WILMINGTON — Delaware State Auditor Kathy McGuiness was indicted on misdemeanor and felony charges Monday for alleged wrongful actions, including hiring her teenage daughter for a seasonal job without an interview and providing her access to a state-issued vehicle.
“If anyone should know better, it is the state auditor,” said Attorney General Kathleen Jennings, who credited the approximately dozen whistleblowers for having the courage over time to report information that led to the indictment.
The charges were announced during an afternoon press conference in front of the New Castle County Courthouse in Wilmington.
Ms. McGuiness was charged with five counts, including felony theft; felony witness intimidation; and misdemeanor charges of conflict of interest in violation of the State Officials’ Code of Conduct, official misconduct and noncompliance with procurement law by structuring state payments. She is facing up to 13 years of incarceration on the charges. There’s no minimum time mandated, Ms. Jennings said.
Officials say the Department of Justice’s Division of Civil Rights & Public Trust began 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.”
According to investigators, Ms. McGuiness approached My Campaign Group for a no-bid state contract for “communication services” in 2019. She had used the political campaign consultant for her 2016 campaign for lieutenant governor, the division 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,’” according to statement by the State Attorney General’s Office.
“Over the course of the contract, My Campaign was paid $49,900 — just $100 below the oversight threshold.”
The indictment also states that Ms. McGuiness allegedly “structured payments on the contract to cover up her spending and avoid oversight. Delaware Division of Accounting rules require 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.”
Investigators say that in 2020, Ms. McGuiness allegedly hired her daughter, Elizabeth, and her daughter’s friend, then seniors in high school, as casual-seasonal employees under her supervision.
Ms. Jennings said that neither teen was interviewed before being hired. Ms. McGuiness also allegedly gave her daughter access to a state car.
Later that year, Ms. McGuiness’ daughter enrolled at College of Charleston in South Carolina and she was still listed as an employee as recently as Aug. 28 of this year, investigators say.
“Over the next several months, she remained on (Office of the Auditor of Accounts) 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,” Ms. Jennings said.
According to prosecutors, Elizabeth McGuiness collected more than $19,000 in paychecks, and nearly $8,000 was paid to her friend.
Ms. Jennings said Monday that the auditor’s daughter is not included in the indictment but investigation into the case continues.
Ms. Jennings said several employees came forward to the Department of Justice to file whistleblower complaints, adding that “the 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.”
Ms. Jennings also said Ms. McGuiness allegedly submitted dozens of requests to the Department of Technology and Information for the content of Auditor’s Office email accounts and one account not connected with the office.
“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,” Ms. Jennings said.
The attorney general said Ms. McGuiness has declined to speak to investigators.
“I can tell you that the Division of Civil Rights and Public Trust has reached out to the auditor on several occasions and she has declined to speak with them,” she said.
Ms. McGuiness was unavailable for comment Monday but her lawyer Steve Wood said Monday night his client is not guilty of the charges.
“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,” he said in a statement.
“It is true that Ms. McGuiness’ 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’ 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.
Also, according to the statement “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 was described as “pure fiction, and is clearly the result of fanciful tales spun by former employees with an axe to grind.
“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,” the statement said.
“When the whole story is finally heard, the facts will speak for themselves.”
When she announced her campaign in 2018, Ms. McGuiness pledged to be transparent and to protect Delawareans’ tax dollars.
Ms. McGuiness, a Democrat, became the first female state auditor in Delaware history when she was elected as such in 2018. She received 57.9% of the vote for a four-year term. Her election came after an unsuccessful bid for lieutenant governor in 2016.
According to Ms. Jennings, a Democrat, “Kathleen McGuiness carried out the very misbehavior that she was elected to stop.”
The attorney general also said the General Assembly determines whether to impeach the state auditor or take any other action.
“I have not spoken to the defendant, and that’s been intentional,” Ms. Jennings said. “She will very soon turn herself in, and she will be arraigned.”
The chairwoman of the Delaware Democratic Party, meanwhile, issued a statement calling for McGuiness to resign.
“To see that she broke the public’s trust while executing her official duties is disheartening and downright embarrassing to our party,” said Betsy Maron.
“Based on today’s grand jury indictment, it is clear that Kathy McGuiness cannot be trusted to do her job in accordance with the law. It would be a disservice to every Delawarean for her to continue in her role.”
State Rep. Ruth Briggs King, R-Georgetown, expressed surprise over the indictment.
“Probably like many people, I am really stunned. I’m very surprised because I felt that the auditor has been working very hard to uncover fraud and point out issues and things to make the state function better,” she said.
“So, I am surprised by the actions today, by the allegations because I think everybody is entitled to due process.
“I really look forward to seeing some explanation of other things that were raised in the indictment. I am not going to be too quick to condemn until I know what some of the other things - presented from the defense of that, from these allegations - are.”
Jane Brady, Delaware Republican Party chairwoman, said in a telephone interview Tuesday that the allegations, if true, are a “very serious breach of public trust ...
“(Ms. McGuiness) had an office that was responsible and trusted with being the watchdog of our public funds. She breached that trust seriously.”
Ms. Brady said Ms. McGuiness is the fourth Democrat in the last “six or eight months who has found themselves in trouble with the law.”
“It’s ridiculous,” she said. “(Ms. McGuiness) had an office that was responsible and trusted with being the watchdog of our public funds. She breached that trust seriously.”
Ms. McGuiness’ indictment comes after Rep. Gerald Brady, D-Wilmington, used a racial slur in a June 27 email.
Sen. Darius Brown, D-Wilmington, was arrested on two misdemeanor charges related to an alleged domestic dispute in late May. Rep. Andria Bennett, D-Dover, was charged with third-degree assault in 2020, however the charge was dropped by the victim in May.
Staff writers Leann Schenke and Glenn Rolfe and the Associated Press contributed to this article.