During an examination of alleged campaign finance irregularities of the 1996 presidential campaign, investigators discovered that a computer glitch had caused the White House's automated record management system to improperly scan, log, and archive incoming, external e-mails to almost 500 White House staff members. The problem was discovered in June 1998. As a result, these emails were not turned over in response to a congressional subpoena.. In March 2000, Callahan was called to testify before Congress regarding her role as White House IT manager during the Clinton administration. Three Northrop Grumman contract workers responsible for operating the system testified that the problem was technical in nature, but that White House staff members Callahan and Mark Lindsay instructed them "to remain quiet on the issue while the problem was diagnosed and repaired." "No witness reported that they were told to lie to investigators or felt they were prevented from reporting matters to the appropriate law enforcement officials," and the contractors did not allege that the problem "actually caused by the White House, nor did the White House tell them to destroy any e-mails." The contractors did testify that the staffers threatened them with being fired or arrested if they spoke about the problem. Callahan and Lindsay "vehemently denied" threatening the contractors, and stated that their instructions to limit "water cooler talk" while the team was in a "diagnostic mode" were standard procedure. The Final Report of the Independent Counsel to the Court, filed in 2001, "found no substantial evidence that senior White House officials unlawfully prevented Northrop Grumman employees from providing information in any criminal investigation" and further concluded:
Callahan left the White House in 1999 and was appointed Deputy CIO of the United States Department of Labor, where she was responsible for overseeing the Department's $420 million IT budget. She was subsequently elected President of the Association for Federal Information Resources Management, a professional organization representing federal information technology managers. Some Department of Labor employees later interviewed by the media said that Callahan was difficult to work for and was known for "belittling and even firing subordinates who did not understand the technical jargon she apparently picked up while studying for her doctorate in computer information systems." A 2001 report issued by Assistant Inspector General John J. Getek cited "allegations of waste, mismanagement, fraud and abuse" against Callahan's office and faulted her management practices for fostering "low morale" among her staff of 125. Callahan was, however, promoted twice by the agency, and in March 2003, she was named to the position of Deputy CIO of the Department of Homeland Security. In 2003 Callahan was reported to have obtained all three degrees on her government resume—her bachelor's, master's, and doctoral degrees—from Hamilton University, a diploma mill in Wyoming. Furthermore, she allegedly paid to have all three degrees backdated to 1993, 1995, and 2000, respectively. Callahan was placed on paid administrative leave in June 2003, but continued to draw a six-figure DHS salary until her resignation on March 26, 2004. She was never charged with a crime.
