In 2007 the Guardian newspaper claimed Moran had been exploiting interns insisting they work for the company eQuality Networks rather than doing political work. Similar allegations were levelled at Moran in 2009 following an investigation by the Financial Times.
In 2007 a Spanish Court ruled that she had illegally blocked a right of way at her holiday home in Carataunas, Spain, by installing a gate and digging up the path with an excavator. She was ordered to make the area as it was. She used House of Commons headed paper during the dispute, including a note written in Spanish and English which said "Please note – this road is private & closed. Please remove your motorcycle from our land. Moran family."
In May 2009, the Financial Times alleged Moran mis-used stationery to support eQuality Networks Ltd (EQN) T/A eQuality Network, a non-profit group which claims to help impoverished communities. Moran is currently an associate (listed as Margaret Booker). Moran repeatedly used House of Commons headed paper to write letters in support of EQN, without disclosing her involvement with the company. The Financial Times obtained copies of letters written by Moran supporting eQuality Networks funding bids and personal invitations to eQuality Networks events. Moran denied committing the offence and claimed her husband "has no part in the running of the organisation".
The Daily Telegraph revealed Moran spent £22,500 of taxpayers' money treating dry rot at her and her partner's seaside house in Southampton, about 100 miles from her Luton South constituency, only days after switching her "second home" to this Southampton property. Moran's partner had worked in Southampton for 20 years when the claim was made. The parliamentary authorities were concerned that the work broke the "spirit" of the rules, but advised that it was permissible on three occasions. The Telegraph said the expenses "appear to be among the most questionable of any MP", and the BBC said the claims caused "widespread public anger". Moran had previously switched her second-home allowance from Luton to London and renovated both. When telephoned and questioned by Rosa Prince from the Daily Telegraph she said "How dare you" and ended the call.
On 10 May 2009, she defended her expenses claim in an interview with Andrew Sinclair on the BBC's Politics Show, saying she had kept to the rules. According to Moran, "You could argue that I use it to be able to sustain my work. Any MP has to have a proper family life, they have to have support of their partner."
Just two days later, after defending using taxpayers' money on her third home, she agreed to repay it, albeit in instalments. In a statement she asserted "I do understand constituents anger at the current fees regime, which is why I will be repaying the full amount claimed for my home in Southampton." On the same day, The Daily Telegraph alleged that she used £1,104.34 from her incidental office expenses to pay for "furniture for her house". Despite the repayment, Moran has refused to apologise for her actions and still claims to have done nothing wrong.
Moran's local constituency party backed her following revelations over her claims, but asked her to explain her actions. The then chairman, Mahmood Hussain, described her conduct as "very questionable".
Moran's claims for expenses 2004–05 were £73,198, higher than those of Luton North MP Kelvin Hopkins. However, it was not until May 2009 that the full details of her claims were revealed. These caused Moran to announce she would not stand in the 2010 general election, and she was later barred from doing so by the National Executive Committee of the Labour Party. Speaking in Parliament, the then Prime Minister Gordon Brown described Moran's behaviour as "totally unacceptable".
Moran had particularly high spending on stationery and postage, and on staff costs.
In the run up to the 2005 general election, Moran sent out thousands of unsolicited letters to her constituents. Following a complaint to the Commons authorities about one of the letters, the Assistant Serjeant at Arms Mark Harvey said the letter was "a reasonable solicited response", but was against the spirit of the regulations. He went on to say "Having discussed this with Ms Moran, I'm confident that there will be no repetition in future." The regulations have since changed and there is now a limit on the postage costs an MP can claim for.On 14 May, The Daily Telegraph reported that Moran had billed the taxpayer almost £4,000 in respect of an employment tribunal case brought by a former member of her staff. The House of Commons fees office agreed that the bill could be paid out of her staffing budget.
On 18 May 2009, television presenter Esther Rantzen announced that she would stand against Moran in Luton South as an "anti-sleaze" candidate. Rantzen launched her campaign in July 2009, but lost her deposit in the 2010 general election. On 28 May 2009, Moran announced that she would not stand at the forthcoming general election, citing the "bruising effect upon my friends, my family and my health." Moran also said "The House of Commons fees office gave me incorrect advice upon which I acted. They have now apologised." Subsequently, she was barred from standing in the next general election by a disciplinary panel of the Labour Party.
In 2009 it emerged that one of Moran's employees at eQuality Networks had successfully nominated her to the shortlist of MP of the Year at the Women in Public Life Awards, describing her as a "forward thinking, modern day suffragette".
In November 2009, Moran's local newspaper, Luton & Dunstable Express, launched a "Get Moran Out Now" campaign on its front page. It called for her to resign immediately rather than continuing to claim expenses and receiving a big payoff and large pension by remaining in her seat until the general election. The newspaper was critical of Moran's failure to apologise or explain her conduct to her constituents, saying that she had "behaved disgracefully" and had "fleeced taxpayers quite enough".
In December 2009, Gavin Shuker was selected as the Labour candidate to replace Moran and retained the seat in the general election. He has said that her various expense claims could not be defended. The Guardian named Moran as one of the news-makers of the year as a result of her role in the expenses scandal.
After the expense revelations broke, Moran stopped attending Parliament claiming that the stress of the expenses scandal had worsened an existing medical condition. Liberal Democrat candidate Qurban Hussain suggested she had gone into hiding "Leaving her constituents completely unrepresented while continuing to draw her generous salary".
In 2010 it was reported by the Daily Telegraph that an IP address associated with the Parliamentary estate had been discovered attempting to remove information on Margaret Moran's role in the expenses scandal from her Wikipedia page. As the edits were made from a parliamentary computer, the user received a warning from Wikipedia.
In March 2010, Moran was one of the MPs involved in offering influential political lobbying for financial reward in a sting operation set up by the Channel 4 Dispatches programme. The MPs were secretly filmed discussing how they could assist the interests of a business which had been invented by the programme-makers. In the film, Moran appears to claim to be able to help modify laws on immigration in order to boost the business interests of the fake company.
She also claimed that she could call on a 'Girls Gang' of female ministers to help, and yet, while she appeared to be enthusiastically courting the fake company, half an hour after the meeting her office told a reporter that she was unavailable to do any work on behalf of her constituents because she was "not very well at the moment". Moran claimed that "This meeting was the beginning of an attempt to rebuild my life".
On the 22nd March, she was suspended from holding office in the Labour Party. Labour leader Gordon Brown indicated that there would not be an investigation into the conduct of Moran, and the other Labour MPs filmed in the programme.
On the 6th of September 2011, the Crown Prosecution Service (CPS) announced that Moran would face 21 criminal charges - 15 of false accounting and 6 of forgery.
She was summoned to appear at Westminster Magistrates' Court on 19 September 2011 where she was reported to have wept throughout the hearing. Moran was sent to Southwark Crown Court for trial on 30 October 2011, where she failed to appear and a 'not guilty' plea was entered by default in her absence. A date for the trial of an issue was set for 18 April with a directions hearing set for 15 December. On 15 December 2011, Mr Justice Saunders was informed that psychiatrists considered Moran unfit to plead with the defence contending that the trial should therefore not proceed.
In April 2012, after receiving evidence from a number of psychiatrists, the judge determined that Moran was not fit to plead in person, and the proceedings were allowed to proceed in her absence. On 13 November 2012, the trial jury found she had committed the acts alleged. In December 2012, she was sentenced to a two-year Supervision and Treatment Order, the judge commenting that although some might feel she had "got away with it" the court had acted "in accordance with the law of the land and on the basis of the evidence that it hears".