOSED TO EVALUATE PRIVATE VENDORS THAT THE STATE USES, BUT THE AUDIT CALLS TWO SPECIFIC VENDORS INTO QUESTION. TONIGHT, AG GENTNER DRUMMOND IS CALLING FOR SECRETARY SHELLY ZUMWALT’S RESIGNATION. SHE WAS THE LEADER OF THE UNEMPLOYMENT OFFICE, WHICH HAD A CONTRACT WITH A SOFTWARE COMPANY. THAT COMPANY’S VICE PRESIDENT IS HER HUSBAND, DRUMMOND SAYS SHE APPROVED MILLIONS OF DOLLARS AND THAT WAS A CONFLICT OF INTEREST. QUOTE, THIS LEVEL OF SELF-DEALING REPRESENTS AN UNFORGIVABLE BREACH OF TRUST THAT DISQUALIFIES MISS ZUMWALT FROM OVERSEEING THE EXPENDITURES OF OUR TAX DOLLARS. WE SPOKE TO THE STATE AUDITOR TODAY ABOUT HER FINDINGS. THIS WAS ALLOWED BECAUSE OMB’S FAILED TO MONITOR THE PROFIT AS THEY WERE REQUIRED TO DO BY FEDERAL LAW TO ENSURE THE NONPROFIT THAT WAS SPENDING THE MONEY IN ACCORDANCE WITH THE GRANT GUIDELINES, OMS HAD THE RESPONSIBILITY TO ENSURE THAT THE EMERGENCY RENTAL ASSISTANCE FUNDS WERE SPENT IN ACCORDANCE WITH GRANT GUIDELINES. WE HAVE REACHED OUT TO ZUMWALT’S OFFICE FOR COMMENT. AFTER THE AG IS CALLING FOR HER TO RESIGN. WE HAVE NOT YET HEARD BACK, BUT AGAIN, THIS IS BRAND NEW INFORMATION AS THIS STORY DEVELOPS. MAKE SURE YOU JOIN US TOMORROW MORNING. CINDY BYRD, THE STATE AUDITOR WHO JU
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Oklahoma AG calls for Secretary Zumwalt's resignation after release of investigative audit

An audit highlights a conflict of interest during Shelley Zumwalt's tenure as executive director of the Oklahoma Employment Security Commission

Oklahoma's attorney general called for the resignation of Secretary of Tourism Shelley Zumwalt after the findings of an investigative audit were released Tuesday. >> Download the KOCO 5 AppAttorney General Gentner Drummond said the findings from State Auditor and Inspector Cindy Byrd revealed troubling patterns of mismanagement that is costing taxpayers millions of dollars each year. “One of the most egregious findings is the wholly inappropriate and potentially unlawful actions of Secretary Shelley Zumwalt, who used her position as executive director of OESC to approve millions of dollars in contracts for a software company where her husband was a vice president, " Drummond said in a statement. "This level of self-dealing represents an unforgiveable breach of trust that disqualifies Ms. Zumwalt from overseeing the expenditure of our tax dollars. She should resign immediately and cooperate fully with my office as I seek to determine whether any Oklahoma statutes were violated."On Tuesday, Byrd released the findings of the fiscal year 2022 audit of the Office of Management and Enterprise Services. In that audit, Byrd accused Zumwalt of failing to disclose that her husband was employed as the vice president of Phase 2 Development, which is a software company contracted to update and stabilize the Oklahoma Employment Security Commission's computer network mainframe. The audit said $7 million was paid to the software company to stabilize and update the OESC mainframe. "Subsequent contracting and payments were transacted by OESC and signed by Shelley Zumwalt, who was appointed as the Executive Director of OESC in May 2020. By April 2022, Zumwalt had approved additional contracts and change orders to P2 totaling $8.5 Million," said a release detailing Byrd's findings. "During this period, Zumwalt failed to disclose the fact that her husband, John Zumwalt, was employed as the Vice-President of P2. As the Director of OESC, Zumwalt was required to complete annual forms attesting that no related party transactions existed in the performance of her duties regarding the expenditure of funds. In three separate instances, Zumwalt checked ‘No’ on these forms."Get the latest news stories of interest by clicking here.Federal law requires any entity receiving federal grant money to disclose any conflict of interests in writing, according to Byrd. Zumwalt finally disclosed her husband's employment with Phase 2 Development after she was named the executive director of tourism in 2022. Byrd's audit also highlights systemic problems within OMES, as well as millions of dollars in questionable costs. Fiscal year 2022 also saw disregard for the competitive bidding requirements and the systemic lack of oversight and accountability, according to the findings. The majority of the problems are within the $1.2 billion in federal Coronavirus relief funds that Oklahoma received in March 2020, as well as the $276 million Oklahoma received for the Emergency Rental Assistance program during fiscal year 2021 and fiscal year 2022. The findings highlight millions of dollars earmarked for these programs were spent on questionable costs. "The Office of State Auditor has learned through its audit that questionable conduct has led to an abuse of taxpayer dollars and I am sounding the alarm," Byrd said in the release. The full audit can be found here. Top Headlines OKC police investigating after 5 people, including 2 children, found dead at Yukon home Caught on camera: Alligator spotted outside a Florida doorstep 'Everybody loved them': Neighbors describe residents of Yukon home where 5 found dead Pregnant woman walks out of second-story OKC apartment to find stairs gone

