Bay to Bay News | by Joseph Edelen
Following seven-plus months of motions, rulings, arguments and more, it’s almost time to determine the fate of Delaware’s state auditor.
When Kathy McGuiness enters a courtroom in the Leonard L. Williams Justice Center on Tuesday, her criminal corruption case will have reached the trial phase.
The auditor has pleaded not guilty to three misdemeanors and two felonies resulting from an indictment initially returned Oct. 11, 2021.
A defense bid to have a misdemeanor charge of structuring as noncompliance with procurement law and a felony act-of-intimidation charge were earlier denied by Superior Court Judge William Carpenter Jr.
Other charges include felony theft, misdemeanor conflict of interest as a violation of the state officials’ code of conduct and misdemeanor official misconduct.
The judge has reserved three weeks for the trial, though the proceeding could run longer or shorter. It is scheduled to begin at 9:30 a.m. Tuesday.
Judge Carpenter issued a gag order for all case participants shortly after Attorney General Kathy Jennings announced the indictment last fall before a throng of media in front of the Justice Center. Ms. McGuiness entered not-guilty pleas to all charges soon after the grand jury’s return.
In a statement announcing the indictment, Ms. Jennings said, “We strive for a justice system where nobody is above the law or beneath justice. 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 conflict-of-interest charge centers around the hiring of Ms. McGuiness’ daughter and a friend as casual-seasonal employees in the auditor’s office in May 2020. Neither were interviewed prior to being hired, according to an indictment.
The indictment also cited Ms. McGuiness’ daughter’s access to a state vehicle and the amount of time spent working while being paid.
Felony theft, according to the indictment, stemmed from work payments involving the auditor’s daughter and friend.
Additionally, the AG said, Ms. McGuiness allegedly structured contracts to My Campaign Group after she was elected to office to avoid state oversight. My Campaign Group served as a consultant for her 2016 campaign.
Lastly, Ms. McGuiness allegedly surveilled communications of potential whistleblowers and witnesses against her, leading to the act-of-intimidation count.
According to the AG, Ms. McGuiness and most of her senior staff castigated employees they deemed disloyal — the witnesses — after the indictment was returned and a no-contact order was put in place.
Shortly following the announcement of the indictment, Ms. McGuiness’ lawyer, Steve Wood, issued a statement proclaiming his client to be not guilty on all counts.
“Kathy McGuiness is absolutely innocent of these charges,” he said. “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’ 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,” Mr. Wood’s October statement said. “When the whole story is finally heard, the facts will speak for themselves.”
Regarding the supposed misdeeds, Ms. Jennings said in October, “If anyone should know better, it is the state auditor.”
Further, she credited the approximately dozen whistleblowers who reported information to her office prior to the indictment.
According to Delaware State University history and political science professor Dr. Samuel B. Hoff, this is not the time to pass judgment on the case.
“I think some folks have automatically assumed that she’s going to be found guilty, but you know, we’ve recently seen a couple instances in Delaware where (high-ranking) folks had charges against them and were found not guilty,” the George Washington Distinguished Professor Emeritus said.
Dr. Hoff referenced the misdemeanor case of Wilmington Democratic Sen. Darius Brown in January and that of the former deputy director of the state Division of Forensic Science, Rebecca Walker, in April. Both were found not guilty.
Even mere allegations of corrupt acts by the auditor has spurred pending legislation to create an Office of the Inspector General. That office, which is receiving bipartisan support, would serve as an independent watchdog of state government.
The entity would be tasked with investigating complaints of waste, fraud, abuse or corruption regarding state employees or state executive branch agencies to root out bad behavior, according to a synopsis of House Bill 370.
Earlier this year, Rep. John Kowalko, a Newark Democrat and prime sponsor of the act, pointed to the McGuiness case as fostering dialogue for an office that would become involved in similar cases.
As for whether Ms. McGuiness will take the witness stand to defend herself, Dr. Hoff said maybe.
“You sort of gauge the person under practice questioning, evaluate their sincerity, along with the evidence against them that may be refuted, along with other things that might happen,” he said.
Ms. McGuiness, a Rehoboth Beach Democrat, became the first female state auditor in Delaware’s history when she was elected in 2018. She received 57.9% of the vote for a four-year term in defeating Republican James Spadola. Her election came after an unsuccessful bid for lieutenant governor in 2016.
Her bid for reelection this year may be damaged to some degree, no matter what the trial’s outcome, Dr. Hoff opined. She filed for office May 3.
“There’s the question of whether the Democratic Party would stand behind her because there’s going to be some residue from the case, regardless of the outcome,” Dr. Hoff said. “Then, there’s the question of whether, depending how it goes, the voters will take it out on the Democratic candidates.”
On April 14, Republican Janice Lorrah of Hockessin also filed to run for auditor.