McGuiness pleads not guilty; bail set at $50,000

Delaware State Auditor Kathy McGuiness pleaded not guilty to corruption charges Tuesday after turning herself in to authorities at the New Castle County Superior Court.

McGuiness entered the Leonard L. Williams Justice Center in Wilmington alongside her attorney just before 10 a.m.

State Attorney General Kathy Jennings on Monday announced a slew of felony and misdemeanor charges against the auditor including conflict of interest, felony theft, non-compliance with procurement law, official misconduct and felony witness intimidation. 

If convicted, McGuiness could face up to 13 years in jail. 

State Auditor Kathleen McGuiness

The auditor appeared in court via video stream from a holding room while state prosecutors and McGuiness’s attorney, Steve Wood, debated the conditions of her bail. Her bail was set at $50,000 unsecured and she was barred from speaking with any former employees or discussing the ongoing investigation with current employees.

Deputy Attorney General Mark Denney unsuccessfully sought to bar McGuiness from speaking about the case with her daughter, who Denney called an “unindicted co-conspirator” in the alleged crimes. 

Wood called the DOJ’s request “unworkable.”

“To say to a mother that you may not talk to your young daughter about probably the most traumatic event that has occurred for either of them in their lives is unnecessary and inhumane,” Wood said. 

The judge agreed and McGuiness left the courthouse around noon without taking questions from reporters. 

Among the charges leveled at McGuiness is that she fired workers in her office and hired her own daughter, who she allowed to use a state vehicle and whom she continued to pay while the daughter was in college in South Carolina and not working for the state. 

Altogether, her daughter received more than $19,000 in pay during her employment with the Auditor’s Office. A friend of McGuiness’s daughter, who the auditor also hired, is said to have received $8,000 in pay.

Jennings said McGuiness’s daughter never logged in to her work account remotely or “sent so much as an email.”

In a statement emailed to Delaware LIVE News, McGuiness’s attorney disputed those charges but acknowledged that McGuiness did hire her daughter — something he said does not violate Delaware law.

Wood said there have been many instances of such hiring practices throughout the 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,” Wood said. “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.”

The auditor is also alleged to have monitored the emails of current and former employees she perceived as possible whistleblowers.

Attorney General Kathleen Jennings

That charge, Wood said, is “pure fiction, and is clearly the result of fanciful tales spun by former employees with an axe to grind.”

Most concerning, the Attorney General said in her announcement Monday, is that McGuiness engineered a “sweetheart deal” with public policy firm My Campaign Group — a company whose services she previously procured during her unsuccessful bid for lieutenant governor in 2016. 

The indictment alleges that McGuiness knew state contracts under $50,000 need not be subject to public bidding and therefore contracted My Campaign Group to provide communication services at a cost of $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, so the auditor directed invoices of more than $5,000 to be paid in increments under $5,000.

Wood said that from time to time, McGuiness has 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,” Wood said. “Furthermore, unlike many other state agencies, the Auditor’s budget did not provide for a full-time policy development staffer until recently.”

He said for these reasons, McGuiness hired My Campaign Group to assist in those tasks, and noted that the company has performed policy development services for other elected officials in Delaware before, including a former governor.

He called all the contracts with My Campaign Group “entirely lawful.”

“There is nothing unlawful about hiring a former campaign consultant to perform legitimate tasks related to government service,” Wood said.  “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.”

Wood said the indictment against McGuiness is full of misleading statements and half-truths.

“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.”

His statement concluded that McGuiness will continue to serve as auditor and focus on the job that she was elected to do. 

Despite the presumption of innocence, some state legislators and political leaders are calling on the auditor to step down. 

Jane Brady, chair of the Delaware State Republicans Party,  said, “The allegations, if true, are a very serious breach of public trust. Ms. McGuiness holds an office that was responsible and trusted with being the watchdog of our public funds. She breached that trust seriously. Ms. McGuiness is the fourth Democrat in the last “six or eight months who have found themselves in trouble with the law. It’s ridiculous.”

She pointed out that 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 and Rep. Andria Bennett, D-Dover, was charged with third-degree assault in 2020, with charges dropped by the victim in May.

“She must resign immediately,” wrote Rep. Eric Morrison, D-Glasgow, on a Facebook post with a link to a news story about the indictment. 

Rep. Madinah Anton-Wilson, D-Wilmington, has also called on the auditor to resign, calling the charges against her “really gross.”

Common Cause Delaware director Claire Snyder-Hall said in a statement to Delaware LIVE News that if the allegations against McGuiness are true, they amount to an egregious violation of the public trust.

“Elected officials are not supposed to use their power to benefit their children, line the pockets of their political supporters or treat their elected office as a personal fiefdom,” Snyder-Hall said.

She said that the auditor is supposed to prevent and detect these sorts of activities and protect taxpayer dollars from misuse.

“Delawareans shouldn’t have to wonder what our elected officials are up to, or whose interests are being served,” she said.

Betsy Maron, chair of the Delaware Democratic Party, said in a statement Monday that McGuiness would be doing Delawareans a disservice if she chooses to remain in office.

“When Delaware Democrats supported Kathy McGuiness, they did so on the promise that she would serve as a watchdog to prevent waste and abuse and uphold the highest ethical standard of transparency and fiscal responsibility,” Maron said. “Our volunteers and voters put their faith in her to do right by the people of Delaware. To see that she broke the public’s trust while executing her official duties is disheartening and downright embarrassing to our Party.”

The DOJ said the first case review will take place on Monday.