I was quite surprised to see these charges about Ms. McGuiness; I ‘ll give her the presumption of innocence and see what happens. I must say that given that the state must prove criminal intent here beyond a reasonable doubt, and having read the indictment, they are going to have an uphill climb convicting her.
Excerpts from the Article:
Delaware state Auditor Kathy McGuiness was indicted Monday on criminal charges that she hired and supervised her daughter in a do-nothing state job, that she circumvented state contracting laws to shield public payments to a political campaign group from regulator scrutiny and that she spied on and discriminated against employees who questioned her conduct.
McGuiness faces two felony charges and multiple misdemeanors in the indictment, which appears to make her the first statewide elected official to be indicted on felony charges while holding office.
Editor’s Note: Read the entire, 11-page indictment at the bottom of this story.
State officials executed a search warrant on McGuiness’ office two weeks ago and since then, neither she, her staff nor her daughter have answered questions regarding the investigation, the existence of which could not be independently verified by Delaware Online/The News Journal until Monday’s indictment.
On Monday, Wilmington attorney Steve Wood said in an emailed statement that his client is “absolutely innocent of these charges” and that the indictment is “full of misleading statements and half-truths.”
The charges carry the potential of zero to 13 years in prison. The case is being brought by Attorney General Kathy Jennings. Jennings oversees the Delaware Department of Justice and its Division of Civil Rights & Public Trust, which conducted the investigation.
“If anyone should know better, it is the state auditor,” Jennings said in a Monday press conference. “Instead, as our investigation has shown, Kathy McGuiness carried out the very misbehavior that she was elected to stop.”
McGuiness, a Democrat and former Rehoboth Beach commissioner, was elected as state auditor in 2018, a position that’s meant to police wasteful and inappropriate spending of taxpayer money in school districts and state government agencies.
In early 2020, the pandemic had caused seasonal employees in the Auditor’s Office to suffer a “drastic” reduction in work hours. From March through June, one had been fired by McGuiness because of “lack of available work” and two others left because they had a shortage of work.
In May 2020, McGuiness hired her daughter, Elizabeth McGuiness, then a senior in high school, as a seasonal employee where she was permitted to book more hours than other seasonal employees, according to the indictment. McGuiness also hired her daughter’s friend, also a senior in high school.
Attempts to reach Elizabeth McGuiness, who is not charged with any crime, were unsuccessful.
Neither McGuiness’ daughter nor the daughter’s friend was interviewed by staff prior to being hired, and the positions were not posted publicly. McGuiness supervised her daughter and provided her access to a state vehicle, the indictment states.
In August 2020, McGuiness’ daughter enrolled in college in South Carolina. She remained on the auditor’s payroll and never utilized the state’s online tool to work remotely. Entrance logs for the Auditor’s Office show she entered the office 15 times, but never between August and her December return from college.
As of August 2021, McGuiness’ daughter remained on the payroll and is listed as a public information officer and intern. She has been paid approximately $19,300 during her tenure as a state employee. McGuiness is also listed as an owner on the banking account where her daughter was paid, the indictment states.
The daughter’s friend was paid approximately $7,760.
The arrangement is the basis of both a felony theft charge as well as a conflict of interest misdemeanor.
In his written statement, Wood said state law does not prohibit family members from hiring family members and that the indictment falsely assumes that Elizabeth McGuiness did not work for the office during the pandemic.
McGuiness is also charged with circumventing state purchasing laws to benefit a firm she had previously employed on the campaign trail. These charges center on a campaign consultancy organization called My Campaign Group. The indictment states that the company helps candidates structure their position on campaign issues. Campaign finance reports show McGuiness paid the group nearly $19,000 during her failed 2016 campaign for lieutenant governor.
After she was elected state auditor, she approached the group about doing work for the Auditor’s Office, stating that the contract would be less than $50,000 and thus not subject to state bidding laws, the indictment states.
In December 2019, McGuiness ratified a $45,000 contract with the group for “communication services.” Because the contract was less than $50,000, the contract did not have to go through the public bidding process.
However, at the time, payments of state money greater than $5,000 had to be approved by the state’s Division of Accounting, another layer of scrutiny beyond the public bidding process. That threshold was later increased to $10,000 in March 2021.
