Why Should Delaware Care?
The Division of Small Business distributes millions in grants and incentives each year to assist small businesses and organizations. But in September, a business owned by a senior agency official received funding from the agency, raising questions about oversight and conflicts of interest.
Officials at the Delaware Division of Small Business recently rescinded a $7,500 sponsorship contract awarded to a Wilmington bar after learning that an owner of the business was the state agency’s own deputy director.
Beyond returning the money, agency spokesman Rony Baltazar-Lopez told Spotlight Delaware that officials had also imposed “corrective actions,” in response to the apparent conflict of interest.
Those included “employee education, discipline, and internal policy revisions,” Baltazar-Lopez said in an email.
The situation began in late September when the Division of Small Business received an email from Rachel Lindeman, co-owner of the popular Nomad Bar on Orange Street in Wilmington, asking the state to sponsor her networking series for small business owners.
The request didn’t appear to raise any alarm, as Division of Small Business Director C.J. Bell responded three hours later stating that his office would award the Nomad a $7,500 sponsorship, according to emails obtained by Spotlight Delaware through an open records request.
Baltazar-Lopez said the sponsorship was the kind of project the office routinely supported.
What was different though was that the money went to a business co-owned by Jaimie Watts, deputy director of the Division of Small Business.
But the sponsorship was short-lived after officials learned of Watts’ dual roles.
Within weeks of Lindeman’s email, state officials quietly opened an internal investigation, rescinded the money, and determined that the sponsorship posed a conflict of interest inside the agency responsible for overseeing millions of dollars in business grants and incentives each year.
“We recently learned that a sponsorship was issued to a business that was not eligible to receive DSB funding due to its relationship with a state employee,” Baltazar said in his statement.
Spotlight Delaware further asked whether the office has ever rescinded a sponsorship; how long a typical sponsorship decision takes; and what controls exist to ensure contracts do not go to businesses owned by agency staff. The Division of Small Business declined to comment further.
Watts became deputy director of the Delaware Division of Small Business in April. A month later, she purchased the Nomad Bar with Lindeman.
Watts also is a member of Spotlight Delaware’s governing board of directors. Read our editorial independence policy here.
In an email sent to state officials in October, Lindeman said she had been “informed” that the sponsorship money had to be returned. By early November, an agency official confirmed in an email to a colleague that it had been.
Watts did not answer questions for this story, instead referring Spotlight Delaware to a Division of Small Business spokeswoman.