State Auditor McGuiness indicted on criminal charges

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Delaware Attorney General Kathy Jennings and the DOJ’s Division of Civil Rights & Public Trust announced Monday that State Auditor Kathleen McGuiness has been indicted for five criminal charges.

Allegations range from employee intimidation,  awarding a contract in a manner that evaded the bidding process, and hiring her daughter and her daughter’s friend for casual employment, with her daughter remaining on the payroll while attending college in South Carolina.

The governor’s office referred requests for comment to the Attorney General’s office. McGuiness denied the allegations. (See story link below a copy of the indictment.

“We strive for a justice system where nobody is above the law or beneath justice,” said  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.”

The state opened its investigation more than a year ago after whistleblowers came forward alleging misconduct by McGuiness 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 offenses:  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. 

Details are as follows:

Contract structuring and oversight evasion

The investigation uncovered what is described as 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 political candidates with comprehensive issues platforms – taking them from the campaign trail to elected office.” 

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. Knowing that State contracts under $50,000 need not be subject to public bidding, McGuiness  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. 

Nepotism and theft

When taking office, McGuiness assumed hiring decision-making for casual-seasonal employees. 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 what was described as a 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. 

According to the indictment, 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 the College of Charleston in South Carolina. Over the next several months, she remained on the 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. 

Surveillance and witness intimidation

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. 

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 auditor’s office staff.

The DOJ noted that the investigation into McGuiness and OAOA are ongoing, and aske 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.

McGuiness, a pharmacist and one-time small business owner in Rehoboth has portrayed herself as a champion of government transparency in a state with a reputation for government corruption and insider dealing.

Of late, she was promoting Operation Gray Fox, an initiative focusing on government spending transparency.

The flurry of activity had led some to speculate that McGuiness was laying the groundwork for a 2024 race for governor.

The Auditor’s office is an elected position with McGuiness succeeding Tom Wagner, the last statewide Republican officeholder.

Below is a copy of the indictment.

Click to access 10.11.21-KM-Indictment.pdf

 

State Auditor denies felony, misdemeanor charges listed in indictment

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