Oklahoma's attorney general called for the resignation of Secretary of Tourism Shelley Zumwalt after the findings of an investigative audit were released Tuesday.

>> Download the KOCO 5 App

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Attorney General Gentner Drummond said the findings from State Auditor and Inspector Cindy Byrd revealed troubling patterns of mismanagement that is costing taxpayers millions of dollars each year.

“One of the most egregious findings is the wholly inappropriate and potentially unlawful actions of Secretary Shelley Zumwalt, who used her position as executive director of OESC to approve millions of dollars in contracts for a software company where her husband was a vice president, " Drummond said in a statement. "This level of self-dealing represents an unforgiveable breach of trust that disqualifies Ms. Zumwalt from overseeing the expenditure of our tax dollars. She should resign immediately and cooperate fully with my office as I seek to determine whether any Oklahoma statutes were violated."

On Tuesday, Byrd released the findings of the fiscal year 2022 audit of the Office of Management and Enterprise Services. In that audit, Byrd accused Zumwalt of failing to disclose that her husband was employed as the vice president of Phase 2 Development, which is a software company contracted to update and stabilize the Oklahoma Employment Security Commission's computer network mainframe.

The audit said $7 million was paid to the software company to stabilize and update the OESC mainframe.

"Subsequent contracting and payments were transacted by OESC and signed by Shelley Zumwalt, who was appointed as the Executive Director of OESC in May 2020. By April 2022, Zumwalt had approved additional contracts and change orders to P2 totaling $8.5 Million," said a release detailing Byrd's findings. "During this period, Zumwalt failed to disclose the fact that her husband, John Zumwalt, was employed as the Vice-President of P2. As the Director of OESC, Zumwalt was required to complete annual forms attesting that no related party transactions existed in the performance of her duties regarding the expenditure of funds. In three separate instances, Zumwalt checked ‘No’ on these forms."

Get the latest news stories of interest by clicking here.

Federal law requires any entity receiving federal grant money to disclose any conflict of interests in writing, according to Byrd. Zumwalt finally disclosed her husband's employment with Phase 2 Development after she was named the executive director of tourism in 2022.

Byrd's audit also highlights systemic problems within OMES, as well as millions of dollars in questionable costs. Fiscal year 2022 also saw disregard for the competitive bidding requirements and the systemic lack of oversight and accountability, according to the findings.

The majority of the problems are within the $1.2 billion in federal Coronavirus relief funds that Oklahoma received in March 2020, as well as the $276 million Oklahoma received for the Emergency Rental Assistance program during fiscal year 2021 and fiscal year 2022.

The findings highlight millions of dollars earmarked for these programs were spent on questionable costs.

"The Office of State Auditor has learned through its audit that questionable conduct has led to an abuse of taxpayer dollars and I am sounding the alarm," Byrd said in the release.

The full audit can be found here.


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