Each of the payments to My Campaign Group came in at less than $5,000, which was not the case with at least three other no-bid contracts executed by the Auditor’s Office since McGuiness took office, the indictment states.
Additionally, McGuiness instructed one of her office staffers to pay the group through his state purchase card. That transaction and another $2,950 payment were outside the original $45,000 purchase order with the Division of Accounting.
The company was ultimately paid about $4,000 more than the original contract terms. The company’s website lists Christie Gross as its president. She did not return a phone call seeking comment.
The indictment states that the no-bid nature of the contract was legal, however the fragment of payments to the organization to avoid regulatory scrutiny was not.
The indictment states that McGuiness later approached the group about a second, no-bid contract. She was informed that the second contract needed to go through the bidding process, the indictment states.
Around September 2020, the founder of My Campaign Group established a second company called Innovate Consulting. Later that month, Innovate successfully bid for a contract with McGuiness’ office for “subject matter expert and analyst on various topics” and was paid $77,500 through February 2021.
The indictment accuses McGuiness of setting up the first, no-bid contract as well as fragmenting the payments to My Campaign Group to circumvent state purchasing laws, a misdemeanor.
“The allegation is less about what work they did but specifically that she structured a contract to avoid scrutiny, period,” said Deputy Attorney General Mark Denney.
The indictment does not discuss why McGuiness may have sought to avoid regulatory scrutiny when paying the consulting group through the auditor’s office.
The political nature of the organization might have been a reason to do so. Jennings called the arrangement a “sweetheart deal built so as to avoid oversight” of a contract with a “campaign vendor.”
“Their very purpose as an organization was to help people run for office,” Jennings noted at her press conference.
Both the no-bid contracts as well as her daughter’s employment are the basis of a misdemeanor charge of official misconduct.
Wood, McGuiness’ attorney, said that “there was nothing unlawful about hiring a former campaign consultant to (perform) legitimate tasks related to government service.”
As employees began to express concerns within the office, McGuiness engaged in felony intimidation by spying on her employees and discriminating against those who questioned her conduct, according to the indictment.
Specifically, the indictment claims McGuiness used the state department that oversees technology to monitor several employees’ email communication in real time. She also monitored the email of a former employee who was then working for another state department, the indictment states.
The indictment claims that McGuiness did this with the intent of dissuading whistleblowers from testifying or becoming witnesses against her in any kind of legal proceeding.
Wood called the intimidation charge “pure fiction” and the result of “fanciful tales spun by former employees with an ax to grind.”
Typically, an indictment like the one handed down Monday will be followed by a court proceeding in which McGuiness will plead guilty or not guilty and a judge will set the terms of her bail pending the case navigating its path through the courts.
That path could include a plea agreement in which McGuiness can admit guilt to some of the crimes in exchange for prosecutors dropping others, or she could maintain her innocence and the Department of Justice will be tasked with convincing a jury of her guilt.
Jennings noted her office’s investigation is ongoing. Prosecutors routinely amend and add charges to indictments in complicated cases.
The elected state auditor’s work is intended to be nonpartisan. The position oversees an office of about 20 employees. They conduct audits of state organizations as required by law.
That includes audits of state agencies, school districts, and the University of Delaware’s state-funded finances. The office also does routine examinations of school construction projects and long-term care facilities.
McGuiness was elected as state auditor in 2018 with other Democrats amid the so-called “blue wave” halfway through former President Donald Trump’s term. She replaced retired Republican Tom Wagner, who had the job for three decades.
During her time as auditor, McGuiness has routinely asked lawmakers to allocate more state revenue to her office and has argued that her staff cannot perform basic duties with their budget.
Within the first six months of her tenure, she denied a request from the Department of Education to audit Odyssey Charter School unless the department paid for the investigation, citing a lack of resources.
Since then, she has pursued projects beyond her essential duties such as advocating for legal marijuana, commissioning an outside firm to audit her own office, and publishing very basic details of how the state is spending federal pandemic-era stimulus money.
On Monday, the Delaware Democratic Party chairwoman Betsy Maron called on McGuiness to either resign or be removed by the General Assembly. Wood, McGuiness’ attorney, said his client has no intention to leave office.
“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,” Wood wrote