State Auditor Kathleen McGuiness indicted on corruption charges

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The indictment includes a great deal of evidence that the State Auditor repeatedly broke the law and systemically abused her power, beginning in her first year in office. | Attorney General Kathy Jennings.

WILMINGTON (DE) BY DIGITAL STAFF: A Grand Jury has indicted Delaware State Auditor Kathy McGuiness on five criminal charges that includes two felonies. The rest are misdemeanors, according to State Attorney General Kathy Jennings.

The announcement came at a major news conference in front of the New Castle County Courthouse also known as the Leonard L. Justice Center on Monday October 11, 2021.

Following an investigation involving dozens of witness interviews, thousands of document reviews, and more than a year of work, Attorney General Kathy Jennings and the DOJ’s Division of Civil Rights & Public Trust (DCRPT) announced Monday that State Auditor Kathleen McGuiness has been indicted for five criminal charges, including two felonies.

Photo by George Shea, Delaware Newsline | Following an investigation involving dozens of witness interviews, thousands of document reviews, and more than a year of work, Attorney General Kathy Jennings and the DOJ’s Division of Civil Rights & Public Trust (DCRPT) announced Monday that State Auditor Kathleen McGuiness has been indicted for five criminal charges, including two felonies on Monday October 11, 20221..

“We strive for a justice system where nobody is above the law or beneath justice,” said AG Jennings. “These are serious charges, and we do not make them lightly. The indictment includes a great deal of evidence that the State Auditor repeatedly broke the law and systemically abused her power, beginning in her first year in office. Our investigation revealed a long trail of corruption, nepotism, official misconduct, intimidation, and fraud that implicated thousands of taxpayer dollars — all from an elected official who is supposed to be a watchdog for exactly this kind of misbehavior. We cannot — and I will not — tolerate criminal corruption, no matter who you are.”

At Monday’s press conference, Jennings said, “DCRPT opened its investigation more than a year ago, after whistleblowers came forward alleging serious misconduct by the Auditor, including abuse of tax dollars to benefit campaign associates, a pattern of deceit to evade spending oversight, nepotism, theft, and intimidation of employees. Monday’s indictment charges McGuiness with five crimes: Conflict of Interest, in violation of the State Officials’ Code of Conduct; Felony Theft; Non-Compliance With Procurement Law by structuring State payments; Official Misconduct; and Felony Witness Intimidation.

Jennings continued, “DCRPT’s investigation uncovered a sweetheart deal that McGuiness engineered with My Campaign Group, a political campaign consultant for her 2016 campaign. My Campaign Group markets itself as a company designed “for your campaign needs” and focuses on “provid[ing]political candidates with comprehensive issues platforms – taking them from the campaign trail to elected office.”

101121_State Auditor Kathleen McGuiness indicted on five charges, including two felonies.

“McGuiness was sworn in as Auditor of Accounts in 2019. In November of that year, she approached My Campaign Group for a State contract for professional services.,” Jennings said. “Knowing that State contracts under $50,000 need not be subject to public bidding, the Auditor entered into a contract with My Campaign Group – which had never before had a State contract – for “communication services.” Over the course of the contract, My Campaign Group was paid $49,900 – just $100 below the oversight threshold.”

The indictment also charges that McGuiness structured payments on the contract to cover up her spending and avoid oversight. Delaware Division of Accounting rules required special approval for purchases or payments of $5,000 or more.  The Auditor directed invoices of more than $5,000 to be paid in increments under $5,000.

Photo Submitted | Delaware State Auditor of Accounts Kathy McGuiness

According to court documents, the Department of Justice allege that early in her tenure, McGuiness assumed hiring decision-making for casual-seasonal employees.

Jennings explained the facts of the case saying, “Early in her tenure, McGuiness assumed hiring decision-making for casual-seasonal employees. 1. In May and June of 2020, three casual-seasonal employees left OAOA due to a lack of available work, including one whom McGuiness fired.  On that employee’s last day, and despite the ostensible lack of work, the indictment charges that McGuiness hired her daughter and her daughter’s friend – then seniors in high school – as casual-seasonal employees under her direct supervision.

Despite McGuiness’ conflict of interest, neither the daughter nor the daughter’s friend were interviewed, nor were their hires delegated to an employee without an ethical conflict.  The indictment further charges that McGuiness provided her daughter access to a State car.

Later that year, McGuiness’ daughter enrolled at College of Charleston in South Carolina. Over the next several months, she remained on OAOA payroll and continued to draw taxpayer paychecks despite not showing up to work, never logging in to work remotely, and rarely sending so much as an e-mail.

As of August 2021, McGuiness’ daughter – who was listed as OAOA’s Public Information Officer and later listed as an intern – had collected more than $19,000 in taxpayer paychecks, in addition to nearly $8,000 paid to the daughter’s friend. The daughter’s paychecks were deposited into a bank account on which the Auditor is an owner.

