Cynthia Stroum, 60, who abruptly resigned her post a week ago, spent a year in Luxembourg that was blighted by personality feuds and improper spending, including $3,400 (£2,100) that the embassy rushed to spend on wine and spirits at the end of the 2010 budget year.
A report by the State Department's inspector general found that there was an "absence of a sense of direction" at the embassy and that the ambassador was the source of the "bulk of the mission's internal problems".
Ms Stroum was a businesswoman and investor, credited with saving the Seattle Symohony from bankruptcy, who raised more than $500,000 (£310,000) for Barack Obama's 2008 presidential campaign. In recognition of this, she was given the plum posting of Luxembourg.
Presidents often give such jobs to friends and donors, thought Mr Obama had promised to end the practice. In the past 50 years, just three of the 21 ambassadors to Luxembourg have been career diplomats.
When Ms Stroum announced in mid-January that she was leaving, she said that her work at the embassy had been "challenging" and was leaving to spend more time with her family in Seattle.
How sad is it when you can't even handle a Luxembourg appointment?