DOVER, Del.- Delaware State Auditor Kathy McGuiness has been indicted on five criminal charges - including two felonies - for alleged wrongful actions including hiring her teenage daughter and her daughter's friend for seasonal jobs.
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 Department of Justice's Division of Civil Rights & Public Trust announced the indictment Monday at a press conference in Wilmington.
“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.”
Jennings said DCRPT opened its investigation more than a year ago, after whistleblowers came forward alleging serious 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 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.
Contract structuring and oversight evasion
According to Jennings, 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.”
McGuiness was sworn in as auditor of accounts in 2019. The indictment alleges that in November of that year, McGuiness she approached My Campaign Group for a state contract for professional services. The indictment further alleges that 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, according to the indictment.
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, according to the indictment.
"The auditor, who's job it is to rule out fraud, handed out state campaign contracts to a campaign consultant and deliberately avoided oversight meant to protect tax payers from the very fraud and abuse she swore to root out. As millions of Americans including her employees lost their jobs, the auditor, who's job it is is to protect your tax dollars from abuse, used her power to hire her daughter, no questions asked," said Jennings Monday.
Nepotism and theft
Early in her tenure, McGuiness assumed hiring decision-making for casual-seasonal employees.1. Jennings said that 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.
According to the indictment, 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. The indictment alleges that over the next several months, McGuiness' daughter 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, according to the indictment. The indictment further alleges the daughter’s paychecks were deposited into a bank account on which the auditor is an owner.
Surveillance and witness intimidation
Jennings said that 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, according to Jennings.
Jennings said that notably, McGuiness submitted dozens of “e-Records” requests to the Department of Technology and Information for the contents of OAOA employees’ email accounts. This enabled McGuiness to monitor several employees’ e-mail communications in real time, according to Jennings. The indictment further charges that 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.
McGuiness' lawyer, Steven Wood, issued a statement on behalf of his client in which he wrote the following:
"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.
"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."
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.