As part of a finalized settlement agreement released Monday by the Oklahoma Ethics Commission, former Oklahoma Employment Security Commission executive director Shelley Zumwalt has agreed to pay $20,000 in fines and not hold a public position for two years owing to a violation of conflict of interest rules.
“Following a detailed investigation by commission staff and coordination with the Attorney General’s Office, the parties agreed to a resolution that includes both financial penalties and professional restrictions to promote accountability and deter future violations,” Ethics Commission executive director Lee Ann Bruce Boone said in a statement.
According to the agreement (embedded below), Zumwalt will pay a $20,000 “civil penalty” to the state’s General Revenue Fund by Aug. 9. Additionally, Zumwalt agreed that for the next two years, she shall not:
- “Hold any public office in the state of Oklahoma;
- “Seek or accept any position, elected or otherwise, where state funds are used to pay the salary
or compensation of her position; - “Act as a consultant for compensation for any state agency, department, commission, or board;
- “Engage in any lobbying activities for compensation in the state of Oklahoma.”
During the COVID-19 pandemic, Gov. Kevin Stitt promoted Zumwalt to lead the Oklahoma Employment Security Commission through a tumultuous period of public turmoil after a spike in unemployment insurance claims crashed the agency’s antiquated software system. At the time Zumwalt was put in charge of the agency, a leading legislator called OESC an “unmitigated disaster.”
About two months prior to her hiring, the agency had signed a software redevelopment contract with Phase 2 Development — where Zumwalt’s husband was employed on other projects. But a 2022 federal audit released in April 2024 lambasted Zumwalt for signing annual disclosure affidavits that omitted acknowledgment of her husband’s employment at the company, which continued to receive contract renewals and change orders authorized by Zumwalt.
“Federal law requires that any entity receiving federal grant money must disclose any conflict of interest in writing,” State Auditor and Inspector Cindy Byrd said at the time. “Any person who could possibly benefit from a federal grant cannot be part of the selection, award or contracting of that money.”
Zumwalt, who most recently worked in state government as the executive director of the Oklahoma Tourism and Recreation Department, deferred comment to the statement she had released Thursday after the commission voted to proceed with the agreement.
“I want to acknowledge the collaborative efforts of the Oklahoma Ethics Commission and Attorney General’s Office to achieve this outcome,” Zumwalt said. “Neither my husband nor I financially benefited from the contracts, and there was no finding by the Ethics Commission of any financial gain.”
The terms of the agreement should bury any lingering rumors that Zumwalt had been approached by Stitt and others about running for lieutenant governor in 2026, a position Byrd is already seeking. Zumwalt, whom Stitt had appointed as secretary of tourism in January 2024, remains a plaintiff in a lawsuit over whether state agency directors can also serve as a governor’s Cabinet secretary. That lawsuit recently featured oral arguments before the Oklahoma Supreme Court.
View the full Shelley Zumwalt settlement