McGuiness’ behavior concerned several employees, who questioned her behavior and, in some cases, came forward to the DOJ to file whistleblower complaints.

McGuiness’ behavior concerned several employees, who questioned her behavior and, in some cases, came forward to the DOJ to file whistleblower complaints. The DOJ’s investigation revealed that McGuiness retaliated against real or perceived whistleblowers and engaged in a course of conduct to surveil those she saw as disloyal to her.

Photo by George Shea, Delaware Newsline | Following an investigation involving dozens of witness interviews, thousands of document reviews, and more than a year of work, Attorney General Kathy Jennings and the DOJ’s Division of Civil Rights & Public Trust (DCRPT) announced Monday that State Auditor Kathleen McGuiness has been indicted for five criminal charges, including two felonies on Monday October 11, 20221. (Photo Inset: Deputy Attorney General Mark Denney)

Notably, McGuiness submitted dozens of “e-Records” requests to the Department of Technology and Information (DTI) for the contents of OAOA employees’ e-mail accounts. This enabled McGuiness to monitor several employees’ e-mail communications in real time.  McGuiness also discriminated against employees who questioned her misconduct, and enacted office policies to limit the off-hours, personal activities of employees who she believed associated with former OAOA staff.

The DOJ reminds the public that DCRPT’s investigation into McGuiness and OAOA are ongoing, and urges anyone with information they believe is relevant to the investigation to contact DCRPT at (302) 577-5400 or de.gov/publictrust. Public trust complaints may also be submitted online at de.gov/dcrptcomplaint.”

On Tuesday morning, McGuiness turned herself in at the New Castle County Courthouse in Wilmington. She pleaded not guilty to all charges. She is barred from contact with former employees of her office and from discussing the case with current employees and was released with a bail condition set at $50,000 unsecured., according to court documents.

While a case review is scheduled for October 18, the law firm McCarter & English who is representing McGuiness said in a statement:

“Kathy McGuiness is absolutely innocent of these charges. The Grand Jury’s Indictment, like all Grand Jury Indictments, was based upon a one-sided presentation from witnesses and documents selected by the Attorney General. The Indictment is full of misleading statements and half-truths.

It is true that Ms. McGuiness’s daughter worked as a temporary employee in the Auditor’s Office. Delaware law does not prohibit family members from hiring family members, and there have been many instances of such employment all throughout state government-including in the Attorney General’s Office. It is also true that, like millions of Americans, Ms. McGuiness’s daughter worked remotely during the COVID pandemic. However, the Indictment’s assumption that the only way for a state worker to work remotely is by using the State’s email network is false.

Ms. McGuiness has, from time to time, hired outside contractors to perform various professional, policy-related and communications functions for the Auditor’s Office. Unlike the Attorney General Office, which has several full-time employees that assist with press and public relations, the Auditor’s Office does not have a full-time employee to perform those functions. Furthermore, unlike many other state agencies, the Auditor’s budget did not provide for a full time policy development staffer until recently. For these reasons, Ms. McGuiness hired an outside contractor to assist in those tasks. The contractor in question has performed policy development services for other elected officials in Delaware before, including a former Governor. All of the relevant contracts were entirely lawful. There is nothing unlawful about hiring a former campaign consultant to perform legitimate tasks related to government service. The Indictment fails to mention that the consultant has provided policy advice for elected officials all around the United States in the past and continues to do so today.

The Witness Intimidation charge is pure fiction, and is clearly the result of fanciful tales spun by former employees with an axe to grind.”

Photo by George Shea, Delaware Newsline | New Castle County Courthouse

While the Legislature has the power to impeach and remove McGuiness from office, her attorney said she will continue her role as state auditor while contesting the charges.

“Ms. McGuiness will continue to work hard on behalf of Delaware’s taxpayers and intends to focus on the job that she was elected to do. She will have no further comment on this matter. When the whole story is finally heard, the facts will speak for themselves.,” Said her attorney Stephen P. Wood from from the McCarter & English firm.

Legislators are calling for her resignation as Auditor of Accounts. State Representative Paul Baumbach is calling for McGuiness to step down saying  “These serious charges have dealt a substantial blow to the public’s trust in the office of the auditor of accounts.”

“I believe the filing of these serious charges have dealt a substantial blow to the public’s trust in the office of the auditor of accounts, and that the legal process that comes next will make it incredibly difficult for the auditor of accounts to continue to meet the responsibilities of the office, especially with the diminished public trust that is necessary to meet the office’s mission as serving as the public watchdog.

I therefore call for the auditor of accounts to submit her resignation now, to enable the office to focus on meeting it’s obligations to all Delawareans without these distractions, and without prolonged reduction in the public’s trust that Delaware cannot afford.”

McGuiness is a former Rehoboth Beach commissioner. She has worked as a pharmacist and business owner.

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