An audit report released on April 23 alleges that Oklahoma officials mismanaged millions in federal coronavirus relief funds and possibly violated the law during the pandemic.
According to Oklahoma State Auditor and Inspector Cindy Byrd, at least two state agencies may have abandoned the competitive bidding process mandated by state law, misreported the status of millions in federal grant funds, and deprived thousands of Oklahomans of benefits.
One official named in the report disputed the allegations. She claims the report is misleading because auditors didn’t ask her to explain what they found.
One of the most serious allegations, based on the amount of money involved and claims of illegal activity, concerns the Oklahoma Employment Security Commission (OESC) and its former executive director, Shelley Zumwalt.
Ms. Zumwalt took over the OESC leadership spot in 2020. At that time, the agency was besieged by workers laid off during lockdowns.
As applications for unemployment benefits skyrocketed, OESC’s aging computers and relatively small staff could not keep up with the demand.
CARES FORWARD set aside $17 million to upgrade the computers and increase staff.
Auditors found that between April 2020 and August 2022, OESC paid $7 million to computer software company Phase 2 Development, through a contract and several change orders, to fix the computer system.
Additional contracts netted Phase 2 Development another $8.5 million. The report alleges that while Ms. Zumwalt authorized those payments, she did not tell officials that her husband, John Zumwalt, is a vice president at Phase 2, as required by law.
Ms. Zumwalt, who was appointed secretary of tourism in 2022, declined to be interviewed in an email to The Epoch Times.
“The Auditor’s report is misleading. A thorough review of this situation would have easily cleared up any confusion on the many sign-offs and disclosures that happened well before I was named executive director of OESC,” Ms. Zumwalt’s email reads.
Attorney General Gentner Drummond has ordered an investigative audit of OESC.
“This level of self-dealing represents an unforgivable breach of trust that disqualifies Ms. Zumwalt from overseeing the expenditure of our tax dollars,” a press release on his state website reads. “She should resign immediately and cooperate fully with my office.”
Ms. Zumwalt denied any wrongdoing.
Her email states, “Transparency has always been a top priority of mine, and I will not be resigning.”
Oklahoma was awarded $1.2 billion in COVID-19 relief funds in March 2020. CARES FORWARD and the Office of Management and Enterprise Services (OMES) handled much of that money. OMES was allowed to establish new rules for vendor contracts, in a pilot program the report calls “rolling solicitations.”
OMES reportedly adapted the program to allow OMES officials to place vendors on a list to receive no-bid state contracts, possibly violating state law.
“SAI has determined these new rules are not in the best interest of Oklahoma taxpayers,” a press release from Ms. Byrd’s office reads.
One of CARES FORWARD’s first moves was to award Jill Geiger Consulting a $325,000 no-bid contract to be the Team Lead/Project Director for the Coronavirus Relief Fund.
The Oklahoma City-based firm is headed up by Jill Geiger, who worked in OMES’s budget department for 15 years before starting her business in June 2019, according to the company’s website. This was barely six months before OMES hired it in May 2020. The audit report questions the firm’s experience and qualifications to handle billion-dollar grant programs.
Unclear If Work Was Performed
“In some instances, SAI was unable to determine whether the work had been performed,” the report states.Jill Geiger Consulting did not respond to an email seeking comment on this story.
The audit lists the state’s emergency rental assistance program as having the most questionable costs.
During fiscal years 2021 and 2022, Oklahoma received $276 million to help Oklahomans with rent and utility bills. OMES contracted with the nonprofit Communities Foundation of Oklahoma. The group reported to federal regulators that it had spent a total of $241 million over those two years.
However, auditors reported finding that the company had withheld $10 million in excess management fees and $15 million in unexpended grant funds. Auditors reportedly found evidence that OMES had told the foundation it could keep the excess funds.
One of Communities Foundation of Oklahoma’s activities caught the attention of auditors. The report states that the nonprofit spent $6.5 million to relocate Afghan refugees to Oklahoma. The auditors claim this is a prohibited expense.
That, combined with undocumented expenditures, came to $21 million in questionable costs.
“Consequently, more than 5,338 Oklahomans did not get the financial help they needed during the pandemic,” the press release reads.
